One of the areas that we discussed in the past included some of the essential documents you need as a startup company to really gain traction with investors, no matter what kind they are. Right here, we'll be looking into one of them; specifically, that being the business plan and planning out your business plan format.
Business plans are effectively a biography of your company and serve as the most concise, yet quick overview of your business. If you write a business plan well, then it can spell out success in any investment meeting you get invited to. A bad one, on the other hand, and investors will close the door on you before they've read the summary.
For those that don't otherwise remember the other documents, you'll need to get your business started: do check out the article for a more thorough insight into this.
What makes a good business plan, exactly? For one, having an apparent, informative and concise structure is key to keeping hold of your potential investor's attention throughout. One thing you need is a solid structure to any plan you're going to put out there.
These are seven sections that you need to make sure you have in your business plan.
In this executive summary, you need to plainly and clearly lay out the overarching plan of your business. This isn't as simple as just saying 'we're going to sell X, Y or Z.' You need to summarise what your business is: when it will be available, and the kind of services it will provide.
You're looking to lay it out as clear and quick as you can; you have other segments in the whole plan that you can use to go into detail.
Now, this is where you can go into meticulous detail about your business. Your summary effectively tee's you up for this description, and the latter should consist of the following information about your business:
The fundamentals of your market research need to revolve around the following questions about your business and products:
Who are your customers? The more detail, the better. Including age, occupation, their average income, lifestyle, educational level.
What do these people buy now? This goes into their typical buying habits and how they relate to your specific product or business as a whole. This should include how much they buy, the supplier/product 'of choice,' including some of the most sought after features and typical price points.
Why do they buy? This is a harder question to ask than it appears. This is because you're effectively trying to dig into the mindset of your customers. And really, this sort of question merits an article of its own to really tap into.
To make it more straight forward, think about just WHY people buy particular products; what advantages they offer over others, and just how much of a figurative bang it gives for their buck.
Why should they buy from you? Now that you've figured out just why people buy certain products, you have to illustrate just why they should buy yours over it? Does it offer something better? Or a newer, simplified, or cheaper way of doing the same thing?
You've dug into just WHY people buy certain products from your erstwhile rivals in the industry. Now, this is where you showcase your specific brand and the kind of products or services that you can provide which really set you apart from all others.
As previously described, this could be that you provide the same solutions, only in a more streamlined or cost-effective way. Or, it could be that your product does something that no other has since provided.
Either way, make sure that this segment of your plan boldly displays that.
Much as the segment title suggests, you need to provide investors with the underlying structure of your company. Who makes up your senior management team? Who are the founders? What are these team members responsible for?
Demonstrate that you have a robust and hierarchical structure in place to demonstrate that your business is on that's built to last.
There needs to be an easy to follow, logic-driven marketing and sales strategy that you can readily show potential investors.
This segment is where you take your previous research and demonstrate just how you plan to capitalise on what you learnt from it. If you found a particular user behaviour that you, as a business, can specifically cater to you need to demonstrate just how you plan to do it.
Along with your longer-term strategy, you also need to show off the current financial projections from your business. This can be an excellent opportunity to demonstrate your previously mentioned strategy in action.
Current financials can also include Quarterly and annual projections, not only to show current liquidity but future profitability. Done right, and you can quickly get a VC taking into consideration just how that can obtain value from investing.