Tuesday, 12 July 2022

[Part 3] How to write a compelling business plan

Our guide will help you write a business plan investors will be ripping out of your hands.

Hey

In Part 2 we looked at ways to come up with a successful business idea and now that you've got your idea, the next step involves some careful planning.

Every successful business started with a single idea, even if it was an incomprehensible scribble on the back of a napkin but a short written summary is not sufficient guidance to launch a business; it certainly can't be used to convince investors to fund your project.

Can you imagine turning up to an investor meeting and just handing them a napkin?

A formal plan needs to be put in place to outline its strategic unravelling.

You need a comprehensive and research backed document that accomplishes two things:

Proves that your business idea is a highly profitable one
Demonstrates that you and your team are capable of building the idea into a successful business

In this email we'll walk you through the process of creating a highly potent business plan that will convince anyone to support you and your venture.

The structure of a business plan
There's no objective business plan structure you need to adhere to; your end goal is to simply convince anyone reading it to give your venture serious consideration.

The following, however, is a suggested structure that will give your business plan a logical flow.

Value proposition
Market opportunity
Target market
Competitor analysis
Funding required
Sales and marketing
Financial projections?
Milestones
Your team

Don't let this dense list scare you, writing a business plan is actually a simple and rational process.

To help make this task much more palatable, we've come up with the following revised definition of a business plan:

"A business plan is an illustration of how you plan to make money and the reasons why you will succeed."

That's it, really. Think of all the components of your business plan as puzzle pieces fitting together to form this picture.

Customer persona

Your value proposition
You set the scene of your business plan by opening with your value proposition.

Think of it as your elevator pitch: a concise summary of your business offering.

The secret to crafting an effective value proposition is to be crystal clear and straight to the point about what your business does without using jargon or pointless buzzwords.

Customer persona
Some business plans include a customer persona chapter while others choose to reflect these details in the "target market" chapter. A customer persona profile maps out all of the different characteristics of your ideal customer.

Things like:

Age
Place of residency
Gross income
Number of dependants
Types of pets

Market research
Your business plan will be immediately rejected if you don't provide statistical proof of a sizeable demand for your solution. Proof of a market opportunity means that your business has a high chance of succeeding.

A comprehensive market research report is comprised of the following essential components:

Market definition
Who are your potential customers?
Geographic locations
Customer profiles
Market niche
Market opportunity size
Estimated number of potential customers
Percentage of market you will be focusing on
Is your market likely to grow?
Consumer segmentation

Consumer segmentation identifies market opportunities and also helps refine your market identify.

Competitor analysis
Competitor analysis should be something you perform as early as possible, to help you decide whether your venture is even worth pursuing. You may find that the competitor field is much too fierce and the bar for your solution set much too high.

Marketing and Sales
In your business plan you need to outline how you plan to notify prospective customers about your solution. An effective marketing plan will keep the customers rolling in and your sales numbers nice and plump.

Your funding section
No business idea is possible without money. Some ideas require more money than others, but how do you figure out how much you need and, most importantly, how do you get that money?

Let's start by giving an overview of fund raising.

Startup funding sources
Your business plan should also include a detailed description of your financial projections, as well as how you plan to source your funding. Stay tuned for future emails detailing the funding process.

Your startup growth milestones
The milestones section of your business plan demonstrates how you propose to make the best use of your time when establishing your business. Milestones also make the strenuous task of establishing a business much simpler by breaking it up into smaller achievable goals.

Your progress can then be readily tracked by noting how much of each milestone was completed.

Your team
The experience and skills possessed by your team members are sometimes the most important factors affecting your business funding. If the people executing the plan lack the necessary skills, no one will support you.

The construction of the team component of your business plan is your opportunity to demonstrate that every member of your team is equipped with the necessary skills to get the job done.

Conclusion
Your business plan is the handbook of your prospective business. If you follow the guidelines in this email your business plan will demonstrate your readiness to launch your business idea.

In Part 4, we move from business plan to finance, examining the most popular ways new businesses receive funding to start and run their business.