How to Structure a Business Plan
So you've got a great idea, but you don't have the capital to put it into motion.
What do you do to attract funding? You have to have a good business plan.
The first step to putting together a solid business plan is knowing what the majority of potential backers are looking for.
Here are a few tips, on that front.
Many of the larger investors hold true to a specific set of principles whenever they approach a potential new investment.
In adhering to these principles, their conclusions are more likely to be soundly based on fundamentals and facts rather than emotion.
This is what the big boys are looking for: 1.
Referrals They like to be referred by people with a track record of success, as it helps them to eliminate doubt between parties involved in the project.
By being referred, the bulk of the pre-qualification needed is largely negated and there is greater clarity as to how the venture is to proceed from the outset.
2.
New Markets Most large backers want to put there money into companies that have entered new markets and are at the early stages of development.
If the market shows sustainability and growth potential, then experienced backers will consider providing funds to help a company.
They are continually looking for opportunities in specialist areas as they can offer some of the strongest returns on investment.
Also, proposals within the oil & gas exploration, agriculture, alternative fuel, technology and life science sectors are particularly favored, of late, due to their strong potential for future growth, well into the 21st century.
3.
A Clear Idea A company's vision or idea should be clear.
A product or service should be easily explainable, demonstrating why they have an advantage over the competition.
This helps potential investors decide how digestible the idea is, as almost all potential backers are looking for ideas that are both concise and without confusion.
The reason larger investors looks for a clear idea is that, ultimately, you need to communicate with customers, marketing teams and sales forces etc.
If the idea is complex, then you run the risk of being unable to communicate your product, hampering its chance of success.
Well, now you know what your backers or looking for.
Given this knowledge, what elements do you need in the business plan that you're going to present to them? We'll take a look at that, now.
How to Structure Your Business Plan A good business plan will contain: a.
An initial executive summary, summarizing the detail of the business proposal b.
A written overview of the business' aims c.
It's product and/or service d.
Management team (this is an area that a lot of entrepreneurs overlook.
Make sure your backers know who they're going to be putting their trust into).
e.
Financial forecasts and appendices, such as the resumes of key management members, market research data and/or technical product information.
The body of your business plan should cover several areas in detail.
Articulate your outlook for the company in the years going forward.
Identify goals, pragmatic market penetration estimates and anticipated speed of growth.
Summarize the business and its function, at the same time highlighting aspects that distinguish it from its competitors.
Discuss marketing strategy; include details on pricing for the product/service, advertising etc.
Provide details of key personnel and relevancy as to the location of the business, any plant machinery or specific equipment as well as the projected number of employees necessary to put your plan into action.
Referring to your financial forecasts, state the sum of investment you will need from the funding source.
(Arguably, one of the most important steps.
Don't let them leave into you've explained exactly how much funding is necessary).
Identify and provide details of any financial commitment available from the founder's or management team.
(Another very important step).
Sales forecasts, cash flow estimates and a projected P&L account for up to five years should be included.
More substantial concerns should prepare a balance sheet projection.
Your figures should be pragmatic and free of hyperbole.
Enlisting a qualified accountant at this step is highly recommended.
Now that you've identified what the serious potential investors are looking for, and prepared a business plan that addresses their concerns, it's time to get out there and put your plan into action.
There's never a bad time to get a great idea, product or service into the commerce stream.
What do you do to attract funding? You have to have a good business plan.
The first step to putting together a solid business plan is knowing what the majority of potential backers are looking for.
Here are a few tips, on that front.
Many of the larger investors hold true to a specific set of principles whenever they approach a potential new investment.
In adhering to these principles, their conclusions are more likely to be soundly based on fundamentals and facts rather than emotion.
This is what the big boys are looking for: 1.
Referrals They like to be referred by people with a track record of success, as it helps them to eliminate doubt between parties involved in the project.
By being referred, the bulk of the pre-qualification needed is largely negated and there is greater clarity as to how the venture is to proceed from the outset.
2.
New Markets Most large backers want to put there money into companies that have entered new markets and are at the early stages of development.
If the market shows sustainability and growth potential, then experienced backers will consider providing funds to help a company.
They are continually looking for opportunities in specialist areas as they can offer some of the strongest returns on investment.
Also, proposals within the oil & gas exploration, agriculture, alternative fuel, technology and life science sectors are particularly favored, of late, due to their strong potential for future growth, well into the 21st century.
3.
A Clear Idea A company's vision or idea should be clear.
A product or service should be easily explainable, demonstrating why they have an advantage over the competition.
This helps potential investors decide how digestible the idea is, as almost all potential backers are looking for ideas that are both concise and without confusion.
The reason larger investors looks for a clear idea is that, ultimately, you need to communicate with customers, marketing teams and sales forces etc.
If the idea is complex, then you run the risk of being unable to communicate your product, hampering its chance of success.
Well, now you know what your backers or looking for.
Given this knowledge, what elements do you need in the business plan that you're going to present to them? We'll take a look at that, now.
How to Structure Your Business Plan A good business plan will contain: a.
An initial executive summary, summarizing the detail of the business proposal b.
A written overview of the business' aims c.
It's product and/or service d.
Management team (this is an area that a lot of entrepreneurs overlook.
Make sure your backers know who they're going to be putting their trust into).
e.
Financial forecasts and appendices, such as the resumes of key management members, market research data and/or technical product information.
The body of your business plan should cover several areas in detail.
Articulate your outlook for the company in the years going forward.
Identify goals, pragmatic market penetration estimates and anticipated speed of growth.
Summarize the business and its function, at the same time highlighting aspects that distinguish it from its competitors.
Discuss marketing strategy; include details on pricing for the product/service, advertising etc.
Provide details of key personnel and relevancy as to the location of the business, any plant machinery or specific equipment as well as the projected number of employees necessary to put your plan into action.
Referring to your financial forecasts, state the sum of investment you will need from the funding source.
(Arguably, one of the most important steps.
Don't let them leave into you've explained exactly how much funding is necessary).
Identify and provide details of any financial commitment available from the founder's or management team.
(Another very important step).
Sales forecasts, cash flow estimates and a projected P&L account for up to five years should be included.
More substantial concerns should prepare a balance sheet projection.
Your figures should be pragmatic and free of hyperbole.
Enlisting a qualified accountant at this step is highly recommended.
Now that you've identified what the serious potential investors are looking for, and prepared a business plan that addresses their concerns, it's time to get out there and put your plan into action.
There's never a bad time to get a great idea, product or service into the commerce stream.
