There are at least 1,000 books in print telling people how to write a business plan. The problem with most of them is that they're wrong. Or they're not practical for the vast majority of business startups.
Unless you are a high technology startup looking for venture capital, you do not need a 50-page book with dividers and index tabs to start a business.
You do, however, need a business plan. As a frequent judge in business plan competitions around the country, and as an advisor to "angels" and other professional investors, I review hundreds of business plans a year. Most are terrible.
So how do you catch the attention of someone like me when writing a business plan? There are six things I look for in a business plan, each of which conveniently begins with the letter "C".
Concept: You must be able to communicate your business idea in a single paragraph -- two at the most -- executive summary. This is the first thing I look for when reviewing a business plan. If I don't buy the concept, I don't even look at the rest of the business plan. Make it perfect.
Customers: I want to know that people will actually buy what you are selling. Who are the customers you are targeting with your products or services? What are their fears (the things that keep them awake at night) and passions (the things that turn them on)? How do your products or services address those fears and passions?
Competition: A business plan that says "we have no competition; our product or service is unique" goes immediately into the trashcan. Every business has competition. If you're convinced yours doesn't, you haven't looked hard enough.
If your product or service is too expensive for the market, what other products and services can people buy to help deal with the same fears and passions? Are there any "big box" retailers, chain stores, or franchises out there that could get into your marketplace and wipe you out with their economies of scale? Are there any new technologies that could make your products or services obsolete?
When reading your business plan, I want you to be realistic about your competitors. I want you to identify them, convince me you have a compelling advantage over them, and tell me how you plan to crush them under your boot heels.
Cash Flow: Too many entrepreneurs spend too much time projecting profit margins in their business plans. That's important, of course, but what's twice as important -- especially for a startup or early stage business -- is cash flow: will there be enough money in your business checking account at the end of each month to pay your operating expenses next month?
New Time 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for Thursday April 17th, 2014 | John Ransom
New Time 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for Wednesday April 16th, 2014 | John Ransom