80% of startups fail even at finding an investor and obtaining additional funding without starting their activities. Thus, many business ideas remain dust on the shelves of the cabinets of their inventors.
Before every enterprise that needs additional financing, the question arises: “How to present your idea to an investor to get the necessary support and, accordingly, the necessary financial funds?” When it comes to the presentation of a business idea, properly prepared business plan writers plays a key role here.
A business plan (BP) is a document that includes a description of the startup’s business concept and an organizational, strategic, marketing, and financial plan.
Before starting to draw up a business plan, every startup should ask itself 5 key questions:
- What problem does your business idea solve, or what new need does it create?
- If your product/service is not innovative: what distinguishes it from others on the market?
- The idea proposed by you should be a unique selling proposition.
- Are people willing to pay for your proposed solution to a problem or satisfy a created need? Or why should a potential consumer choose your product over an analog on the market?
- You need to understand that your product must have a certain demand in the market.
- How will your idea generate revenue for the company?
- This question is one of the keys when preparing an investor’s business plan. After all, it is important that the idea is attractive and interesting and demonstrates monetization possibilities – bringing income to the company. The possibilities of monetization of a business idea determine the “survivability” of a startup in the business environment.
- What does the path of your product/service look like from the moment of manufacture to when it gets into the hands of the end consumer?
- You should have a complete and detailed understanding of how your planning, production and delivery process will be organized.
- Why should a potential investor invest in your idea? What benefits will he get from it? First, each investor has a certain personal benefit from participating in your project. Your task is to offer the most profitable option for you as a company and for an investor who is interested in receiving dividends/assets of your company.
Writing a business plan becomes a simpler task with answers to all these questions.
Let’s move on to the description of the skeleton of the business plan, that is, its structure. It should be noted that depending on the business’s specifics, the business plan’s structure may vary.
Business plan section Points of the business plan Significance
Business idea Description of the business idea (Must include an economic rationale why this idea will be in demand on the market)
Organization and management (Legal form, management, team, division of responsibilities, organization of production and implementation)
Product/service description, including pricing
Target group and marketing strategy (Description of the target group and marketing tools used by the company to attract customers)
Research and Analysis Market research of market dynamics and main trends. The market analysis should include statistical confirmation of the possibilities of entering the market of a new company and its promotion there.
It involves the analysis of the company’s direct competitors. Therefore, it is very important to demonstrate the competitive advantages of the startup in front of the main competitors.
The analysis includes a comprehensive assessment of the strengths and weaknesses of the business idea, as well as potential threats and opportunities for the enterprise.
Financial plan Income planning Assessment of potential income is often carried out based on bottom-up methodology. Moving from the bottom from individual components (variables) to the total income. For example, the restaurant’s monthly income will equal the average number of visitors per month multiplied by the average customer check. Where the average check remains, as a rule, stable, and the number of guests increases gradually every month.
Cost planning Assessment of all company costs, not forgetting to divide them into a variable (those that depend on income – for example, the cost of goods for a store) and constant (independent of income – for example, salary). We also do not forget about taxes and depreciation.
Based on the calculation of the three previous points, the startup can estimate how much money it needs to make all the planned investments and the company’s losses in the first periods of activity. It is this amount, as a rule, that is requested from the investor.
Consolidated financial planning results: As a rule, consulting companies present these results in three forms of accounting:
- Income statement
- Balance sheet
- Cash flow statement
Financial analysis of scenarios Presupposes the development of three scenarios (basic, positive, negative). This analysis makes the financial plan more flexible and gives the startup more opportunities to adapt to the external environment.
Analysis of the point of profitability Determination of the break-even point – the volume of production and sale of products at which costs are covered by income, and with the production and sale of each additional unit of production, the company begins to make a profit.
Sensitivity analysis Determining the sensitivity of a certain financial indicator to changes in factors affecting it. For example, the company’s operating profit varies from the number of customers per month and the average customer check.
We went through each business plan component, giving us a complete presentation of the business idea.
In the end, I would like to give general recommendations for writing business plans, which are based on typical mistakes of beginners:
- The shorter, the better
- The optimal volume of a business plan is within 15-20 pages (the exception is large investment projects). Also, pitch decks have recently become very popular: a short presentation (about 10 slides) and a short version of a business plan.
- Data visualization
- Try to visualize the information as much as possible; if there is an opportunity to present the information in a diagram or graph, be sure to use this opportunity. Avoid “sheets of text.”
- “Meet by clothes…” design. In the case of an investor, your business idea is a product that needs to be sold. And in our century, the design and appearance of any product play far from the last role. Good graphic processing creates a professional impression and attracts the investor’s attention.
By following these three simple rules, you can achieve the desired results. Among a stack of printed Word template business plans on 50 pages, the investor will choose yours:
- with a clear and understandable structure and a minimum of text that you want to read
- with an individual design that reflects your idea and an eye-pleasing page layout
- presented a timeline of processes and schemes that convey the necessary information in a matter of seconds.
For more information visit Business Plan Consultant.
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