You have this brilliant idea you believe will change the world. You have a clear vision of the future and are excited about it. But first, you must convince venture capitalists, banks, and close family and friends about your idea because you need capital. This is where a business plan comes in. A business plan is a simple document that gives a good description about your company and how you expect it to grow. A well-written plan increases your chances of ever raising money for your business. Here are some of the best tips you should always use when coming up with a great business plan.
Make it short and simple
A common mistake we see with most people is that they develop very lengthy business plans. In these plans, they try to cover everything in their businesses with great detail. Sadly, this is wrong for several reasons. First, most people you will share your business plan with are busy people. They don’t have time to read hundreds of pages of a business plan. Second, if you can’t explain what your business is with a few words, it has a problem. Finally, a long business plan sends the wrong picture to investors. Ideally, we recommend a plan that is less than 3 pages.
Make a great business plan clear
If you are developing the business plan to raise capital, make it very clear. To do this, just say what your business is, the market you are targeting, the competitors in the business, how the industry is growing, your estimated customer acquisition costs, and how your business differs from the competitors. Most importantly, tell the investors and lenders how you will generate revenue and your likely margins. If you write all these well, you will have a likelihood of raising money.
Have all the essential parts
A business plan has three main components. You should do your best to explain these components with ease. The first part is business analysis. As mentioned above, this includes things like the industry, competition, industry growth, and industry trends. The second part is on your action plan. This includes things like the people involved in the project and sales and marketing. Finally, there are projections. This is where you project how much money the company will make.
Do your research
As you write your business plan, you need to get everything right. One way to achieve this is to remember that the people who will read the plan already read tens of them every day. In many venture funds, some people are assigned the role of reading business plans. This means that they read a lot of them. Therefore, you should do your research to ensure you get everything right. For example, if you talk about the growth rate of an industry, make sure you have real data to prove it.
Watch an episode of shark tank
Shark tank is the premier business plan television show. You have likely heard about it. If you haven’t watched it, we recommend that you watch a few episodes. This is because what you will learn from the program will help you develop your plan. For example, you will learn so many things about competitor analysis, margins, customer acquisition costs, how to negotiate with retailers, and how to grow your business.
Make a visual version of the plan
Most people don’t have time to read a lot of materials. To solve this problem, you should do a video version of the plan. This will draw the attention of the people you are reaching with your plan. If you go through this route, ensure that the video is short and well-edited. Another brilliant way is to create a pitch deck presentation.
Highlight your progress
Having an idea itself is not enough. The audience of your business plan needs to see the progress you have made. For example, have you registered the business name? Do you have a prototype? Have you bought a website domain? Have you patented the product? Is the business generating any income? If so, how is the growth? These are some of the things that you should tell your investors or financiers.
The exit strategy
The reason investors fund small companies is so that they can maximize their returns. Organic income itself will not make them happy. Therefore, you need to explain to them about having a good exit strategy. This could either be to license the product, sell the company, or even an IPO.
Don’t make vague pronouncements
A common mistake we see is when entrepreneurs make vague announcements. A popular one is when an entrepreneur talks about the size of the market and how they would be successful even if they took a small share of the market. Another one is when an entrepreneur underestimates the amount of money that is needed to grow the company.
Final Thoughts on great business plan
A good business plan is said to be the foundation of all businesses. In fact, not many companies have succeeded without having a good business plan. By following these simple tips, you will be in a good position to raise money from both banks and investors. It will also help you in running and managing your organization.