Creating a business plan that works is a challenge, here we try to give you the basics, how to create a business plan that actually gets funded. Most entrepreneurs do not have the experience or the network of contacts to know which elements are essential and which can be omitted.
It's not just about producing a document with lots of pretty graphs and charts; your business plan has to convince potential investors that you have a solid idea, an executable strategy and the ability to measure your success (also known as "return on investment").
If you are thinking of applying for funding from an angel investor, venture capital firm or other source of capital, you need to develop a business plan that meets your specific criteria. These organisations want to see that you understand your market and have a solid foundation for growth.
They also want to see evidence of demand for their product or service, including validated customer interest and price sensitivity.
Step 1: Make a list of your assumptions
Any business plan is based on a number of assumptions: If this happens, then this will happen. Make a list of all of them so that you can clearly identify where you need to do more research. If it is impossible to know some elements, be honest about it and be sure to explain why.
Assumptions about your market: Target customer, competition and unmet needs.
Assumptions about your product/service:
Product scope, pricing model, value proposition, go-to-market strategy Assumptions about your team:
Strength of founding team members, track record of success Assumptions about your financial situation: revenue projections, cash flow, projected costs
Step 2: Determine your measurable goals
Every business plan has a few basic parameters that will determine whether your business has been successful.
These may include:
Assess your market:
- What is the size of the total addressable market (TAM) for your product or service?
- What are the growth rates?
Evaluate the product and customer satisfaction:
- What is the overall customer satisfaction?
- What is the level of satisfaction with the product?
Evaluate the adoption of your product/service:
- How many customers use your product/service?
- What is the retention rate?
Assess revenue streams:
- How much do you earn from each type of customer?
- What is the average revenue per customer?
Assess the cost structure:
- What is the break-even point?
- What is the break-even point per month?
Assess growth potential:
- What is the expected revenue growth?
- What is the expected growth in profits?
Step 3: Calculate your baseline metrics
Every business plan includes a table describing the metrics that will determine its success. This table is called a "baseline metrics table". It should include metrics related to all aspects of your business, including revenue, costs, growth potential and customer satisfaction.
Assess your market:
- What is the size of the total addressable market (TAM) for your product or service?
- What are the growth rates?
Evaluate the product and customer satisfaction:
- What is the overall customer satisfaction?
- What is the level of satisfaction with the product?
Evaluate the adoption of your product/service:
- How many customers use your product/service?
- What is the retention rate?
Assess revenue streams:
- How much do you earn from each type of customer?
- What is the average revenue per customer?
Assess the cost structure:
- What is the break-even point?
- What is the break-even point per month?
Assess growth potential:
- What is the expected revenue growth?
- What is the expected growth in profits?
Step 4: Writing a lift speech
Your lift pitch is a brief summary of your business plan. It can be a single paragraph or a few sentences; the point is to have a quick summary that you can repeat on any lift ride. Your lift pitch should include the core elements of your business plan: your team, your market and your product.
Assessment of your market:
- What is the target market?
- What is the size of the total addressable market (TAM)?
- What is the growth rate?
Evaluate your product/service:
- What is the scope/vision of your product/service?
- What is the product differentiation?
- What is the value proposition of the product?
- What is the price of the product?
- What is the marketing strategy for the product?
Evaluation of your team:
- What is your level of experience?
- What is your track record of success?
- What is your network?
- What is the support/feedback from clients?
Assess your financial situation:
- What is your income projection?
- What is your cash flow projection?
- What is your expected break-even point?
- What is your monthly break-even point?
- What is your target customer base?
Assess your risk points:
- What are the main risk points of your company?
- What are the main risk points of your product/service?
Step 5: Develop the product roadmap
Every business plan should include a product roadmap that includes milestones and targets for the next 12 months. This roadmap should be based on your key metrics.
Assess your market:
- What is the current size of the market?
- What is the projected size of the market?
- When will the market reach critical mass?
Evaluation of your product/service:
- What improvements are being made to the product/service?
- What is the expected market penetration?
- What is the expected customer retention rate?
Assess revenue streams:
- What are the expected monthly revenues per client?
- What are the expected monthly revenues per channel?
- What are the main sources of income?
Assess the cost structure:
- What are the expected monthly costs?
- What is the expected cash consumption at critical mass?
- What is the expected break-even point?
Assess growth potential:
- What is the expected revenue growth?
- What is the expected growth in profits?
- What are the main milestones for the next 12 months?
Step 6: Identify risk points
Every business plan has points of risk, even if you don't want to admit it. Identify the main risks to your business, such as competition and the economy.
How will potential customers react to the price of your product or service?
If the risk points are too big, investors might pass up your opportunity. You need to be able to show them how you will overcome these challenges.
Assessing competence:
- What is the current size of the competition?
- What is the expected size of the competition?
- What is your current market penetration?
- What is the expected market penetration?
Market assessment:
- What is the current size of the market?
- What is the projected size of the market?
- When will the market reach critical mass?
- What are the main challenges for growth?
Conclusion
Creating a business plan that actually gets funded is a difficult but achievable task. While there is no one-size-fits-all approach that works for everyone, there are some general principles that can help you establish the structure of your own business plan.
Identify the key assumptions that underpin your business plan and ensure that you have done enough research to support these assumptions.
Create a benchmark metrics table to show the metrics that will determine your success. Write a lift pitch that includes the main elements of your business plan. Identify the main risks to your business and show how you will overcome them.
If you need to know if your company name or brand name is already registered, you can use the website of the ministry of industry, trade and tourism to check if it already exists, or if it needs assistance of any kind, contact us and we will help you find the premises you need.