Most financial institutions, be they Banks, Private Equity of High Net Worth individuals like a business plan that presents a lot of information in as few words as possible. The following business plan format, within 15–20 pages, is all that’s needed.
Many business plans also fail to visually present well, people get lost in the importance of the substance of the plan, they forget about the visual impact ... don't. The visual plan is the first contact and whilst the content must be credible and written well, don't forego a great plan for poor presentation.
Company purpose - Define the company/business in a single declarative sentence. Don't mistake this for your mission statement, your elevator pitch or your exec summary, simple one sentence based on fact.
Executive summary - This is your elevator pitch, a couple of paragraphs giving a broad outline of your business idea and why its going to work and more importantly why its worth investing in.
Problem - Describe the current challenge for the customer (or the customer’s customer). Outline how the customer addresses the issue today.
Solution - Demonstrate your company’s value proposition to make the customer’s life better. Show where your product or service physically sits. Try and give case studies or testimonials where your solution has already been tested.
Why now - We have all seen it, a great business idea ahead of its time or, you're to late to the party. Set up the historical evolution of your category. Define recent trends that make your solution possible and credible.
Market size - Not only do you need to qualify your total addressable market, you should also where possible define a market map. Who sits where, how is the product or service channelled. This is a critical piece of work and one which often gets the least amount of time. The reason is people dont dig and get to grips with the actual market dynamics, they guesstimate and make wild assumptions of share gain. Be realistic, spend time doing your homework and make sure you can substantiate any claims with industry verified date where possible.
Competition - Who's who in the sector, dont be concerned about opening up on what they are good at, or bad at, investors want to see what you are up against and if it was that easy, everyone would be doing it ... right.
Product - If you are going to be producing a physical product then you need to map out the timeline for launch. List all your IP, Patents and agreements, whats the timeline and do you require any approvals before launch. Is part of the investment to secure production, if so list out the critical path and timelines. Again, be realistic, investors need to know if you are going to need further funding before they commit.
Business model - Here we need to identify your revenue model. Whats your pricing strategy, who are you targeting, average account size, distribution model if applicable and who are your customer pipeline.
Team - When you present your team, about a paragraph on each is sufficient, add a photo and keep the facts succinct and relevant. Investors don't need to know your hobbies, they need to know why they should invest in you, what are your credentials and how do you and your team stack up.
Financials - Again, this is surprisingly an area where a lot of business plans fail. It is well worth investing in a professional to review and support your financials. Investors are not just interested in your P&L, you need to complete one of course, about three years is acceptable unless you are in a high capital investment model and five to seven may be required. Make sure you add a credible cash flow forecast, cash is king in any business and if you haven't completed at least a monthly cash flow forecast you are going to quickly come unstuck. Everyone hears of the statistics why businesses fail in the early years, running out of cash is one of the highest contributors to this problem.
The Deal - OK, whats the deal, you are asking for investment, what are you offering in return. Decide and take advice before you put pen to paper. If you are offering equity, make sure you value the business realistically, don't undersell yourself, but make it credible so as to make the return an attractive one. Whilst there is a lot of cash out there waiting for a good home, the competition is tough and the return on the investment will need to be realistic and worth the risk.
So, there you go, it takes time to write a good business plan, make sure you invest the time up front to get it right and you will find the funding of your business easier, in turn it will take the pressure off and allow you to do what you want to do most, deliver on those targets and make your mark in the business world.