Menu
Welcome to the Topic “The Dos and Don't Of A Business Plan”
There is one golden rule that supersedes all others when it comes to developing a business plan, and that rule is that your business plan must address each of the primary concerns of your potential backer.
Table of Contents
There is one golden rule that supersedes all others when it comes to developing a business plan, and that rule is that your business plan must address each of the primary concerns of your potential backer. If you do not succeed on this first point, all of the other things that you should and shouldn’t do pale into insignificance, and even a fantastic idea for a business may not receive the necessary funding because of this. Here are ten things that you should and should not do:
Dos
- Show that you understand market demand.
A solid understanding of the microeconomic environment in which your company operates is vital for developing a sound business strategy; hence, you need to demonstrate that you have thoughtfully analyzed the factors that raise or lower demand in your market.
- Use sensible numbers
The fact that you have estimated that your revenue will be £4,672,591 in three years’ time is irrelevant to backers; the fact that you have started such an accurate projection is a dead giveaway that the writer does not think strategically.
A more experienced strategist would predict revenues of £4.7 million, recognizing that it would be absurd to imply any greater degree of precision three years down the line. Instead, they would settle for a revenue prediction of £4.7 million.
The investor should be able to swiftly evaluate the profitability of the business based on the ease of comprehension of the financial projections.
There is really no requirement for reams of spreadsheets displaying complicated numerical information. A limited number of charts and graphs can effectively convey essential information in a short amount of time.
- Stick to a clear storyline
Take a seat, and in one sentence, describe the benefits of investing in your business plan and why someone should do so. Be careful not to lose sight of the main point; the rest of your business plan should just support this statement and repeatedly remind the reader why your company deserves financial support.
You might write a business plan that is 200 pages long and go into every detail, but your backers will lose interest if you stray from the main story, so you should trim it down to a lean argument and include a few supporting appendices if necessary. You might write a business plan that is 200 pages long and go into every detail.
- Make it your plan stand out
After you have presented a clear image of the market, it is time to demonstrate how your company fits in with the overall picture. Make sure that your answers to the following questions are included in your business plan: What is the long-term competitive advantage that sets it apart? What makes your suggestion unique in comparison to the others?
- Tackle the risks head-on
It is certain that risk will be the primary concern of a backer; therefore, you should not be afraid to address it head-on. Show your backer that you understand the risks, including those related to market demand, competition, your strategic positioning, and your resource deployment, and show how you plan to reduce those risks, when possible, or insure against them, where that is not an option.
The flip side of dangers is opportunities, so it is important to point out that, while it is possible for this risk to materialize, the opportunity that serves as a counterbalance is just as likely, if not more likely, to materialize.
Provide the backer with an easy-to-understand graphic representation of the risk-opportunity balance so that the backer can evaluate the investment decision, which will undoubtedly be favorable to you.
Don'ts
- Ignore your Competitor’s Response
Backers will be aware that markets are constantly shifting. Therefore it is important to evaluate how your rivals could react if you were to implement the strategy outlined in your business plan.
Is it possible that your rivals’ actions could damper your ability to reach your goals? Be truthful, and demonstrate to your backer that you’ve considered the implications carefully.
- Forget your audience
This audience should be considered throughout the whole writing process.
Determine the most likely concerns that your potential backer will have and then address those concerns head-on.
Put an end to musing over the things you wish to write and concentrate on the things your funder absolutely must read. You may be quite pleased with what you have accomplished in your company to this point, and you may have lofty goals for what you will do in the future; however, if the material is not pertinent to the decision that your backers will make, then you should leave it out.
- Underestimate the resources you will need
Make a detailed inventory of the resources and relationships that will be required to accomplish the anticipated growth rates, and be as specific as possible.
- Dismiss the Competition
When developing a company plan, it is very simple to fall into the common pitfall of giving the competitors an inadequate amount of consideration. Do not try to hide that potential client will always have access to other options; your investor will be astute enough to see this regardless of how compelling a concept you have presented them with.
Investigate what it is that your rivals excel at, where they have room for improvement, and what they are going to do that will have an impact on the level of competition.
- Think your Backer was Born Yesterday
If they are serious about providing financial support for your company, investors will conduct their own research and will speak with customers, employees, and sometimes even competitors. Because of this, any negative information will invariably come to light; thus, resist the urge to sweep it under the rug.
Any trust between you and them will be destroyed if they discover anything that you really ought to have informed them about, and they will abandon the relationship.
The same can be said for making forecasts. If you give in to the need to lie or exaggerate, you risk having none of your backers support you in the future. You should be optimistic, but you also need to keep your expectations in check; otherwise, your backer will see right through you very fast.
Have any questions regarding the topic “The Dos and Don’t Of A Business Plan” feel free to comment below.
Also Read: How to form a business plan?
Check Out Some Of Our Latest Blogs
Habit Stacking: Develop The Habit Of Tackling Your Major Task First Thing Each Morning
Here’s Why You Should Make Your Bed First Thing In The Morning.
High-Performance Habit Rewiring
Hitting The Snooze Button Makes Your Body Even More Tired