The usual run of the mill business plan…… That 100 page document that entrepreneurs hand out at startup funding meetings with potential investors is like using an old school pay phone with a BT phone card (anyone remember these!)
Todays, entrepreneurs are expected to produce their business plans in a well designed power point presentation.
Whilst the format of a business plan has evolved, the content has not, the same questions that needed answering in the time before silicon valley are still just as important. If you’re out looking to raise funding for your company, you still need to address the key issues of financial goals, your team, your market size and the long-term vision of your company. With banks unwilling to lend you money and credit providers charging you unbelievable interest rates, convincing potential investors to part with their money is a very important factor in how you prepare and present your business plan…. wether this be through angel investors, crowd funding or government grants.
Here are some of the key business plan questions you should ask yourself before you start preparing your Power Point slides.
1. How can I prove my idea fills a niche within the market?
Entrepreneurs are under pressure to prove the strength of their idea and how it fits within a potentially already saturated market. Try test marketing your product on a restrictive scale so you can forecast future sales in a more informed way.
2. How will I target customers and how will I retain them?
This is a tricky one, the best way forward here is to ensure your market research on your competition is water tight. Analyse your competitors marketing activities and their annual financial reports and be as detailed as possible.
3. What differentiates you from your competition?
If you are in direct competition with several competitors use the detailed analyse you researched for question 2 to find holes in your competitors marketing strategy and how you can position yourself differently within the market. If your market has no direct competition then you will need to explain why and why you are going after that market.
4. Financial forecasts?
The biggest mistake when planning your business plan is the underestimation of the overall market size and how your key strategies, decisions will need be made to capture this market.
5. How to visually depict key elements?
A major challenge in a modern business plans is the inclusion of graphics to depict words visually by using infographics, illustrations, charts and pictures. Some parts of your business plan can be delivered in a more succinct way when done correctly through visualisation. Sections such as forecasts and product description pages are perfect for graphics. We would recommend hiring a designer (unless you are very handy at Photoshop) through one of the freelancer websites such as People Per Hour to ensure your business plan is not let down by the quality of your imagery.
6. Should I get a few ambassadors/key advisors on-board?
Every start-up should look at getting the right startup business mentors on-board at the very start. Wether you want to keep all the equity of your potential start-up you will find it a lot smoother process if you have people within the business who “have been there and done it”. These individuals should be included in your business plan to offer weight to your idea, the right names can make a huge difference when approaching potential investors.
7. How and where will you be spending the investment you are seeking?
Potential investors will want you to drill down with your numbers to ensure their money will not be wasted with non mandatory expenditure. When formulating how you will spend their money, think about the strategy and how you can minimise the rate you burn your cash.
8. Does your current team bring anything to the table?
A lot of mistakes start-ups make when looking for funds is over emphasising on having the right team in place prior to knocking on investors doors. Why would you need a Sales Director now if you are not at the stage where you have a sales team? Taking a conservative approach to how you plan the growth of your team will show the investors a shrewd organic approach to building a successful business.
9. How are your Investors going to exit your business in the near future?
The investors you will be approaching are going to be asking the question “how do I get a return on investment”? Your business plan should clearly communicate your plan over the next two to three years and how at that time the backers can exit. You can use competitors to base an informed assumption on how they can make a good return. Things to think about are the trading of shares, taking the company public or a full acquisition.
10. How long do you want to be in the company, when will you want to exit?
Don’t be too worried about being transparent of your personal exit strategy. Informing the investors in your plan of your wish to exit the business will show that you are thinking about how “you” will get a good return on your personal investment. If you are looking at a long haul approach then a great way to cover this is the development of internal staff to succeed you one day.
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