Last month I got a chance to go through about 25 business plans. All plans were in the idea stage and were written by college students. I am no expert in wrinting bplans, but felt, with basic knowledge on how to run a company and common sense, the bplans could have been improved many folds.
For a Business plan to be successful in real world, there are a few areas that you need to concentrate on irrespective of the sector of operation. In a bplan competition you will judged on the very same criteria. I will be talking on these few key areas in this post.
Say, you go to a investor asking him to invest in your company. What are the things he will see before investing in your company?
He would evaluate:
- your knowledge of the market and competition
- demand and need for a product such as yours in the market
- how you distinguish yourself from competitors
- strength of the core team
- how feasible your plan is
- how much investment is needed
- what is the ROI(return on investment)
- how much time will it take to break even.
Hence, you need to focus on the areas which will answer the above questions. Below are few key area that are a must to have in your bplan:
- Market Research
- Competition analysis
- Problem that your product will solve
- Need for your product in the market
- USP
- Team
- Finance
Market Research
Have already blogged about how important market research is. Market Research must, at the minimum, contain:
- market size
- projections on market growth
- competitors and their market share
Competition Analysis
You should not only know who your competitors are, but also their strength and weakness. Make a thorough analysis of all your competitors. Know why customers are choosing a particular competitor over others. Drawbacks of each of them. And compare your product with these. This will not only help you decide if you need to proceed further with the venture or go back to the drawing room, but also helps make projections.
Problem that your product will solve
Every product in the market tries to solve some problem or the other, so should yours. Be clear on what problem you are trying to solve. It can be something which the customers are already facing, or something they will face in the near future. If yours is a value add company i.e your product is not a must for them to have, but help cut costs, improves performance etc.
Need for your product in the market
Find out if there is already a demand for a product such as yours. Sometimes, there might not be any existing demand for your product. In that case, you will have to create the demand. Knowing the demand for your product also helps you to price your product appropriately.
USP (Unique Selling Proposal)
Its good to have something unique about your product, which your competitors cannot easily mimic. Of course this “unique thing” should add value to the product from customers point of view. It can be anything: getting a patent for your product, building a network that helps provide better service, getting exclusive deals etc
Team
This is one of the most important, at the same time, the most ignored section in a Bplan. You might have an ordinary idea, but if the team is good, the chances of it working is more. You might have identified the right market, right product and even got investment, but if the team is not competent, all the effort you have put in goes waste. Have already blogged about choosing the right partner for your venture.
Finance
Finance section of your Bplan must give an idea of
- how much investment is needed
- when you’ll break even
Always put cost on the higher side and sales projection on the lower side. Try to give capital flow(projection) for 2-3 yrs.
You might have to touch upon other things like market acceptance, legalities etc depending on the type of sector you are in.
Hi thanx for your great post i have been looking for a good price for this for a long time.
You can find thousands of entrepreneurial business opportunities using the net and these can help you to build a career that you could have only dreamt of.
You may want to go and pitch your ideas where investors gather. Here are some places where angel investors come and those looking for funding can come and pitch their business plans.
It’s really tough to judge business plans. Take Federal Express, the concept was submitted as a business plan by Fredrick Smith as an assignment for his Yale Economics 43A class in 1968. Professor Hall did not regard the business plan as anything special and history records it as “C” quality. We all know the story after wards. (Source: Snopes.com FedEx Origin).
Also, I’ve personally found the effort necessary to secure funding exceeds the benefit. It’s similar to the banker that loans you his umbrella and wants it back when it rains.
Thanks for sharing.
Interesting one! Would’ve helped me a lot when I was preparing my b-plan…
I, for one, had goofed up big time on the financials part of my b-plan as according to the calculations I made (trust me, I’m no finance whiz), I would never ever break even!
Why have you stopped blogging? Your last post was in 2009! Please to be updating your blog
@zorya Thanks. Updating my blog is one of my new year resolution. Lets see hot it holds up