12 Tips for a SUCCESSFUL Business Plan
1. Know Your Business.
While a written business plan can serve as a
valuable tool if you are seeking business funding, the actual
process of drafting your business plan will force you to consider
many issues critical to your company's future success. Furthermore,
savvy investors often skim through written Business Plans; thus, it
will be YOUR responsibility to personally address your potential
investor's concerns regarding your industry, your company, and your
Strong business planning software will actually
walk you through the planning and development process, step-by-step,
breaking each element down into manageable segments. During the
process, you should also gain an understanding of what issues you
should consider and why each is important to your plan.
This step-by-step process will also lead to the
development of basic information necessary for the creation of
financial projections related to balance sheets, profit & loss
statements, and cash flow statements.
Thus, if you intend on using software for the
creation of your business plan, it is critical that the package you
select allows you to customize the plan to your specific needs.
Quick NOTE: The Executive Summary
The "Executive Summary" is the first section (and
often the last) that will be reviewed by your potential investors.
Regardless of how you decide to draft your plan, your "Executive
Summary" should always contain the following sections:
- The primary
objectives of your company.
- Your key
- The market
you address, its needs, how those needs are currently met, and
how you address its shortcomings.
- A detailed
description of your product or service, including how it
addresses customer needs and desires.
projections for five years, profit point, break-even point, and
ROI for investors.
2. Be Flexible & Willing to Change.
As you begin to implement the business plan the
real world may not embrace your business model. Determine what works
and what doesnít work. Be ready and willing to alter your business
plan accordingly. Often, you may even discover a greater market
potential that may require you to re-think your entire plan.
3. Consider Alternatives to Product Distribution.
Failing to understand how your product should be
distributed is a sure way to turn away investors. Do your homework
on the various distribution channels. Know their expectations and
working models. Find the channel that works with your pricing model
and facilitates your growth requirements. If possible, develop
partners with brand names that can provide credibility and growth
4. Be Flexible with Investors on Issues of
Donít focus on retaining control of your company;
focus on what makes the company profitable. Investors need to see
that you are willing to assume some level of risk and are not intent
on hoarding stock. Great businesses have been built by entrepreneurs
that understood their limitations and hired executives who knew more
than they did. Focusing on profits creates capital opportunities.
Focusing on control creates potential barriers to investors.
5. Develop a Strong Management Team.
A business plan is only as good as the people
responsible for making the business succeed. Identify who will run
the business, their achievements, and their ability to make the
business a success. Obtain commitments from qualified personnel for
operations, financial management, development, marketing and sales.
If not yet identified, make note of those key
positions for which you must identify and recruit the appropriate
individuals with the requisite education and experience.
Donít hide your weaknesses or shortcomings.
Identify them and disclose your plan for overcoming problems and
6. Give Customers a Reason to Buy from You.
There must be a need and desire for your product.
No longer will a clever idea, by itself, bring in the money. You
need customers willing to test your product. Paying customers
validate your pricing strategy.
7. Provide Reasonable & Conservative Projections.
Revenue projections that increase by the same
percent each year raise red flags for savvy investors. You should
anticipate various increase levels as your business progresses
through different stages of growth. Your engineering, sales and
marketing expenses will also change with these growth stages.
Research your industry to determine expected ratios for expenses and
revenues per employee. Investors will take you seriously when they
see that you have a clear understanding of the financial
8. Give Investors Alternative Exit Strategies.
Understand what motivates an investor, their
expectations, their desired exit strategies. Moreover, gain an
understanding of your potential investor's minimum acceptable return
on investment (ROI). The investor has many alternative investment
opportunities. If the investor is going to take a risk on your
concept he or she must "BELIEVE" in your plan. Demonstrate your
potential for profitability with detailed descriptions of the
market, your personnel and your product concept.
9. Donít Ignore the Competition.
Customers always have a choice. They can either
choose to do things the way they have always done them, find
alternative solutions, or purchase your product. Identify your
competitors, their strengths and weaknesses, and discuss emerging
technologies. Without this information, your business will not be
able to effectively respond to your competition.
10. Accurately & Honestly Define Your Market.
Research your market. Investors can easily discern
between substantive and superficial data. Define and locate your
market niche then determine its TAM (Total Available Market) and SAM
(Served Available Market). Through the use of surveys (primary data)
and secondary data you can calculate the approximate percentage of
the SAM your company can penetrate, and how much to increase the
SAM. Stating that you will capture the entire TAM is a clear
indicator you donít understand the market and that you have
unrealistic expectations for your potential in that market.
11. Identify the Methods & Costs of Getting Your
Message to the Marketplace.
Investors want to know what methods will be
employed to gain customer attention, customer acquisition costs,
average and target per-customer revenues, customer breakeven
milestones and product life cycles. They also want to see your
future plans for retaining existing customers. In most every
business sector the returning customer represents the most reliable
source of near and long-term revenues and profits.
12. Select a Business Structure and Protect Your
If you are seeking venture capital or equity
business funding, most investors require that you maintain a form of
personal assets are protected from business creditors.
- Shares of
ownership are easily transferable.
actions require certain formalities and/or approval by the
property is protected from Law suites and under-insured
assets including all equipment is protected from Governmental
agencies, Tax collection agencies and employees.
You can protect your personal
assets and your business structures with our proven strategies.
Donít wait until itís too late for us to help you. Waiting until an
law suite is filled or an employee or taxing agencies services
notices can cause you and your company to lose all assets.