By Andrew Apfelberg, Guest Expert
Once you’ve sufficiently protected your company’s assets and hired a few key people to help you, it’s time to focus on writing your business plan.
My biggest piece of advice is not to rush into the writing of the plan. Many people start typing before they’ve finished thinking. They wind up with a convoluted plan that requires major revisions.
This is the stage when you should rally all the people you’ve hired to work on the business plan, along with your board members and advisors – and brainstorm.
In the brainstorming session, be sure to cover:
- What they think your company does.
- How it does what they think the company does – now and in the future.
- What the company needs in terms of money, people, technology, alliances and so on to grow.
- How much it will cost to get these things onto a timeline – and when – is critical to satisfy these needs.
- Your company’s strengths and weaknesses, specifically, how the company can make money and when.
- What market your company’s in, and how it stacks up against competitors.
- What size and kind of business they envision your company becoming.
- What the compelling element of your company is for an investor, and how you can convey that to potential investors.
I think you’ll find every person in the room will have a different take on these items. By discussing and debating them with the people who know your company best, you’ll get a better picture of your business and its business model – as it is now, and which changes, if any, would attract investors.
Will It Fly?
Once you’ve collected these ideas, bounce them off your attorney, accountant and/or other business advisors for their opinions.
Then the real test: Explain your business plan to your kid or to your grandparents. If they have an inkling of the value of your proposition, you might be on to something.
Remember: For people to invest in your company, they need to believe in your business model and your management team, not just in your concept or product. By business model, I mean realistic and sizable revenue streams, sustainable proprietary advantage, well-conceived growth strategy, and a financial backbone to your assumptions.
Other key concerns are whether the management team has the right stuff to execute the plan and whether the greater market will embrace it. All investors really care about at the end of the day is revenue streams – how many, how quickly, how long they’re sustainable and whether they grow.
When you’re ready to write, do yourself a favor and write an outline first. A business plan is no different from the essays we all wrote in high school. Address:
- What the company is; what it does; where it’s headed.
- How the business works and what revenues it produces.
- How your company compares to its competition.
- What market your company would enter.
- Why your company’s management and board profiles are great assets.
- How much money is needed to execute the plan.
- What people get for their investment.
- Why they should invest.
Here’s another approach. Identify a problem and explain how your company solves that problem and makes money doing it.
Finally, write in plain English. You need to assume your readers know nothing. You want to ensure they won’t get lost in your prose.
Your reader might receive up to five or 10 business plans a day, so make your plan easy to understand. If a child or a grandparent can understand it, it will probably work.?