Having an excellent business plan may not guarantee successes and fruitful endeavours. But for budding entrepreneurs with innovative ideas, a good business plan can drastically increase the chances of success.
We’ve seen it before, shaking hopefuls stepping into the Dragons Den with dreams of hitting big and bagging an investment and a much needed Dragon based on what they perceive to be investable ideas. Only to then have it all come crashing down because they’re business plans are flawed or rife with errors and inaccuracies – it’s heart-breaking, but that’s just the way of the world in business.
A great business plan accomplishes three very important tasks. First, it aligns the management team towards a common set of goals. Then, once the business vision is on paper, it’s then imperative to take a long, hard look at the viability of the business. Peter Hale, MCIM founder of Teneric, a site dedicated to providing resources and advice to start-up businesses said “Think of a business plan as a test run to see if there are any major flaws in your business model before losing any money”. Finally, think of a business plan as a sales document; It aims to attract investors that may only have time for a quick glance – so encapsulating content is important.
Without further ado, here are some crucial elements that every business plan should include if it’s to be successful
Research is an often overlooked element of building a good business plan, that’s not to say that most don’t do it, it’s just they don’t do it enough.
Spend time researching and analysing your product or services, your market and your objective expertise. Consider spending at least twice to three times the amount of time researching, evaluating and thinking as you spend on actually writing the plan. To concoct a brilliant business plan, you’ve got to know your company, your offering, your competition and your market thoroughly.
In short, it’s fundamentally your responsibility to know everything you can about your product or service and the market you’re looking to operate in. Failure to do this can result in putting together a plan with clear pitfalls.
Figure out the purpose of the plan
Entrepreneur.com notes that a business plan is “a road map that provides directions so a business can plan its future and helps it to avoid bumps in the road” and this is very, very important to keep in mind – especially if you’re self-funded. However, if you’re objective is to seek investors through the plan, then it will invariably server a different purpose and your plan should be delivered in a way that will attract them – so it’ll need to be as concise as it possibly can be.
Document all aspects of your business
For an investor, making money is central to their thought process. Because of this, investors want to know everything about your business. To help them better understand your business, document everything including things like expenses, cash flow and relevant industry projections.
It’s also important to note that even if you think things are minor such as a location strategy or licencing agreement, these should be included also – be thorough.
Strategic marketing plans work miracles on investors
All good business plans normally include some form of strategic marketing plan – afterall, you could have the greatest idea in the world, but if no one knows about the product or service then it will inevitably fail.
Typically, these can include the following elements:
- Content marketing
- Relationships / contracts with third parties
- Cross-selling strategies / upselling
- How to raise prices without cutting into profits
- Boosting sales – where are the sales going to come from?
- What mediums of marketing are going to be most effective for your products or services?
- Market research to back marketing plan
Each marketing objective within a plan should realistically have a subset of objectives which branch out into various goals. An investor needs to know what plan of action you have in place that’s going to bring in the bread – and this has to be extremely thorough as making money is at the forefront of any investors mind.
Make sure your business plan suits different types of investors
Investors, like all of us, are different in that each will have a different element of your business plan that they’ll be most interested in. For investors with a background in banking or financial sectors, you need to ensure your figures are better than spot-on. If pitching to a marketing guru, make sure your marketing plan is impenetrable.
Having an adaptable business plan to suit the audience is a great way to ensure a positive response (if the idea is of course a good one!)
Why do you care?
Amongst other things, a few things that investors really like is seeing that you’re passionate and dedicated to your business – after-all, the mirroring theory says that if you truly believe in something enough, you can make it work.
Make sure you include why you want to start the business, what experience you have in the industry, why the business will work, problems that your product or service solves and very importantly, what sets you apart from the competition?
By utilising each one of these strands of DNA that makes a good business plan, you should find yourself in a position where investors find it hard to say no – and that, is the dream place to be.
Good luck in your endeavours!