June 26, 2010
Do you want your business plan to get noticed by investors?
If so, youâ€™re in luckâ€¦
There are a few â€œdon’t’sâ€ and a few â€œdo’sâ€ to creating a business plan that gets noticed. The dont’s will get your business plan noticed â€“ and tossed out. The do’s will keep you in the game all the way through to the end of the business plan and beyond.
Avoid Automatic Disqualifiers
Investors read for mistakes. The moment they see one, they lose interest. And here are those mistakes in plain English:
- Overestimating market sizes. For example, if your business operates in the $1 trillion health care industry, you cannot state that your market is $1 trillion. You must narrow down a niche.
- Underestimating competition. A business plan that claims no competition undermines the credibility of the management team. It screams naivetÃ©.
- Projecting results over-aggressively. A business plan that claim market penetration, operating margin and revenues per employee that are weakly reasoned, internally inconsistent or just unrealistic undermine the credibility of the business plan as a whole.
Avoid those mistakes, and you will avoid creating a business plan that â€œgets noticed in a bad way.â€ So much for the â€œdon’t’sâ€. The following are the â€œdo’sâ€.
Identify a Large and Growing Market with an Unmet Need
You absolutely must show investors that your company operates in a large and growing market and that there is a â€œclear and compelling need for the product or service,â€ according to a business plan guide by Growthink, a leading business consultancy. It is therefore important to narrow the market by referencing reliable sources regarding its size and projected growth.
The dilemma is that a large market will undoubtedly have many competitors. Therefore you must also prove â€œbarriers to entryâ€.
Prove Barriers to Entry
A barrier to entry is an aspect of your business that locks out the competition. Barriers to entry include proprietary technology, exclusive information that no other company has, and a management team with experience that no one else has. The â€œbarrier to entryâ€ aspect of your business plan sets your company apart in a stark way. You are showing here that your company is the only one that can fill the market need identified in your business plan.
Show Examples Cases
A tried-and-true method of operating is one compelling way to increase faith in your business plan. If something has been done before successfully by other companies that are similar to yours, tell their stories. The trick here is to show that your company can command a different large and growing market and holds barriers to entry.
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