Creating a good business plan is essential, that is if you want to be taken seriously by potential investors!
Here are five top keys to creating this business plan:
Let Your Experience Shine
Past success of an individual or business is a great barometer of a company’s potential future and investors know this fact well. If you have previously received investments you will need to show what you did with the money, how you grew the company, penetrated the market, achieved milestones and in the end rewarded your investors. For a new business, of course, you will not have this information; however, you can still show how you and your team have already moved a company from infancy to adulthood in the past.
Know Your Niche
There are millions to be made in niche markets, that is why they currently reign supreme in the business world. For example if your company is operating and competing in the healthcare field, a trillion dollar industry, you will want to focus marketing and products on a specific area of the whole. For instance networking appliances for family physicians on a particular coast. This will mean you are also competing in the telecommunications, business services and electronics industries. This will allow you to narrow the business focus, a niche in other words, which maximizes potential ROI. Experienced investors will appreciate how much you know about your particular niche.
Know Your Customers
Businesses are often seen by investors in terms of customer relations. A business plan must show concisely how your business is uniquely positioned or qualified to provide a market need, preferably an unmet need. This plan will need to include your timeline and outline of how product will move from your company into the waiting hands of the consumer. You nor your investors have any hope of profit if you cannot move your product to the consumer. Map out the special route between the customer and your business for your investors.
Block Competition and Lock in Customers
There are several methods used to lock-in your customer base, one very well known example is bundling. Telecommunications companies do this by offering current customers extra services at a reduced price. They further lock in their customers by waiving installation fees for added products, unless of course you switch companies. In addition to these, customer service and great products are also very important. This is what is known as building barriers around your customer. Investors will want to know what types of techniques your business is planning to use.
Realistic Financial Assumption
According to Grow Think, a business-consulting firm, well reasoned, financial projections and assumptions convey operational credibility and maturity. Keep in mind this is a firm that has helped new businesses raise over a billion dollars in equity capital. Understand that the financial section of your plans may be the only thing your investors ever look into. Your pro forma and financial assumptions need to be on the mark and realistic. Operating margin, revenues per employee and market penetration should be internally consistent and well reasoned if you want to be taken seriously by investors.