This video teaches you how to create an effective company analysis section that will educate investors about your company’s history, past accomplishments, and unique qualifications.

 

 

Watch the first installation of our new Business Plan Video series.

This video, "How to Write an Executive Summary," provides advice on how to create a compelling executive summary for your business plan.

 

 

• Watch More Business Plan Videos

• Visit Growthink's Business Plan Help Center

We are proud to announce the launch of the Growthink Business Plan Video section within our Business Plan Help Center.

These videos walk you through each section of the business plan, providing expert tips and advice on how to construct your business plan to better stimulate, engage, and impress your audience.

• Watch our new Business Plan Videos

• Visit the Business Plan Help Center

1. To prove that you’re serious about your business. A formal business plan is necessary to show all interested parties -- employees, investors, partners and yourself -- that you are committed to building the business.

2. To establish business milestones. The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you'd certainly share the news that you launched your new website or reached $1M in annual revenues.

3. To better understand your competition. Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company's competitive advantages.

4. To better understand your customer. Why do they buy when they buy? Why don’t they when they don't? An in-depth customer analysis is essential to an effective business plan and to a successful business.

5. To enunciate previously unstated assumptions. The process of actually writing the business plan helps to bring previously "hidden" assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity.

6. To assess the feasibility of your venture. How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture.

7. To document your revenue model. How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model.

8. To determine your financial needs. Does your business need to raise capital? How much? The business plan creation process helps you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital and for effectively employing the capital.

9. To attract investors. A formal business plan is the basis for financing proposals. The business plan answers investors' questions such as: Is there a need for this product/service? What are the financial projections? What is the company's exit strategy?

10. To reduce the risk of pursuing the wrong opportunity. The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities.

11. To force you to research and really know your market. What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace.

12. To attract employees and a management team. To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that the idea is sound and that the business is poised to achieve its strategic goals.

13. To plot your course and focus your efforts. The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones.

14. To attract partners. Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed explanation of your company.

15. To position your brand. Creating the business plan helps to define your company's role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners.

16. To judge the success of your business. A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).

17. To reposition your business to deal with changing conditions. For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new ideas and strategies.

18. To document your marketing plan. How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business.

19. To understand and forecast your company’s staffing needs. After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion.

20. To uncover new opportunities. Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business.

We're told that every successful business starts with a great idea. That's a half-truth. Our nine-year track record of transforming exceptional entrepreneurs into successful CEOs shows us that great companies start with great ideas — and a great business plan.

We've written more than 1,000 business plans for a diverse array of companies who have gone on to raise more than $1 billion. (Dakim is the most recent example). Our clients, early stage and middle market companies, just like yours, are engaged in every type of business, from building boutique hotels to wifi-hotspots.

The following five concepts, based on a recent Business Week Online interview with Growthink partner Dave Lavinsky, (see the interview here), are critical to building a successful business plan — and most importantly — a successful business:

1. Why You Need a Business Plan

A business plan is the marketing document telling the story of your company: its purpose, achievements and objectives. A business plan helps you obtain investment capital. Ideally, your business plan should be 15-25 pages long and it should include an executive summary of between 2-4 pages, depending on the complexity of the business and the purpose of the plan, which answers the two questions asked by every experienced investor::

• What are the key value propositions of your business to your targeted marketplace(s)?
• Why and how will an investor receive a return on their invested dollars?

Your business plan should also include an operating plan. In addition to other components, the operating plan contains milestones — the list of business objectives your company will achieve by a certain date.

2. Research, Research, Research

Entrepreneurs of the world: do your homework. Investors reading your business plan want to see that you've thought long and hard about the potential promise — and pitfalls — of starting or expanding your company. Your dutiful due diligence must supply answers to these questions potential investors are asking themselves — and will ask you:

• Who are your competitors?
• Who are your customers?
• What companies have succeeded or failed in your sector?
• Why fund your company now, rather than a year from now? Or a year ago?

Here's the blunt bottom line: If your business plan doesn't include research that helps you present a clear, compelling case to potential investors, why should anyone trust you with their money?

3. Investor Insight: Experience Over Speed

Ah, the days of 1999, when we believed that First Mover Advantage, like Venture Incubators, was the key to success. Well, we've been burned and we've learned that, for a range of ventures, from e-tailing (Boo.com anyone?) to streaming networks (Quokka.com, RIP), that being first doesn't mean finishing first among your competitors.

Many investors now want to see a track record — for example, a history of revenue and customers. Have you been running your business for a while or is it still just a great idea, looking for capital? This change in investor strategy makes for longer funding cycles: that period between presenting your business plan to potential investors and receiving an initial round of funding. Longer funding cycles are frustrating for emerging stage business owners who need investment capital sooner, rather than later.

4. Seek Specialist Funding

Does your company generate annual revenues over $1 million dollars? Are you an early stage company or a pre-revenue concern that owns its intellectual property? Well, there are investors seeking to fund companies just like yours. Growthink's capital partners represent a wide range of investment mandates. Thousands of companies have come to Growthink for the capital and counsel critical to their success.

5. Get Great Advisors — And Listen To Them

Your business plan should include the creation of an advisory board. The advisory board is a group of external experts who are not involved with the day to day business operations. A good advisory board helps keep your team on track towards achieving the milestones contained in your operating plan and alerts you to the changes and opportunities occurring in your target market.

6. Have Questions? We Have The Answers

Our business planning experts are ready to help you create an exceptional business plan which transforms your world class idea into a world class company. Contact us.

Growthink Co-founder David Lavinsky was interviewed on BusinessWeekTV recently regarding his core understandings of strategic business plan development gleaned from nine years of working with hundreds of entrepreneurs.

Entitled "What the Business Plan Expert Knows," key takeaways from the interview include:

• Changes in the Nature and Expectations for Business Plans over the Years. Because of the nature of technology and the "flat world," investors today are less interested in first mover advantage as a key value driver and more interested in the track record/experiences of management and the initial execution/market traction of the business.


• The Importance of Writing the Business Plan Right Away. The biggest cost in any business is the opportunity cost - or the cost of pursuing the wrong opportunity. The best way to minimize this cost is to undertake a formal business plan development process at the start of any new business or any new growth initiative for an existing business. This is especially true for the market research and feasibility study components of a business plan: the analysis of the industry, competitors, and customers that is the core of sizing and scoping the prospective market opportunity.


• The Difference Between an Investor-Focused Business Plan and an Operational Plan. An investor-focused business plan is, at heart, a marketing document. It must contain all of the elements of an operationally-focused business plan, but needs be developed and presented in such a way as to have a clear call to action to invest. It must have a compelling, flowing narrative. An operations-focused plan, which Dave believes should be created on an annual basis (and reviewed consistently), should primarily be focused on key milestones - such as number of visitors to the Website, headcount, customer attrition rates, etc.


• The Rise of the Niche Investor. More than ever, investors have grouped themselves into various niches - software as a service (SaaS), healthcare, renewable energy, franchising, etc. It is important to draft the business plan in congruence with these niche orientations.

 

The full interview can be seen on BusinessWeekTV here.

It's an easy trap to think of market research as a data point collections process when in actuality, it's a creative undertaking where synthesis, strategies, and ideas are paramount.