June 26, 2010
If you want to raise capital, you need a business plan.
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The first thing to do is set the pen down and look around. That is a maxim all writers worth their salt must follow, and someone writing a business plan is wise to observe it as well. It all begins with research. Is there a market for your product or service? What is the competition? After research comes developing a strategy, calculating costs and revenues, drafting a plan, and finalizing a finished copy.
1. Do the Research
Use databases, articles, and direct interviews with entrepreneurs and potential customers to do research on the industry as a whole, your niche market, your competitors, and operational costs. Keep detailed, organized, careful notes. Be very careful about citing sources, as you will be referencing them throughout the business plan.
2. Develop a Strategy
Use industry standard best practices as a jumping-off point. This ensures your strategy is solid, as it is has tested in the field by others. But then you must develop further strategies that differ from the rest of the industry. This will set your company apart from the competition and create “barriers to entry” to help your business succeed. This will inform all sections of your business plan.
3. Do the Calculations
Add up all the costs of every activity your business will engage in. Include operational costs for the first year, five-year, and long-term projections. Then create revenue projections for the same time periods. Base your projections on the research you did, in light of the strategy you developed. Your projections must absolutely be realistic from square one, or the scent of naivete will make its way to investors, who will promptly drop your business plan into the wastepaper basket.
4. Write a Draft
If you have done the previous parts of the business plan process thoroughly, writing a draft will flow naturally from your existing data. The idea is to turn it all into prose, organized into the ten standard sections of a business plan: Executive Summary, Company Analysis, Industry Analysis, Customer Analysis, Competitive Analysis, Marketing Plan, Operations Plan, Management Team, Financial Plan, and Appendix.
5. Revise and Hone as a Final Draft
First revise for logic and completeness. Remove any redundancies, as the business plan must be as brief as possible without sacrificing the whole picture. Then revise for grammar, punctuation, and finally formatting. If you need to hire a new pair of eyes to look over your business plan, do it. Business planning burnout can make you miss glaring flaws.
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