As a new business, you might hope to help your customers solve a problem or complete a task more easily. Or, you may have a vision that reimagines how your entire industry operates.
These are admirable goals, but putting them into action takes more than just a sound idea — you need a solid strategy to ensure success. This strategy starts with a detailed, effective business plan.
What Is a Business Plan?
A business plan is a highly detailed document that fully outlines how you expect your business to operate. The best business plans set out the company's objectives in easy-to-follow terms and detail step-by-step operational strategies for achieving them. These details should include specific costs, business expenses, projections, products and information about the members of your management team.
Using a sound business plan, you'll be better able to present your ideas to potential investors and measure your short- and long-term progress.
Tips for Completing an Effective Business Plan
Developing a clear business plan and strategy is crucial for attracting solid investors and having a full understanding of your long-term goals. When trying to write an effective business plan, keep the following tips in mind:
- Understand Your Audience and Competition: Determine who your business's biggest competitors will be, and outline how you stand out from each in your business plan. Likewise, create a separate outline of your business goals for each audience you will interact with — including yourself, bankers, venture capitalists or other investors. By determining which specific individuals you'll be targeting, you can better grasp how to tailor your business plan toward the types of ideas they've previously invested in.
- Offer a Clear Solution: Any successful new business should be able to determine a market need and solve a specific problem. Every aspect of your business plan — including your products, team members, expenses and profit projections — should present a clear solution to an issue. Ask yourself what resources are needed to solve a particular problem, how your business has the right tools and solutions to address that problem and how much you will charge users for those solutions.
- Provide Proof to Back up Your Claims: Having a solid, creative idea for a new business is fantastic. However, investors also want to know you have the resources available to truly achieve that potential. Be honest and realistic in your challenges and opportunities, and back up every statement you make with facts. For example, if you claim you have one of the best management teams in the industry, be sure to include their resumes and outline their expertise in detail.
- Be Creative, Yet Concise: Investors see plenty of template-based business plans every day. Make your business plan fun to read with a captivating introduction and eye-catching visuals like charts and graphs. That said, don't clutter your business plan with unnecessary wordiness. Keep your words concise. Ask an editor to remove any "fluff" before showing it to your investors.
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- Focus on the Accuracy of Your Financial Projections: When assessing startup expenses and projected revenues, it's essential to realistically calculate every financial need you might have as a new startup. Consider what costs you may have over your first few years of business and what financial resources you have available to save your company money. For example, many construction startups incorporate rental equipment into their business plans since rentals allow a new business to access more machinery within a more limited budget.