#26: Business Plan

Over the last few articles, we have looked at your business image, the importance of research and your strategic plans. Now it is time to turn our attention to your business plan.

There are a vast number of templates available to you, which are all pretty much variations on a theme. You could well find that the one-pager which I suggested, and which we are building, may be sufficient for your initial purposes.

If however you need to go to a bank or an investor then you may need more; if you can answer the 10 questions listed below in robust fashion then you are in pretty good shape.

Key Questions A Business Plan Should Address

• Where is the company today?
• What is the product or service?
• What is the market/sector?
• How will the market be reached?
• Who is the competition (today and tomorrow)?
• How will the product be produced?
• Who are the people?
• What are the financial projections?
• How much funding is required?
• What are the risks?

You may have to tweak the questions a little to fit your business, but if you can answer them all in confident fashion you are well placed to proceed. I reckon I have looked at over 5,000 business plans over the last 10 years from a fundraising perspective.

A few comments on these:

• Lifestyle versus value business – we talked about this earlier. Remember, banks and investors do not see it as their job to fund your lifestyle!
• Unbalanced team with key skills gaps – unless your plan indicates how you propose to address this, financial backers will be nervous.
• Unclear product proposition – if you do not make it easy for the reader to grasp your proposition, he or she will quickly lose interest. Remember to avoid jargon.
• Limited analysis of competition – if you put in your business plan that you have no competition your plan will go straight to the discard pile; – people will either believe a) that you are lazy or b) that if there is no competition there is probably no market.
• Unproven revenue model – this is difficult if you are a pre-revenue start-up. How can you prove how much you can sell at what price and with what kind of frequency unless you have done the type of research the florist.
• Incomplete sales plan – you need to give the reader a clear indication as to how you are going to reach the people who will buy from you. If you mention your route to market, your sales qualification process, your pipeline management process, and your activity and conversion ratio model, you will make them comfortable.
• No sensitivity analysis – it is helpful if you do a best case, middle case and worst case, so that the reader has an idea of how you financial model looks in different scenarios.
• Attention to audience – if you are talking to a bank their main interest is your ability to service the debt and pay them back; if you are talking to investors, their interest is your ability to give them a higher return than they can get from any other project, or from the stock market.

Back to our one-pager. We have talked about the pitch, and a little bit about the website. The details behind sales qualification process, pipeline process, and conversion ratio process will become clear when we have covered sales in a forthcoming article.

Until then, do get in touch with me anytime with any questions you may have.