In three pages, summarize your company’s mission, business objectives, target market, points of differentiation, marketing strategy, funding needs, and why it’s time to bring your vision to market. Go easy on the details here, and let your enthusiasm shine through, albeit professionally and modestly. Why? If the overview leaves lenders and investors cold—thwack! Your plan hits the recycling bin.
Begin with your “elevator speech,” a onesentence description of what your business does. Next, detail your products and services, market niches, and what makes you unique. Detail the size and demographics of your target market, the demand for your offering, your expected market share, and the type of legal business entity you plan to operate.
List your competitors’ locations, estimated revenues, and marketplace history. Report on what they’re doing right and wrong, how they’re meeting or not meeting their customers’ needs, and explain how you intend to neutralize their strengths and exploit their vulnerabilities. Spell out why your offering gives you a competitive advantage. Is it a patented new technology? A better location? Greater convenience? Do your prices, service, or quality give you an edge? How? Most important, how do you convince your rivals’ customers to jump over to your side?
Flying into the fray with an untested squad of rookies? You might as well plan to get by on good looks, because the quality of your management team is what lenders and investors look at first. In three-paragraph Cliffs Notes bios, list each exec’s skills, education, work history, achievements, and responsibilities. Dip a little deeper into the inkwell for yourself. You have to convince investors that your shoulders are broad enough to carry your team to the Promised Land.
Begin with an analysis of the space you’re entering: the competitive landscape, the growth opportunities, the niches that make up the market. For good measure, explain how your industry handles the whipsaw of the business cycle. (Trade associations and local industry insiders are excellent sources.) Next, specify the demographics of your target customers, and whether they’re local, regional, national, or international. If you’re going B2B (business-to-business), identify your potential corporate customers. Who are the decision makers, how will you breach their defenses, why will your product or service be irresistible? If you’ve already landed some contracts, say so.
Offer a glimpse into your day-to-day business, starting with the workforce. How will you find, train, and compensate employees and convince them to buy into your vision? Then name the vendor relationships you’ll cultivate, and which functions, if any, you’ll outsource, and why. Last, describe your accounting plan. Who’ll wear the green eyeshades, and what resources will she have?
Time to remove your rose-colored glasses and assume the role of devil’s advocate. Really, quit drinking your own Kool-Aid for a minute and try to prove your assumptions wrong. Every business has vulnerabilities. What are yours, and how could competitors expose and exploit them? Don’t try to tap dance around insomnia-inducing issues, drag them to center stage. Explain how you’ll avert the preventable crises and deal with the inevitable ones. Investors like to see that you understand—and are prepared for—the risks that lurk for every entrepreneur.
Lay out conservative and best-case sales scenarios. When in doubt, err on the side of caution. Estimate monthly revenue and units sold for the first year. Do the same, but on an annual basis, for the following four years. Then back up the numbers with detailed underlying assumptions. Where to get the data? Start with competitor and marketplace analysis, field research, trade associations, perhaps focus groups. Pit the numbers against your sales objectives, and account for any discrepancies. Perhaps most important for lenders and investors, spell out your margins and breakeven point, as well as the percentage of the market you need to achieve them.
Okay, that’s it. You’re done—for now. Later, you’ll tighten the nuts-and bolts portions of your business plan at strategic-planning time. Now thank yourself for that hard work. You’re already avoiding the seat-of the-pants trap and looking more and more like an enlightened entrepreneur.