When writing a business plan, it is critical to do research and set strategy across the following key topics: When you’re finished, you’ll have the evidence you need to support your plan’s fundamental presumptions. Below, we’ll discuss each of these topics.
- Your industry/competition;
The preliminary study must be carried out. How big is your sector? Who are the main rivals? How fast is the sector expanding? Are you making a bold move or stepping into a busy area? What market proportion can your company reasonably expect to gain? Investors prefer to engage in established businesses that can expand up to a 10–20% market share in big, developing markets. Therefore, there is a sizable market opportunity for selling them the “next Google search engine,” but it would be very challenging to create one because there are many established, well-funded competitors in the search market who would fiercely protect their market share. On the other hand, offering them the most recent patentable invention in door hinges might be seen as less damaging and less competitive in the market, but the market is actually quite tiny. You need the ideal combination of a sizable market chance, a disruptive/defensible business model, and little rivalry.
- Business/revenue model;
What kind of company are you establishing now that you have located your prime industry opportunity? a mechanical remedy? a piece of software that is installed? Software as a service? And perhaps more significantly, how will you generate income? one-time transaction? weekly recurring revenues? heavy repetition? How do your rates compare to those of your rivals? What advantage do you offer over the market’s existing solutions? Investors favor disruptive companies that offer fantastic value to their customers to have big and recurring income sources.
- Sales/marketing plan;
Developing your go-to-market plan is the next stage. a few years ago. Then you know the story of the abyss. You know the story of the abyss. You know it. You know it. Is it reliant on amassing a sizable sales force? Does it call for significant customer marketing spending? Will marketing be fueled by trade fairs, internet search engines, or direct mailers? Does it need any popular or social media components to succeed? Typically, it costs less to start a B2B sales-driven company than a B2C marketing-driven company. But because B2B companies typically have much lengthier sales cycles (and therefore higher cash loss), it can be challenging for startups to forge new B2B relationships, particularly if they are aiming to work with big organizations. Additionally, B2C companies that can develop online through viral marketing are favored over those that must spend heavily on costly media such as TV, radio, or print. (Which frankly you should never use to launch a business until the concept is proven out, given the heavy expense and long-term branding aspects of such media). Additionally, in every situation, ensure that the marketing or sales expenditure is appropriate for the size of the revenues you are attempting to generate. (e.g., is there a reasonable customer cost of acquisition metric compared to traditional industry norms).
- management team;
This, in my opinion, is the most crucial component of any enterprise. Instead of a B- management team in an A+ business, I would prefer to have an A+ management team in a B- industry. In a start-up setting, you want a staff that has “been there and done that” before and won’t waste your limited startup funding on trials and errors. Please read my earlier article again for more information on how to assemble your company team in a manner that will be most appealing to investors.
- Cash requirements;
Investments in sales and marketing will drive revenues. Revenues will include sales expenses. The business will also spend money on taxes and other personnel costs. Depending on that, you will need to fund a certain sum of an operating deficit. Then there are any financial outlays required for your workspace, the R&D of your merchandise, or anything else. As a result, think long and hard about your financial requirements before approaching an investment. Additionally, investors favor companies with lower burn rates and smaller cash needs, so a $1 million need has a better chance than a $10 million need; and secondly, double whatever the model estimates you’ll need for your cash raise. (as things ultimately go wrong and you will want a cushion in place, to prevent going back to investors looking for more later–most likely at worse terms).
- Forecasted financials/expected ROI.
More than anything else, the final review is a logic check. Will the owner see a 3x return or a 10x return on their money over the next three to five years? And, there are two drivers of that: (i) the size of the revenues/profits at that time; and (ii) the value at which the investor put their money. Investors are obviously seeking 10x chances, so ensure that your financial strategy offers them a decent opportunity to do so, either through scale or valuation.
Depending on your needs, you might significantly reduce this information once your business plan is complete before showing it to investors. (e.g., a 1-2 page executive summary for preliminary introductions to investors via email; 14-15 slides for an in-person presentation). Never begin with a 30–40 page document; due to investors’ short attention spans and the abundance of rival investment possibilities, nobody will peruse it past the first page. Therefore, be sure to be succinct and to the point. Also keep in mind that, whenever feasible, visual demonstrations are more effective than written ones. Therefore, instead of simply explaining the merchandise in words, provide screenshots.
A wise leader and investor once said that if you can’t explain your goal in a single phrase, you’re making it too difficult for the audience to understand.