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June 2, 2010

5 Keys to a Great Business Plan

If you’re looking to raise capital, you need a great business plan. And if you still haven’t finished your business plan, you’re in luck.

Click here to finish your business plan for just $1

When composing your business plan – if you want investors to view you as a pro and not as a starry-eyed money hole – keep in mind the following five keys to a great business plan:

Display your stellar track record.

Investors know that the best bellwether of a company’s future success is the past success of the company and/or of its executives. If your company has been previously funded, show how you managed capital to grow the company, achieved operational milestones, penetrated your company’s niche market, and rewarded investors. If your company is new, show how your management team has successfully raised new companies from birth to adulthood and beyond.

Show that you know and can master your niche.

These days, niche is king of the business world. If your business competes in the $1 trillion healthcare industry, for example, it must focus its product and marketing efforts on a specific segment of that industry, e.g. networking appliances for family doctors on the West Coast. In this example, your business also competes in the electronics, telecommunications, and business services industries. This narrows your focus into a niche, helping to maximize ROI on your marketing strategies. Savvy investors appreciate niche knowledge.

Show that you know what your customers want and how to deliver it to them.

Investors see companies in terms of customer relationships. Your company’s business plan must clearly explain why your company is uniquely qualified to deliver on an unfilled market need. The business plan must include an outline and timeline of how it will move product into the hands of that specific market. If you cannot reach your customers, you cannot profit, and neither can investors. Show investors the special road between you and your customers.

Explain how you lock in your customers and lock out the competition.

One well known example of locking in customers is the way telecommunications companies offer “bundles” of services. If you purchase one product as a customer, you are given the opportunity to receive a suite of services at a discount. Furthermore, once you are a customer you do not need to pay installation fees unless you switch companies – another lock-in tactic. Obviously, great products and customer service are also examples of lock-in strategies. This keeps the competition at bay, and the practice is called building “barriers” around existing customers. What methods will you use to keep your revenue base? Investors want to know.

Convey realistic financial assumptions.

“Sober, well-reasoned financial assumptions and projections communicate operational maturity and credibility,” according to Growthink, a business consulting firm that has helped entrepreneurs raise $1 billion in equity capital. The financial section of the business plan is the only part some investors ever look at. The assumptions and pro forma statements (projected financials) must absolutely be realistic. Penetration, operating margin and revenues per employee figures must be well reasoned, and internally consistent to earn credibility in the eyes of investors.

Growthink business plans have raised $1 Billion in funding since 1999. And for a limited time, you can download Growthink’s proven business plan template for just $1.

Click here to finish your business plan for just $1


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