Your business plan, or roadmap, is one of the most important documents that you will write.
The plan should be a comprehensive guide, where answers to the questions and problems you will face in each stage of your business growth are laid out in detail. It should also provide both a literal and proverbial roadmap to reach the financial goals that your business has set out to achieve.
KNOW YOUR AUDIENCE AND THEIR NEEDS
It is very important to know your audience and understand what they are looking for. The primary purpose of a business plan has less to do with the actual product or service and more about the process of delivering these products or services to the customer. Being able to effectively explain this process through a clear and concise vision will allow the reader to fully understand the feasibility and viability of your business. A detailed explanation of how your business will bring its product or service to market is much more valuable in the analysis of a business than merely describing it.
YOUR STRENGTH IS IN YOUR EXPERIENCE
It is very rare that a business will be led to success by an inexperienced leader, and investors know that. It is extremely important for you to highlight any and all experience related to your chosen industry. Savvy investors understand that without the right people at the helm, nothing else really matters.
Take for example a football team. On any given day the team could have the optimal lineup of healthy players, the perfect weather and field conditions, and be playing against a team where they dominate in every area. However, without a talented and experienced coach on the sidelines, the value of the other successful elements will be significantly diminished.
Don’t forget about your team members! If they have relevant experience—and they should have some experience—it is important to include a “Personnel” or “Management” section emphasizing your team’s industry experience and insight.
ANSWER DIFFICULT QUESTIONS
Force yourself to ask difficult questions and, more importantly, to find answers. Potential investors will be looking for holes in your plan. You must be able to self-scrutinize. Always be willing to poke holes in your own work, because that is certainly what your readers will do. Moreover, you must construct an impressive document that investors can read and believe you have thought of every potential flaw in your plan and have provided solutions. Have a mentor or trusted friend look over the plan with a critical eye and encourage them to give you honest feedback. Then adjust your plan accordingly.
IT’S NOT ALL ABOUT THE NUMBERS
Stop for a moment and think: What good is it to deliver a business plan that projects revenue and profit, more than three years into the future? As a new company, it is virtually impossible to accurately predict revenue and profit. The fact is seasoned investors know this! By becoming overly technical in your approach with numbers, you may in fact come across as a naive business owner.
It is far more important to show that you have considered financial drivers that will ultimately determine the success—or potential failure—of your business. Additionally, numbers need context. When introducing figures, make sure to explain why you have included them, and their relevance to the success or failure of your business.
REMEMBER, IT’S JUST A PLAN—WHAT MATTERS IS FVD!
While your business plan is an important introduction to your venture, it is by no means set in stone. With this in mind, no matter what the contents of your business plan are, stick to what matters: feasibility, viability and desirability.
• Feasibility in that you can successfully bring the product or service to market.
• Viability in that your business is sustainable.
• Desirability in that your product or service fulfills a meaningful consumer need.
Make sure to take the time to do the job properly. Be sure to keep detailed notes about your sources of information and on the assumptions underlying your financial data. With all of this in mind, the question shouldn’t be if you should write a business plan, but how will you draft an effective business plan that will take your company where you want it to go.
What are some of your biggest hurdles to writing an effective business plan? Tell us in the comments below!
