Four Simple Steps to a Winning Business Plan
BusinessStep 1: Strategic Planning
Let’s say you have a brilliant idea that puts Microsoft’s Bill Gates to shame, you’re convinced you have the driving passion to make it work, and market research seems to give the green light that the idea is actually viable. Wait, don’t dive in yet. “Entrepreneurs are often so passionate about their ideas that they can lose objectivity,” says Nancy A. Shenker, president of ONswitch LLC, a full-service marketing firm in Westchester, New York. How do you determine if your idea is one that will generate millions in revenue with one that crashes and burns? Potentially risking your company on a high? The answer: an in-depth study. One of the research approaches that startup entrepreneurs use is SWOT analysis, which assesses the strengths, weaknesses, opportunities, and threats involved in a new business venture. The final analysis should be able to tell if your idea has holes that will need patching.
Step 2: Success Stories
Ask any successful entrepreneur and they will most likely tell you that the success of a well-crafted business plan will not only attract and pique the interest of potential lenders and investors; but also be able to draw funds from their conservative budgets. So before you jump in to conquer your great business plan, start by finding out what worked for others, and what didn’t, for companies in your industry. While many plans fail because they are too long, poorly structured and packaged, full of spelling and grammatical errors, or even missing a call to action; some business plans just fail due to outlandish and ridiculous reasons.
Step 3: Key factors
Crafting a business plan is one matter, while making a lasting impression on yours (over thousands that ultimately landed on the desks of bankers and investors) is another. The truth is that 95% of the business plans submitted were usually killed on the first run. Therefore, present your business plan with complete and detailed information and complete it with concrete and verifiable facts of exactly how you intend to operate the proposed business. Here are four key factors to keep in mind:
People
Who’s on the team? What do they know? Who do you know? How well are they known? William A. Sahlman, Professor of Business Administration at Harvard Business School, puts it this way: “A business plan should candidly describe each team member’s knowledge of the new company’s type of product or service.” company, its production processes and the market itself, from competitors. To consumers.”
industry market
Is the industry market large or small? Is it growing or slowing down? Will it continue to hold up as an opportunity market or will it decline in the next two years? “Entrepreneurs and investors look for large or fast-growing markets, Sahlman says, primarily because it’s often easier to grab a piece of a growing market than it is to fight entrenched competitors for a piece of a mature or stagnant market.” Make sure his business plan describes in detail the market position of your industry, one that is large, growing, and marked by opportunity. Explain how your business idea will fill an unmet need in the marketplace; how it will be built and launched on the market; how you can grow and expand your range of products or services, as well as your geographic and customer base, and how you can hold your own against competitors in the long run.
Economic activity
At the macro level, recessions, inflation or deflation, unemployment rates, stock market rates, interest rates, and exchange rates cover all the essential aspects of your business plan. Why? The answer is simple: they affect the success of your company. It is imperative to clearly describe in your plan how aware you are of the economic activity of the new venture, and as such, how it helps or hinders your proposed business. Although it is necessary to include the former, it is also important to show that you know that the context of the business will inevitably change, and therefore you will be able to explain what management can do if the context changes and turns unfavorable.
risk and rewards
In a highly competitive and rapidly changing market, every start-up faces certain (or uncertain) risks. Risks can range from product liabilities to a company’s reputation and personnel. Also consider the risks of skyrocketing costs of raw materials like oil and iron, the resignation of a key partner (who also pinches all your potential customers along with it), and the emergence of new competitors in similar markets, all which should be addressed in your business plan, with solid answers on how to resolve these risks.
“The business plan should be candid about the end of the process. How will the investor ultimately get money from the business, assuming it succeeds, even marginally? Investors feel much better about risk if the end of the business it is analyzed in advance. ”, says Shalman.
Step 4: Developing the plan
You’ve identified the key factors, now roll up your sleeves and get into the deal structure. All successful business plans should have a summary of the essential elements for the proposed venture, being as specific as possible. So you ask, what should be on the agenda?
Your business plan should consist of:
1. Executive Summary
2. Risk idea and market analysis
3. Company description
4. Management and Operation Team
4. Marketing objectives
5. Trading strategies
6. Timelines and milestones
7. Risks and powers
8.Financial data
9. Required funds and their uses
10. Supporting documents
11. Exit Strategy
While it may seem like a lot of information to present, keep the plan short and simple by using bullet points with helpful illustrations and charts. According to Growthink, which provides career advisory services to startups, SMEs, and Fortune 2000 companies in the United States, 15-25 pages of text is the optimal length, and while some companies are too complex to describe in 15 – 25 pages, the business plan is not meant to tell the whole story but to create interest. In short, aim for quality rather than quantity.