A business plan is a reality that entrepreneurs, inventors, corporate managers and idea creators will have to accept. Whether you are starting a new business, introducing a new product line, or are looking to improve existing processes or products, a well-written business plan is a must.
The purpose of a business plan can be to seek funds from investors. It can also be to inspire confidence in, or convey your business or product vision to, customers, clients and employees.
Only a well-developed business plan can earn you the confidence of your stakeholders and enable you to put your plan in action. In creating such a plan, be sure to conduct market research about your industry focusing on its size and trends. For example, if writing a catering business plan, you’d want to research the catering business. By understanding the growth or decline of the industry and what has been causing changes in the market, you can devise strategies that allow you to achieve more success.
Here are four components that make a business plan outstanding:
- Focuses on the Target Market
Your target audience, especially investors, will want to know if your proposed plan has a buyer market. It is therefore important that your business plan focuses more on the target market and less on the technology that drives your idea.
Provide insights into the target market by:
- Giving details about the problem your product or service is solving
- Explaining its benefits for users
- Including research reports that support your market demand and projection claims
- Presents Clear Evidence to Prove Market Interest
It is crucial to back up your market demand claims with credible evidence. A Harvard Business Revenue (HBR) publication proposes the following strategies as some examples:
- Collect clear positive customer responses that say they are interested in the product/ service and would buy it on once available
- Demonstrate a prototype of the product/ service to a select customer group. Obtain the group’s written reviews of the product/ service. Gather their level of interest (in a written format) in purchasing the product/ service once it becomes available
- Offer the product/ service to a potential customer group at a significantly discounted price.
- Offer a product/service at a discounted price to potential customers in return for written reviews, references, or letters of support.
You could also propose to have customers to talk to marketers or investors directly regarding the benefits of the product/ service and their extent of interest in purchasing it.
The above strategies are applicable even to start-ups that only have a prototype and not the actual product or service. They also apply to companies working on a limited budget.
Attach such customer referrals, letters and other support documents, to the Appendix section of your business plan. You could also have a separate volume for such customer feedback.
- Addresses the Target Audience in their Language
A winning business plan addresses the needs of the people that read it, whether they be investors, customers, employees, or existing and prospective clients.
Too many times, a plan is written from the viewpoint of the entrepreneur, inventor, corporate manager or the idea creator. As a result, the plan gets too technical and too focused on the creator, which simply puts off the reader.
- Keep Financial Projections Realistic
Investors are generally interested in a 5-year forecast (Source: HBR). They use this projection to get a future estimate of profitability.
It is easy to go carelessly overboard with financial projections. No matter how optimistic you are about your profits, it is crucial to project only credible forecasts. On the other hand, do not let your forecasts be only about numbers where you give projections for every market variation.
Strike a balance and keep your projections grounded.
In conclusion, a winning business plan is one that tells its target audience about your company and the proposed project succinctly. It presents a logical view of the future of the proposed project, the resources you need to make it a success, and credible proof for every claim.