Important Steps To Consider When Creating A Business Plan
What are you doing and why? What is the opportunity for others to come along on the journey with you? These are some of the questions you would be asking yourself when putting together a business plan.
A business plan will essentially be used when you are looking to raise a round of funding for your startup and you want to do so by using safe notes.
The Problem
The anchor of everything is the problem. So, what is the problem you are solving?
Be as crystal clear as possible. Show why it is so important. How did you encounter it? How have you verified and proven this is a problem for others already? Especially in terms of being something with commercial potential. An urgent problem that people will quickly pay money to solve.
The Solution
Now that you have established the problem, what is your solution?
How are you solving it? Both the big idea, and then any specific initial products or services you plan to use to solve it.
What is the main benefit of your solution? What makes it so unique?
The Market
Much of your fundraising and marketing success will rely on you nailing this section.
So, what market are you operating in? How big is the total market? How much is it growing and predicted to grow? What’s it worth, and how much of that do you think you can acquire and control?
What are the specifics of the target market you will begin focusing on winning? Be as detailed as possible, including customer avatars and ideal customer profiles.
The Competition
Who are the competitors in this space? How many are there? What are they good and bad at? Most importantly, how are you standing out against them with your USP?
This is a great place for your SWOT analysis. Layout your Strengths, Weaknesses, Opportunities and Threats in this environment.
Rather than shy away from acknowledging competition and the challenges, consider how you can use the competition to make your argument for your business, stand out, and imply more value.
The Execution
Now it is time to get into how you will actually execute on your business idea and this opportunity.
After all, it is the execution which really makes all the difference in just a nice idea and great opportunity, versus actually creating a successful business.
Your Marketing & Sales Plan
Marketing and sales is often 90% of your success. You can have the best tech in the world, and never make any progress without great marketing and sales. The opposite is also true.
This is probably a good time to recruit a top notch sales and marketing expert in your industry to help you with a brief plan and budget for getting early wins and then scaling and building on that.
Operations & Organization
How are you going to organize this business?
Some businesses are very simple. Others will have manufacturing, logistics, and sales in different physical locations around the world.
Perhaps most important in this section, what is the business model? What is the cycle, and how will you actually make money here?
Milestones & Metrics
What specific milestones and metrics has your business already achieved? Any proof points and validation will help. Show what has been working, and even what hasn’t been working so well.
Layout the next key milestones and data points you are shooting for. That may be an amount of customers, finishing a product, or tightening up unit economics.
Company
How has your business been formed? What type of business entity did you choose, and where is it registered?
Who are the shareholders and owners of this company so far? It’s worth mentioning any notable investors as well.
How is your organization structured and who is already on the team, versus hiring needs that you may have now and in the near future?
The Financials
Begin with your existing financials. If you have already been operating, include your historical financials. Or at least show your current financial status. For example your balance sheet and year to date P&L.
Your Financial Forecast
One of the most important parts is your forward looking financial forecast. Breakdown the first year by month. Then lay out your expectations and goals for the next 3-5 years. Include your breakeven point.
Funding
What funding and financial leverage have you secured so far? What funding and financing needs are there to achieve your goals?
How do you plan to raise the money you need? Will it be through equity fundraising, bank loans, or something else?
What is your philosophy on leverage? Are you going to bootstrap and get profitable to be self-sufficient as fast as possible? Or are you going to rake in all the cash you can to grow at all costs, and punt profitability down the road?
Appendix
You can use this section to support your forecasts and assumptions with links to credible data sources.
You may also want to include key documents, like your articles of incorporation. As well as financial documents, like your cash flow statement.
Review & Improve
Now take the time to review your work. Get as much feedback as you can. Then make tweaks and polish it.
Then get right to taking action.
Author Bio
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and NYU Stern School of Business.