Your Business Plan is a road map for achieving your goals, and it tells us that you have taken the time to think about your business seriously. Moreover, it gives you a process to map out and flesh out business ideas to determine whether there is sufficient validation of your idea to turn it into a reality. The following is a breakdown of sections we believe should be included in every business plan.
Executive Summary / Elevator Pitch
This is the last section written and is the first in the plan. Tell the reader in a few sentences what your company offers (clearly defined offerings) to help specific customers solve (some clear problems) with your value proposition. One page, ideally half or less, and dump the superlatives and BS concepts such as robust, and scalable. Give your reader a good reason to turn the page.
Problems you are solving with what Products and Services
What problem(s) are you solving for your customers? How painful of a problem is it for them? How do you know? What are you selling to customers and clients and why on earth are they going to buy from you? Are you competing on pricing (a commodity?) By adding some value proposition that no one else is (a brand)? The reader must clearly understand what problem you are solving, and how. What proof do you have that your product/service(s) can do what you claim? Do you have 3rd party validation? Will you get it?
Where are you in the process of development? What are your key milestones and timing?
What is your target market? What is its size, composition, and how are you going to reach the market for your products and services? The reader is not interested in just what you think; you are biased. The reader wants to know what market research you have done and what you have learned. Discuss in some details the barriers to entry and your plans to overcome them. Also, discuss your general branding strategy.
What is your go-to-market plan? What milestones are most important, and when do you need to reach them?
Discuss competition in a narrow sense of what products and services you will compete against as well as competition in a broader sense. Hot dog stands do not just compete narrowly with hot dog stands they broadly compete against every other place that wants to sell food to consumers. The reader also wants to know the competitive threats, and what the competition is going to do to block you and make you waste your money, and especially the potential technologies that may disrupt you!
Intellectual Property and Critical Information
The reader must know what you have that is unique regarding your intangible assets. Patents, Copyrights, Trademarks, Trade Dress, Trade Secrets and any information that might be of benefit to a competitor (this would be critical information). The reader wants to know what you possess, if it is valuable, as well as what you have done to secure your exclusive use. If you just rely on patents, filings, and agreements then you have just failed.
All regulations that you might fall under today or as you grow that can impact company growth must be addressed and discussed. Pushing this responsibility off to legal counsel, or saying “we can cross that bridge when we come to it” tells the reader you are not serious. Many high-tech businesses have struggled as their foreign markets never could develop as their products were banned from export from the US because the product/service(s) had “military applications” they had not considered during development.
Team / Leadership
Who is committed to the business? Who is generally involved? The reader must see full and detailed biographies of each member. Note that the inane “She served 27 years as a senior management professional in a Fortune 500 company,” does not count as real information. The reader must know why that person is important to the company, and how much time they intend to devote to the business. Additionally, map out roles, responsibilities, and what other skills or people that will be needed.
Revenue/ Financial Plan/ Money
How will you make money? When will you break even? Spend a great deal of time on the financial plan. The Financial Plan typically covers sales, profit and loss, cash flow, balance sheet and a personal plan. The errors that are made in 80% of business plans – it’s the line that goes from the bottom left of a chart to the top right in a straight slope. The reader needs to know how, with their money are you going to make the enterprise profitable. We strongly suggest the first year – month by month and the second and third year quarter by quarter. Any more than three years of financial projection is just a silly exercise. Those that demand five and ten-year forecasts must come from a Soviet-era management camp.
Also, the reader wants to know what you intend to do when you miss your numbers and when you exceed your numbers. The reader also wants to know your plans to prevent unnecessary wastes of money. Seeing budget items for leased cars or fancy uptown office space – forget about it. You are looking to use the investor’s money as efficaciously as possible. Show them you are smart in handling money and that you care about their money.
Starting up or growing a business is not a risk-free enterprise. It is just the opposite. Starting or growing a business is the assumption of risk with the expectation of profit. So discuss your perceived risks and explore ways to hedge, insure, and ideally map out options for mitigation. We remember a bus company that was going to set up thirty-two interstate routes with seventy buses. They got their routes and the buses but could not hire enough drivers for almost seven months. Risk can be internal, external, economic, and marketplace. Significant risks can be a single supplier or a single customer as well. Readers know you are taking risks, that is why they are interested. Do not soft peddle or discount the risks – identify them head on and discuss them in some detail.
Who will vouch for you? Include names, relationship, and contact info.
Writing The Business Plan
You are right it is hard. Hiring someone else to draft your business plan defeats the purpose. Yes we get it, it is helpful to have a better writer – but they will only polish your business plan after you have drafted it.
The Business plan is a living document and should be revisited, especially in the first year – each week, or every other week, to serve both as a general guide and to see where your milestones and benchmarks sit in comparison to where you find yourself. Most plans are overly optimistic and do not address time, mission creep, as well as failures. But they get you thinking and aware of many variables, which will lead to better risk mitigation. Further, it will be the essential tool for you to get funding.
If you are considering, or in the process of creating a business plan, please reach out to us, and we would be happy to see how we can ensure you get it created right the first time.