By Dr. Larry Blaine, Senior Consulting Associate
How to Books, Online Templates and Sample Business Plans are everywhere and no one has to pay an expert anymore to put a business plan together and you can now do it yourself. Whether your new idea, product or service is the best ever won’t make much difference if you don’t get this part right and you won’t unless you have experience at putting a business plan together which few have. It is educational, insightful and indicative of the depth of knowledge and experience that is required to be able to go it alone.
THE PURPOSE OF A BUSINESS PLAN
A business plan serves as a “blueprint” for the development of your company. It should function as a step-by-step guide for implementation. Therefore, it’s important to be precise at each phase of preparation.
Accordingly, the first step in developing a business plan is to clearly define your goals in quantitative terms. The trick here is to translate your vision for the company’s future into specific, quantitative terms. You should be able to answer such questions as:
- How much money do you wish to generate in this next year or the next 5 years? How do you intend to do this?
- Will the market support this objective?
- Do you have a marketing plan to help you accomplish these?
- What is the competition? Even if there is no competition, do you anticipate any market resistance? (A new, untested product, for example, often faces consumer resistance, even if there is no direct competition.)
- How do you intend to spend your money to achieve the stated goals?
The questions that need to be addressed are extensive. And the answers vary for every business. Further, if you intend to use the plan to help you find money, you need to address the concerns of the prospective investor or lender.
USING THE BUSINESS PLAN TO FIND FUNDING
At a minimum a prospective funding source will want to know the answer to several basic questions.
- How much money do you want and how you intend to spend it?
- What are the financial targets? Detailed financial projections (including the assumptions upon which you are basing them) should be provided for at least 5 years.
- A clear and concise mission statement should be presented in both text and financial terms. The body of the plan should provide a detailed description of your planned phases for development.
- Why do you think this is a good investment? Provide a description and analysis of the market, the size of the market, the market potential, market trends, etc.
- Who are you? Why should an investor believe you are capable of accomplishing the task set before you? Describe the experience and personal traits which you feel best reflect your ability to implement the proposed program.
In addition to the above issues (which are only a brief sampling of topics to be addressed), be sure that at every step of the way you very carefully analyze and present the potential risk factors associated with the project. Some entrepreneurs feel that this should be glossed over because it is too negative and they don’t want to scare investors away. Nothing could be further from the truth. Besides being your responsibility to provide this information, it also demonstrates that you have done your homework and are providing as complete and honest a picture as possible. But also remember: If you present the risks, you should also address your strategy for overcoming the risks.
Finally, it should be noted that perhaps the most important part of the business plan to raise money is not in the plan at all. I’m referring to the cover letter. The cover letter (either accompanied by the business plan or just the Executive Summary) is your opportunity to make your initial impression on the funding source. It is essential that you quickly get to the point and grab the reader’s attention. It is here that the reader should be stimulated enough to want to read the entire plan. After all, no matter how dynamic you, your business and the business plan are, if you want someone to fund the project, you will need to get the right person’s attention.
ONE FINAL POINT
Whatever you say in the business plan, be interesting and convey a sense of excitement! Of course, you are not required to be interesting. On the other hand, you do not have a mandate to be boring. Excitement tends to be contagious. When you adequately convey your enthusiasm for the project, that will tend to make others enthusiastic as well. Once you have a potential investor’s attention, it is time to maintain the excitement by sharing the details of how you will translate the concept into reality.