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, 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 willask 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.comanyone?) 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 awhile 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 justlike 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
Founded in 1999, Growthink is a leading business plan consulting firm and middle market investment bank. Our professional business plan writers and investment bankers have assisted more than 1,500 clients in launching and growing their businesses, and raising more than $1 billion in growth financing.
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