When the spark of a new business idea tugs at you for weeks, one of the smartest ways to turn your inspiration into something real is to draft up a business plan. And don’t think you’re too small, or indie to have one. Even if you’re a one-woman shop, it’s a good idea to get clear on where you are today, where you plan to go, and how you plan to get there.
First, let’s take a look at WHY you want to have a business plan (BP):
1. It can provide you with a detailed roadmap so you can take your idea from that little spark inside your head, into something tangible.
2. It’s an indispensible sales tool you can present to potential investors, loan officers, friends, and family if and when you are seeking financial support.
Typically, there are three potential audiences for your BP:
The document may be for internal purposes only, to help you spot any potential pitfalls, to plan for future development, restructure your finances, and review your successes. This is the MOST common reason I have clients create a business plan, as most of my coaching members are not looking for funding; they are simply planning out a viable business.
Or you may be using the plan to secure funding, in which case your audience will be angels and venture capitalists. There are several different types of angels, including parents, siblings, friends, or anyone that you have a personal connection with—and this can allow for some latitude with the business plan. Angels believe in you and your ideas and don’t mind providing a few thousand dollars.
Then there are those angels who are affluent individuals looking for a higher return on their dollar than they may get in traditional investments. These venture capitalists are usually successful entrepreneurs who want to help other entrepreneurs get their ideas off the ground, and will lend their expertise as well as their money. Venture capitalists, or VCs, are institutional investors of high net worth individuals who will fund your enterprise if they think it is profitable.
These are usually strangers or friends of friends, and 99% of the time, you won’t be meeting with them first to sell your business idea. So your BP needs to do all the talking… And it needs to make a great first impression.
Here are a few common blunders to avoid, so you don’t blow your chances…
Blunder #1: Not having one ready
Potential investors are all around you. They’re sitting next to you on the plane or at your neighbor’s dinner party, and you truly never know when the Universe will drop these golden opportunities right in your lap. So, all you can do is be prepared!
You want to give yourself enough time to give your BP the thought, attention, and care that it needs. Otherwise, it will show in the form of half-baked research, typos, and a less than convincing case for not only your business, but also your credibility. So, don’t drag your feet or wait until someone asks you for one. Get it ready now, and don’t make any excuses!
Blunder #2: Not making a convincing case
The entire point of your business plan is to convince the reader to believe in your idea. So, you want to present a well-defined problem in the market, and how you and your business intends to solve the problem. Usually, you will do this by providing evidence, otherwise known as market research, which could come in the form of statistics, trends, or expert analysis. The more you build a case that there is a real need in the market for your products or services, the more viable your business will appear to be.
(Note: this is also a good time for you to personally assess your business idea. Is it solving a problem? Does it make sense? If you’re finding any leaks in your plan, it’s a good sign that you need to fine-tune your idea.)
Blunder #3: Not getting to the point
If your readers snooze, YOU lose, so keep your BP concise, exciting, and to-the-point. For starters, your BP should only be between 20-40 pages long. Since, that’s still quite a lengthy read, try to add a few formatting tricks to make it easier on the eye. Break up your points with headers and subheads that POP. Use bullet points instead of big blocky paragraphs. Add a few colorful charts, tables, and graphs when you know that your point will be better communicated visually. Don’t go overboard, but do be sensitive to your readers’ attention spans.
Blunder #4: Not mentioning your team
An idea on its own doesn’t always make a great business. Investors know that an unoriginal idea executed by a superb set of managers often has a better chance of succeeding compared to a fantastic idea in the hands of a weak and poor performing team. No matter how big or small your business, make sure you include a description of your key team members. Spend some time presenting all the credits and experiences, so you can assure your readers that the company is in good hands and on its way to success.© Copyright 2011 Ali Brown