These five tips will guide you to a stronger business plan that is more likely to be funded by investors or lenders.
Research Before Writing
Before putting pen to paper on the business plan itself, there is a significant amount of research needed. The research into the opportunity may uncover challenges you will have to face, in which case your plan must address those. You may find opportunities for additional customer segments you were unaware of. You may also find that the challenges will be very difficult to overcome and your idea must be drastically altered or discarded. Now is the time to make that decision, before you have poured weeks and weeks into a business plan.
Clear Market Opportunity
Showing a clear market opportunity in your plan requires both a description of customers who need your product or service and competitors against whom you can build a competitive advantage. You must prove the size of the market is large enough to sustain growth, even if new competitors arise. You must show that your strengths will take advantage of the weaknesses of your competitors, allowing you to compete on qualities beyond price whenever possible.
Filling Logical Holes
The business plan is a logical argument, showing an opportunity, the resources you have or will have to take advantage of that opportunity (management team, intellectual property, cash, location, etc), the methods you will use to do so (your marketing and operations plans), and the results you expect to see (your financials and growth) which funders can take part in. Each of these four pieces must be tailored for each other other, and holes in the logic must be filled and not ignored. For example, the results or rewards must be appropriate for the inherent risk you face in taking on the opportunity.
Explaining Financial Assumptions
Financial assumptions which drive the revenues and costs of your financial plan must be explained at some point in a good business plan. What these assumptions are and their validity should not be left up to the imagination of the reader, as he or she will likely imagine that unexplained assumptions are based on nothing but the entrepreneur’s extreme optimism.
Standard Format and Structure
The format and structure of the business plan must be professional, clean, and close to the standards used by business plan writers. This means referring to direction on the proper business plan format and outline and not using creativity in these areas. Creativity can certainly enter into the marketing and operations sections, but the plan should not have a distracting format or structure.
You can keep reading our help articles to learn even more about how to format a business plan.
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