Obtaining operating funds is crucial to the success of any business and the main reason that businesses fail is improper funding. And while many new entrepreneurs want to just “jump right in”, a solid business plan is critical to attracting investors and setting a roadmap for your business.
Your business plan needs to accomplish several things:
- It sets up a mission for your company.
- It stands as a roadmap for you and your employees.
- You are bound to run into business challenges. As you do, you can return to your business plan and see if you are still on target.
Related: Free Business Plan Template
You should put thought into your business plan since it is easy to get bogged down in the daily tasks of running your business. Failing to draft a business plan is like deciding to take a family vacation and just getting in the car. You don’t know where you are going or what you will need to get there.
So with that in mind, here are a few tips that will help you craft a great business plan:
1. Start With A Great Summary
The summary of your solid business plan needs to attract people. This is like your 30 second sales description. This should consist of one to two pages. A great summary will draw in anyone reading your solid business plan. You want to show them the value that your company offers. You want to prove that your company can make money and how you plan to attract customers.
2. Establish Your Marketing Strategy
One major question any investor wants to know is: “Are there enough people needing your product or service?” After all, you need to have a product that people are looking for. This is your chance to prove how many people are looking for your product. This should include potential demographics, number of potential customers, and how you are going to reach them.
3. Tell About Your Competition
Winning a war begins with knowing your enemy. Yes, this is taught in the Art of War but it holds true for any business. You are beginning a war. Investors want to know that you are aware of the competition. List your major competitors. Describe the products that they sell. This analysis also can show you potential add-ons for your own products.
4. Illustrate Your Experience
Investors want to know why you can make your business work. There are many people with great ideas but they never get off the ground. This has little to do with the quality of the idea but more with the ability of the person to execute their idea. You need to prove why you have the experience and knowledge to make your business work. Include resumes and accomplishments of anyone that will be working with you.
5. Show How Much You Can Make
You have built a solid business plan so far. Now, you need to prove that your business stands to make money. Don’t confuse profits with cash. Many companies that go under are actually profitable. But, they get bogged down with accounts receivable that they can’t collect. Prove how you will keep actual cash coming in. How will you deal with customers that owe you money? Include profit-and-loss statement, past budgets, and past cash flow statements.
6. Be Able to Prove What You Say
Anyone can build a solid business plan that sounds great. But, you need to be able to prove what you say. Investors will be leery of any “pie in the sky” business plan that promises to build a million dollar company in a couple years. Make sure that you can prove what you say. Be able to show references for anything in your solid business plan.
Your business plan is crucial to your success. Taking the steps that we have listed will walk you through each step of how to write a solid business plan. Make sure that you have a great summary. Show that there is a potential market. Prove the experience that you bring to the table. Make sure to be able to backup anything you say with proof. These will give you a solid business plan that will attract investors.