For many first-time founders and small business owners, the concept of writing a business plan is new and they have no idea where to start. It can be a daunting experience, but when you do it right, the payoff can be enormous.
What is a business plan?
A business plan is the roadmap for your small business’ growth and development. It communicates who you are, what you plan to do, and how you plan to do it.
Why do I need one?
The first thing any investor or venture capitalist will ask for is a business plan. It doesn’t matter how great your pitch is—if your business plan doesn’t hold up to scrutiny, they’re not going to invest a dime. Good business plans give investors an idea of what to expect from your company, and tells them about you as an entrepreneur. It’s the handshake of the small biz sector.
Even if you don’t plan on courting Venture Capitalists, there are other compelling reasons to develop a business plan. Writing out your goals and the action plan to achieve them allows you and your team to view your strategy objectively. It helps you see the holes and blind spots you may not have accounted for, or uncertainties that could cause trouble down the road. If you can discover these weaknesses yourself, you’ll be in a better position to fix them before you start pitching investors.
What makes a good business plan?
Business plans come in many different formats and styles, but the best ones cover the same critical topics:
Purpose. Explain why your small business exists and why it’s important. What problem or need is your business trying to solve? How does it solve your customer’s pain points?
Product/Service. Describe the product or service that you’re offering, and what makes it unique from its competitors.
Customer. Identify your company’s ideal customer. Get into their head, have a clear understanding of their challenges, and explain why your product is perfect for them.
Marketing. How do you plan to promote your brand? Show what you’ve already done, what you plan to do given your existing resources, and what results you expect from your efforts.
Monetization. The key to a sustainable company is a profitable business model. Explain how your business will make money and what kind of ROI (Return on Investment) investors can expect.
Team. A business idea is only as good as the team that executes it. Identify your team members and why they are the perfect team to bring this idea to life. Also look ahead and mention the people you still need to expand your company.
It’s not enough to just dump all this information into a single document and send it off. Venture capitalists read dozens of these documents a month, and have little patience for badly written or poorly created documents. You want your business plan to be as attractive and readable as possible.
Here are some tips to make your business plan more presentable:
- Don’t write a novel. Make your business plan as short as possible while still communicating all the essentials. The fewer pages you use, the better.
- Make it easy to read. Divide your document into distinct and logical sections, so that investors can quickly flip between key pieces of information.
- Proofread. Double and triple check the writing for typos and grammatical mistakes. Awkwardly written documents are hard to read through and easy to dismiss as amateur.
- Invest in design and printing. A proper layout and decent printing or bookbinding gives your business plan a professional feel.
Also remember that content is more important than design. Strategize and research your business plan thoroughly and know your numbers inside out—from costs to sales projections. Once you’re confident in your plan’s viability, then you can worry about formatting and layout. If you can show investors you can perform to a professional standard even during the pitch phase, they’ll be more willing to join you in building a thriving business!
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