Every small business needs a business plan. It’s an essential document that’s not just for start-ups and expansions – because a great business plan can serve as a road map for your company and help you make the right adjustments when things go wrong. Your business plan should be a living, breathing portfolio that evolves along with your company.
With that said, a business plan is still one of the most vital tools for a start-up or expansion, because this is when your document will convey the viability and potential of your idea (or existing business) to other people – usually people you’re trying to convince to invest their hard-earned cash in your company.
How can you do that?
By making sure your business plan answers the right questions. Below are six crucial points that you should address with your business plan.
Business Plan Questions to Answer
Is Your Product or Service Innovative?
This does not mean the core offerings of your company have to be completely different from anything that’s out there on the market now. In fact, having what amounts to an alien concept can be detrimental to a business pitch, because you’ll have no foundation to compare your company with.
Instead, your business plan should highlight what is different, exciting, or inspiring about your product or service. An element of innovation will underline the viability of your concept, and help to persuade investors that you can succeed.
Will People Pay for What You’ve Got?
As a business owner, you can’t just put in your 40 hours and cash a paycheck at the end of the week. Your product or service needs the ability to earn its keep, so that eventually it’s turning enough of a profit to cover the overhead costs of your business, the salaries of any employees you have or plan to hire, and your own cost of living.
Your business plan should outline the potential revenue for your company by showing how much you plan to charge for your products or services, and why people will pay that amount for what you’re offering. This piece of information shows investors that you know the real worth of your company, and you’re prepared to avoid collapse and bankruptcy with realistic projections.
Is Your Target Industry Growing?
Pitching a business that’s going to “revitalize” an industry is a tough sell – mostly because it takes more than one company to save a sinking ship.
Investors like to see new or expanding businesses in industries that are either stable or growing because it presents them with a better chance that their investment will pay off.
What Have You Got That Your Competitors Don’t?
The competitive edge is more than just a corporate buzzword. A great business plan articulates the differences between your products or services and similar offerings from your competitors. You should be able to describe why people will choose your widget over the next one in line, and therefore why your business will be profitable once you’re established.
By taking the time to describe your competitive advantage, you’re also giving yourself a foundation for a solid marketing plan.
What Are Your Staffing Plans?
Few companies can remain viable forever as sole entrepreneur operations. Eventually, you’ll need to hire people as your company grows. Investors want to know that you have smart, realistic staffing plans in place for your start-up or expansion.
You might start with assigning multiple roles to yourself and/or your existing staff, and then outline the milestones that will necessitate hiring new people, and offloading roles to them.
It’s important to have your business plan show that you understand the need for management and collaboration – and that you have good timing.
Are Your Goals Rooted in Reality?
You may be completely confident that your business is going to make a million dollars by the end of the first year, but that’s not something you’ll want to say to investors. Your business plan is a place for reasonable goals, with carefully considered, even conservative projections.
One of the best rules for customer service is to under-promise and over-deliver, and your business plan should follow that rule. Use it to outline a business forecast that you can reasonably expect to meet, and then wow your investors when your (private) wild speculations come to pass.
If they don’t, you’ll at least have kept up with the promises your business plan initially made.
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