Step 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 the market research to signal the green light that the idea is actually viable. Wait, don’t dive in just 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 company in Westchester, New York. How do you determine if your idea is one that will generate millions of revenue with one that collapses and burns? Potentially risking your business at the stoppage? 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 any holes that will need some 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 being able to squeeze the funds out of their conservative budgets. So before you set out to conquer your great business plan, start by discovering what has worked for others, and what hasn’t, of companies in your industry. While many plans fail because they are too long, poorly structured and packaged, loaded with spelling and grammatical errors, or even missing a call to action; some business plans simply fail due to outlandish and ridiculous reasons.
Step 3: key factors
Crafting a business plan is one matter, while leaving a lasting impression on yours (over thousands that eventually landed on the desks of bankers and investors) is another. The truth is that 95% of submitted business plans are generally eliminated 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 consider:
Who is on the team? What do they know Who do you know? How well do they know each other? 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 type of product or service of the new business. company; its production processes; and the market itself, from competitors. To consumers. “
Is the industry market large or small? Is it growing or decreasing? Will it continue to sustain itself as a market of opportunity 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 get a share of a growing market than it is to fight entrenched competitors for a share of a mature or stagnant market.” Make sure your business plan thoroughly describes the market position of your industry, one that is large, growing, and marked by opportunities. Explain how your business idea will satisfy an unmet need in the market; how it will be created and released to 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 defend yourself against competitors in the future.
We have macroeconomic levels, recessions, inflation or deflation, unemployment rates, stock market rates, interest rates and exchange rates that cover all the essential aspects of your business plan. Why? The answer is simple: they affect the success of your business. It is imperative to clearly describe in your plan how aware you are of the economic activity of the new business and, as such, how it helps or hinders your proposed business. Although it is necessary to include the first, it is also important to demonstrate that you know that the context of the company will inevitably change and therefore you will be able to explain what management can do in case the context changes and becomes unfavorable.
Risk and reward
In a highly competitive and rapidly changing market, every new business faces certain (or uncertain) risks. Risks can range from product liability to a company’s reputation and personnel. Also consider the risks of high raw material costs such as oil and iron, the resignation of a key partner (which also affects all of your potential customers along with it), and the emergence of new competitors in similar markets – all which should be raised in your business plan, with solid answers on how to resolve these risks.
“The business plan should speak frankly about the end of the process. How will the investor get the money from the business, assuming it is successful, even if only marginally? Investors feel much better about risk if the business is discussed in advance. business end. “Shalman explains.
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 an outline of the essential elements for the proposed business, be as specific as possible. So you ask, what should be put on the agenda?
Your business plan should consist of:
1. Executive Summary
2. Risk idea and market analysis
3. Description of the company
4. Management and operations team
4. Marketing objectives
5. Business strategies
6. Schedules and milestones
7. Risks and competences
8. Financial data
9. Necessary funds and their uses
10. Supporting documents
11. Exit strategy
Although it may seem like a lot of information to present, keep the plan short and simple by using bullet points with helpful illustrations and graphics. According to Growthink, which provides professional advisory services to startups, SMEs and Fortune 2000 companies in the United States, the optimal length is 15 to 25 pages of text, and while it is true that some companies are too complex to be described in 15 to 25 pages, the business plan is not intended to tell the whole story, but to generate interest. In short, aim for quality rather than quantity.