There’s a reason most businesses go belly-up within the first five years: starting a business is hard. In fact, if the foundation isn’t solid, everything that you do can be negatively impacted. That’s why it’s so important to begin with a business plan. But what does a modern business plan really look like? Well, the following is a basic outline of things that should be included just to get you started.
1. Conduct market research. What are your competitors doing? What are their price points? What makes you different/better?
2. Connect with your target audience. Get comfortable with the idea of creating several versions of your business plan—one for investors, one for venture capitalists, one for business partnerships.
3. Be sure that you can provide proof to back up each claim you make. If the goal is to be a thought leader within the next year, you have to be able to state why you believe that is possible. What are you offering that sets you apart? If you say your product will take the market by storm, you have to support this statement with facts.
4. Under promise and Over Deliver. Be conservative in all financial estimates and projections. If you feel certain you’ll capture 40 percent of the market in the first year, you can say why you think so and hint at what those numbers may be. But make your financial projections more conservative—for example, a 10 percent market share is much more credible.
5. Provide proof as to why your idea will work. Have others done something similar that was successful? Have you already created a prototype? Include all the variables that can have an impact on the result or outcome of your idea. Outline why some of the variables don’t apply to your situation or explain how you intend to overcome them or make them better.
6. Discuss bonuses for investors. Some investors will insist upon a hands-on role; some would prefer to be involved as little as possible. All investors want to know when they can get their money back and the ROI. Create a brief description of options for investors, or at least mention that you’re ready to discuss options with any serious prospect.