By Dave Lavinsky
Business plans generally serve two core purposes. The first is that they provide a roadmap for you and your company to follow to achieve success. The second is serving as your company’s resume or brochure when seeking funding from lenders or investors.
When developing your business plan to achieve those goals, there are two core strategies you must consider and develop. The first is your business strategy. This is strategy and plan your business will follow. In creating your business strategy, you will conduct market research and a SWOT analysis, figure out the financial implications of various options, and choose the strategies and action plan that seems most likely to succeed.
The second strategy to develop is your communications strategy. Your communications strategy determines how you will present your company to the financial community. Just like a toothpaste company can stress different attributes like the fact that it whitens teeth, freshens breath and/or fights cavities, you need to determine which attributes of your company you’ll stress in your plan.
So, what should you stress? In helping thousands of entrepreneurs prepare business plans for funding, I have found the most success stressing your “unique success factors.” Your unique success factors are those attributes of your business that make you uniquely qualified to succeed. Maybe it’s that you have a proprietary and patented technology. Or maybe it’s because you have an incredible team. Or maybe you’ve already secured and locked-up a key customer or partner. There can and will be numerous success factors – be sure to identify and stress them in your plan.
Other key aspects of preparing a business plan that secures funding include the following:
1) Make your business and opportunity crystal clear. After reading the first two sentences of your business plan, the investor or lender must understand what your business does. Conversely, don’t start with a long-winded story. Get right to the point and positively frame your company.
2) Constantly prove why your business will succeed. The purpose of your Management Team section is not merely to list the bios of your team. Rather it’s to prove why they will be able to successfully execute on the venture. Likewise the purpose of your Industry Analysis section is not to present a market research report on your industry. Rather, it’s to prove that the market and market trends fully support your success. In summary, each paragraph the investor or lender reads should not only educate them, but make them more excited to invest.
3) Create a realistic financial model. Your business plan must answer several questions such as how much money you need to raise, for what purposes, and what the expected returns might be. Importantly, your financial model must be realistic. When a financial model shows a company growing to $100 million in revenues within three years, most investors will immediately be turned off as very few companies in history have ever achieved such rapid growth.
In summary, when developing your business plan, keep your audience in mind, particularly if your audience is investors. Make sure they can quickly and clearly understand what your business does and the growth opportunity. And convince them you are uniquely qualified to succeed and have a financial opportunity that makes sense for them.
Dave Lavinsky is the President of Growthink, a consulting firm that, since 1999, has helped over 500,000 entrepreneurs develop business plans through business plan consulting services and their business plan template.