Creating a business plan is a useful process for a new company and for its founders or directors. The act of mapping out with real clarity exactly what your aims are has a value in itself but often the ultimate aim is to raise finance for the company in question.
Here are some tips to help ensure that any business plan you create has what it takes to not just make for interesting reading but to actually succeed in getting the financial backing you’re after.
Consider your customers
A business plan is the right place for optimism and for a sense of ambition but it always has to be backed up by as much detailed research and real information as possible. Key issues for potential investors in your business are always likely to centre around your customers and simple questions such as – ‘Who are they?’ ‘Will they be interested in your products or services?’ ‘What can you offer them that’s new?’
Demonstrating the viability of your business ideas is much more easily said than done. Or, to put it another way, it is much easier to sketch out your ambitions in the context of a business plan than it is to illustrate their potential in the real world. But a sense of real-world demand can make all the difference in the minds of potential financers of your business.
Focus on the business not the plan
A business plan is a tool and a means to an end. During the process of putting your business plan together it is important not to lose sight of what really matters, which is that your operation develops and succeeds in attracting interest, customers and revenues. A well-crafted and eloquently created plan can help sell your ideas but the business is what really matters to potential investors.
Explain your market
A strong business plan should include information that helps contextualise the nature of the company you’re trying to create. This part of a plan requires good communication skills and an ability to demonstrate that you know the market you intend to operate in extremely well and that you can use that knowledge to good effect.
Identify key competitors
If you believe that your company does not have any competitors then it is likely you will have to revisit that opinion very soon. Every business has competition of one form or another, even if you don’t consider that your rivals bear any real relation to the company you’re aiming to be.
It is better to err towards providing too much information on your competitors in a business plan rather than omitting details that potential investors can quite easily find out for themselves elsewhere.
Detail some downside risks
Every company faces some measure of downside risk and it is better to be upfront about the challenges you might face in your business plan rather than to ignore them and hope nobody ever finds out. The reality is that anyone in a position to decide on whether or not to finance your plans will be well versed in the process of identifying potential weaknesses in fledgling organisations. So trying to pretend there are no downside risks can easily backfire and give an impression of naivety or overconfidence, neither of which help your chances of securing the funding you want.
Understand your audience
Your business plan should have a different emphasis depending on who you intend to put it in front of. A bank or a traditional lender of any kind will generally want to know where your revenues are coming from and how reliable they can be considered to be. By contrast, investors in equity stakes in your business are likely to be more concerned with the size of the market in which you intend to operate and what potential for growth there is at your business within a given timeframe. It is important that your plan reflects this distinction to give it a better chance of appealing to its audience.
This article was syndicated from Business 2 Community: How to Create a Business Plan Worth Backing
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