Believe it or not, a business plan is a crucial document for a business, especially the new ones. It will help you to know the answers to several crucial questions such as whether your approach is relevant. If so, then it will tell you about the best practices that you can follow as well as the data that you can analyze and use to create a relevant document that may help you to get the funding you need to ensure that your venture lasts for a long time.
Therefore, you must be well aware of the components of a successful business plan and the best way to craft it. The first thing you should know before you spend several hours and a large sum of money on commissioning a business plan is whether or not you need it in the first place. Yes, you absolutely need it especially with the changing scenario of business.
If you approach to anyone without a business plan for funds, they will either laugh at you in surprise and sarcastically or will drive you away, be it your friend, family, a traditional financial institution or even the most aggressive angel investors.
To sum up, a business plan is mandatory for every entrepreneur and startup company.
Things to know first
There are a few specific reasons and some scenarios even though you may tend to think that pitch decks and a clever presentation can displace them. To understand these factors and reasons, there are a few critical questions to answer before even you decide how to create it or how does it look like.
- First of all you must know why you need a business plan and what exactly you are trying to achieve with it. Just because it is the status quo, it should never come in the line in the vocabulary, especially if you are a startup. Remember, designing a traditional business plan can be a big beast of task that will consume a lot of money, time, and mojo at a very importantmoment.
- Do not simply write a business plan if it does not match up your goals. Instead, you must have a business plan that will get you and your business more organized and will help you to ensure that there is something in it that is viable, commercial and have a lot of potential.
- A business plan should not be designed if you are not going to run out of money or lose your focus. However, a plan will help you to stay operative before you get going, of you plan to raise money, intend to bring in partners, and apply for loans through traditional banks or through private money lending sources such as https://www.libertylending.com/ or any other.
- If you design a business plan that will be nothing short of a 25 pound manuscript, make sure that you keep it simple. If you take help of professional experts then you can even design a one-page business plan that will help you in global domination.
- At all cost and forms, you must design something that looks legit to the local banks you want to approach for a business loan, or anyone within your sphere of influence. Make sure that it is in a format in which they are comfortable with.
Therefore, take out and devote some time to design a business plan if your sole purpose is to raise funds for your startup which will not go anywhere without it. Only a proper business plan will help you to get your desired fund in this competitive fundraising environment of today.
Designing a business plan
When you start creating your business plan make sure that it is significantly different from a pitch deck, though there are several crossover factors. The most significant difference is that one is designed specifically to getfunds from angels and VCs while the other is more structural an internal in nature.
Typically, a business plan should be functional, prototype and scalable. It must be measurable and reasonable with the following other features and components:
- A 12 month expense projection
- A proper marketing plan
- Customer vale
- Customer acquisition costs
- Results of testing
- A dashboard of KPI
- Proof of consistent improvement
- The burn rateand
- It must never fallbelow 6 months of cash.
Ideally, you can cram in most of these into a pitch deckwith a good appendix.
A business plan should also be different from an executive summary. The best practices for constructing a brilliant business plan is to focus on the format, substance, and the key data that viewers will find to be most important.
You should not get bogged down while rehashing and dragging out your business plan. This will cause a hindrance to getthe results you want. According to Harvard Business Review, the key to succeeding in creating a business plan is to be flexible and responsive to the opportunities. You will have to pivot your business when you find that your product fits well in an alternate market.
The stats from HBR also show that:
- The chances of success will increase by 12% if you do not spend more than 3 months on your business plan and more than that can prove to be futile effort
- Most successful entrepreneurs usually write their business plan with the first 6 to 12 months after they decide to start their business as that increases the probability and viability of success by 8% and
- Startups venture viability will also rise by 27% if you create the business plan when you talk to customers and prepare for marketing as these are the sweet spots.
According to Entrepreneur.com you must consider including and take into account the following factors while creating your plan:
- The main objectives
- How the business is vested
- The mission statement
- The keys to success
- Industry and market analysis
- Competitor analysis
- Marketing plans
- Core strategies
- Key operations
- Organizational structure
- Projections and preformed
- Financial needs and
- Break-even analysis.
The pages should executive summary, company description, products and services, marketing and operational plan, management and organization, startup expenses and capitalization, financial plan and appendices.