Four Key Things To Consider When Creating a Business Plan
August 1, 2019
Your Business Plan should show investors and your stakeholders that your venture will be a success.
Stating your own business is an extremely exciting journey to embark on. Freeing yourself from the constraints of an employer and being able to work on a company that you truly believe in is liberating.
Furthermore, most of the time people will find that they can persevere in the midst of professional hardships when they are passionate about what they are working on.
Therefore, one should definitely be passionate about the business that they are building.
A business plan is a way for founders and cofounders to show investors and stakeholders that this passion will translate to success.
So, taking the time to create a comprehensive, persuasive business plan is an investment well worth the time to create for the founding team.
1. Adequate Research
The first and most important thing to consider when creating a business plan is doing extensive research on the business and anything else that will pertain to the company’s development.
Having a general idea of what the company will represent, how the market looks for that industry, or how a company in that industry will operate is far from sufficient.
Fully understanding the ins and outs is imperative and knowledge of this research should be evident on the business plan.
Nothing is more off-putting to investors than seeing founders who didn’t take the time to explore every aspect of the idea that they are pitching.
It’s not only inconsiderate and rude but also a very damaging way to start off the startup. Setting the impact that a lack of knowledge will have on the impressions of others aside, being well versed is a strong way for founders to invest in their future.
A knowledgeable leader is a strong leader. Personal talents and characteristics are second to knowledge.
2. Understand Your Audience
Your business plan needs to both be understandable and appealing to everyone who will need to look at the business plan.
Therefore, all people should be taken into consideration. This will include the need for some quantitative objectives and statements as well as qualitative ones.
Think about all of the people who will be looking at the plan and what their typical interests are when looking at business plans in general.
Of course, investors will want to see your plan but future employees might see it as well in order to see if this company will be a fit for them and their goals.
Being able to recognize the different approaches that people will have to analyzing the plan ensures that no one will be left out of consideration which could potentially result in a loss of opportunities.
Whenever other people are being taken into consideration, the future success of the company is also being taken into consideration.
Don’t minimize the importance that other people have in regards to the company just because they might not be working as directly with the founding team yet.
Your investors, desired accelerators, and banks may be more concerned about your financial forecast and the company’s projections for revenue.
The content geared towards them will perhaps consist of more data sheets and graphs.
Cofounders and employees however may be more concerned with the company values, goals, and desired impact to see if this company can create an environment that will be supportive for their goals as well.
Another group of people to consider who are often overlooked are initial beta testers. The business plan should give them context so that they can test solutions with adequate information.
3. Emphasize Why You Care
No one will want to engage in your company if they don’t think that you are passionate about it or if they see that you don’t care a great deal.
A founder who doesn’t care isn’t as invested or concerned about the company as investors or potential cofounders want. Who wants to work with someone who’s unmotivated?
An unmotivated founder kills morale and dooms the company.
The business plan should explain :
- why you started the business,
- what you want to fix and the problems that you are addressing,
- the values that you want to uphold in the company,
- and how all of this will set you apart from the rest of the competition.
This will give confidence to all of those who can help you. An extra bit of encouragement for outsiders can be the difference between the company getting the resources that it needs to thrive or its downfall.
4. Have a Strong Marketing Strategy and Financial Forecast
Getting your product or service out to customers is arguably as important as research.
Having an exceptional product is worthless if no one is buying it.
The business plan should clearly state:
- the target demographic,
- how that demographic will be reached,
- and how you can convince customers of competitors to switch to your product or service.
How you plan to make money is important to say the least so those who will be looking at the business plan are going to concentrate on this section.
Having a marketing strategy for the future is also crucial.
The business plan should answer how:
- your approach to customer acquisition will change as the company progresses?
- the user experience will evolve as well?
- will you secure customers and prevent them from turning to alternatives?
Understanding your consumer and how you can appeal to them is vital for the company’s success.
Additionally, you should clearly state your financial forecasts for the company as this will be extremely important to investors.
You need to address the size of your projected market, pricing, and budgeting.
Investors need also to understanding where the money is going.
All of these factors speak to the anticipated cash flow. The company needs to be at the very least financially viable so creating ambitious but reasonable financial forecasts is necessary.
By Brian Cho of IdeasVoice US
Additional, helpful links:
When is the ideal time for entrepreneurs to write a business plan?https://www.smartcompany.com.au/startupsmart/advice/business-planning/when-is-the-ideal-time-for-entrepreneurs-to-write-a-business-plan/
SBA Recommended Business Plans & Length https://www.sba.gov/offices/district/az/phoenix/resources/sba-recommended-business-plans-length
Top 10 Business Plan Mistakes https://www.entrepreneur.com/article/81188
How to Create a Financial Forecast https://bench.co/blog/accounting/financial-forecasting/