Seriously, if you think you only need a business plan to go fishing for funding your business, you are going to make some mistakes.
A business plan is actually a sea chart for any company, in other words, it sets direction, defines short- and long-term objectives, facilitates communication and controls performance indexes. You should rethink that well-planned business plans force business owners to constantly review and adjust their operations.
As a rule of thumb, an investor-grade business plan usually takes about 20 pages long. The plans are frequently written straightforwardly in deep knowledge of an industry as well as the money-making opportunities, supported by strong economic data. Frankly, I can’t do that work for you here, but to highlight the 9 core components that matter most.
Primarily, your business plan must start with an explanation of the current problems which your plan has discovered and intends to solve. The description of the company and product is just secondary. Lay your plan out in terms moms and housewives could understand. TRAP: Avoid fantasy remarks like “every customer needs this” etc., you don’t need to make a product for everybody.
Your Solution (or Product)
This is not a place for you to talk about your product specification and detail. But, you should explain how and why the solution (or product) works in order to solve the problem. TRAP: You should skip the technical jargon. This is neither a product brochure nor catalogue.
This section is all about your research which captures the progression of the overall industry, market segmentation, market dynamics and trends. Relevant economic data such as charts and graphs with figures from accredited sources is a must. TRAP: Online data from your desktop research is fine for many investors, as long as the data is accredited backed by source link with date of access.
This section describes all of your competitors, including the direct and indirect competitors. Your business competitive edge should be able to compete with all current players, while setting barriers to entry which will keep new competitors at bay. TRAP: If you are selling motorbike, its substitutions like cars and trains should not be overlooked.
Strategic Marketing and Sales
Here is the summary how your solution (or product) will go to market, including the making of your product (or service), your business model, pricing and distribution channels. This is also a good place to map out your product costing and budgeting. TRAP: The cost of a product varies, whether should you include the commission payable (to your sales reps, agents, members), advertising investment etc. is very subjective.
Investors will ultimately bet on people … likely, neither your products nor ideas. So, your business plan should be able to convince investors that your team has credentials, and demonstrates deep knowledge and technical know-how to run the show. TRAP: Simply relying on an individual for a smooth business running is ill-advised. The team, is the whole idea.
You should explain how you arrived at the amount of capital you are asking for, for instance, a million Ringgit to start a F&B business, then you should detail in-depth how you plan to use that money, in short-, mid- and long-term basis. TRAP: Do not simply shout a figure which you may not use in near term, and treat the additional fund as reserve. Requesting additional fund is worst.
A 3-year projection is required, not necessarily 5 years. Your projections should include break even analysis (in quantity and monetary), revenue, expenses, and project them on a monthly basis for first year, and annual basis for the next two. Do remember to clearly justify your every single assumption, backed by clear explanation. TRAP: Plenty of entrepreneurs are simply too optimistic of their projections.
This section is crucial when attracting an investment as investors eager to know when and how they will harvest the returns, and what types of returns they can expect such buy-back option, initial public offerings (one of the best exit choices for many investors) etc. TRAP: Plenty of entrepreneurs have built companies only with an eye to sell them.