You’re ready to go and get funding for your startup idea, but the obstacle of writing a detailed business plan is slowing down your progress. Don’t be the entrepreneur who forges ahead without a plan, leading to their startup company’s eventual demise.
A well-written business plan is often the difference between your entrepreneurial dream staying just an idea in your head and getting financed and making your startup business a success.
The value of a business plan isn’t solely for getting loans and pitching to investors. The plan’s vital role in your company’s success is the thought process you, the entrepreneur, go through as you compile the information and financial numbers. This is where you set your goals and crunch your numbers to determine if your business idea is profitable. Your research will uncover information that can help you modify your marketing plans to your benefit.
Our experts advise you to be sure to make your document is complete and not to forget these 10 critical components of a winning business plan:
10 Most Forgotten Items in Business Plans
Executive Summary
This critical and most-read section of your plan needs to be at the very front of your document. However, it should be the very last part that you write. It’s meant to contain and summarize the information in your complete business plan. Your readers should be able to quickly scan this summary and get a general understanding of your goals and why you will succeed. It should be no longer than one page, and preferably shorter.
Answer these questions for a powerful and compelling executive summary:
- Why will customers care about your business?
- What pain points will you solve for these customers?
- What sets your company apart in the industry?
- Why will your startup succeed?
Competitive Review
It’s surprising this is one of the most often missing components in submitted business plans. However, it’s probably the most important. You can’t succeed by not considering and strategically planning how to beat your competition. Your prospective customers will certainly consider all their buying options before making a purchase.
Your competitive review should answer these questions:
- Who are the companies currently in the marketplace?
- How do they sell their products?
- Why is your product needed and wanted in the industry?
- What is the value factor that makes your company different?
Originality and Innovation
Be sure to include the reasons why your company is unique. What is your point of difference? Today‘s highly competitive business environment demands that companies continually innovate to succeed. Decide how your firm will encourage creativity and improvement in all departments on an ongoing basis.
Cash Flow Analysis
The common mistake that beginning entrepreneurs make is being overly focused on profits and neglecting cash flow. Many businesses fail, while still technically profitable, by running out of money. Understanding, planning, and managing cash flow is critical. Include a detailed cash flow analysis report in your completed business plan.
Business Goals
Your goal should be simple, crystal-clear, and, most importantly, measurable. Instead of saying “I want the best salon in town,” which is not a measurable goal, instead phrase your goal like this: “My hair salon is the best in town with 200 regular customers in 2017.” Once you convert your goal into a measurable target, you’re more likely to hold yourself accountable and will be able to measure your progress against this specific number.
Emergency Plan
Plans are not reality. Be prepared for everything to go wrong. Remember Murphy’s Law. Detailing these plans will impress lenders and give you peace of mind to know what to do in the case of an emergency.
Here are some questions to answer:
- How will your company survive disasters — both natural and marketplace?
- How will you cope with a hurricane or flood?
- What will you do if you don’t achieve your sales goals?
- What if your expenses and cost of goods are higher than expected?
- What if you run into vendor delivery issues?
Growth Strategy
Fast company growth is stressful for the entrepreneur and the startup firm. Again, this type of “what if” long-range thinking will give both you and your investors confidence in your ability to manage a fast-growing company.
Answer these questions:
- What are your plans if you get more orders than anticipated?
- What if your website traffic increases 10X?
- How will you increase production, fund growing capital needs, and hire more staff?
Marketing Psychology
Most business plans include information about the target customer and their demographics, such as age, gender, income, and geographic location. Smart companies also write about their customers’ mindsets and the emotional needs and problems that their proposed product or service will solve.
Social Media Plan
Social media is a major part of all business promotion and needs to be addressed properly. A strategic and well-planned social media program of how to build audiences and engage with customers is crucial to business success. The time to develop this plan is at startup.
Exit Strategy
Having a well-researched exit plan will help you get venture capital investment. Venture capitalists want to know how they can cash out of your startup. Most venture capitalists want to see a growth of 10X of the initial investment. These profits are most often realized when companies are sold or go public.
Proofread
Don’t depend on your computer’s spellcheck function to be sure that your document is free of typos. Instead, take the time to print your plan and read it very carefully backward. Brush up on your proofreading techniques.
This makes you more likely to find any mistakes in spelling, word usage, or incorrect data. It can also be helpful to have a friend or business associate proofread your business plan. Also, don’t forget to double-check all your charts and graphs for typos and mistakes. The smallest typo can create a negative impression in your lender’s mind about the professionalism of you and your startup idea.
Sadly, many a good business plan has been rejected due to grammatical errors that result in misunderstandings and negative impressions. Don’t let this happen to you. Instead, hire a professional proofreader to check your work. You will be confident knowing that your business plan is letter perfect.
Go out and pitch your business idea and get funded! Good luck.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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