WHAT IS A BUSINESS PLAN

A business plan is a comprehensive description of a new business. It is a helpful tool as it forces the writer to realistically consider all aspects of the business in detail, this is helpful whether you use it to seek funding, or write it purely to articulate your idea.

In many cases the business plan brings the weaknesses of the idea into the light - this is perhaps it's most important quality, as it helps the entrepreneur confirm if it is the right idea to action.

A business plan generally contains:

• Product description,
• Analysis of the market and
• Analysis potential segment of customers,
• Marketing plan
• Implementation plan
• Financial information
• Team info

 

Download a popular Venture Cup template for a business plan here. 

 

WRITING A BUSINESS PLAN

Here are the key questions and components that should be answered and included in your business plan

1. Start by grabbing the reader's attention

You should lead with the most compelling statement of why your idea has big potential. This sentence sets the tone for the rest of the executive summary. Usually, this is a concise statement of the unique solution you have developed to a big problem. It should be direct and specific, not abstract and conceptual. If you can drop some impressive names in the first paragraph you should-world-class advisors, companies you are already working with, a brand name founding investor, that is really good. 

2. The Problem

You need to make it clear that there is a big, important problem (current or emerging) that you are going to solve, or opportunity you are going to exploit. Here you identify how you solve this problem by, for example increase revenues, reduce costs, increase speed, expand reach, eliminate inefficiency, increase effectiveness.

3. The Solution

What specifically are you offering to whom? Software, hardware, service, combination? Use commonly used terms to state concretely what you have, or what you do, that solves the problem you've identified. Avoid acronyms. If you have customers and revenues, make it clear.

4. The Opportunity

Spend a few more sentences providing the basis for the opportunity. This could be the basic market segmentation, size, growth and dynamics-how many people or companies, how many dollars, how fast the growth, and what is driving the segment. Advice; you will be better off targeting a meaningful percentage of a smaller, well-defined, growing market than claiming a microscopic percentage of a huge, heterogeneous, mature market.

5. Your Competitive Advantage

No matter what you might think, you have competition. At a minimum, you compete with the current way of doing business. Most likely, there is a near competitor, or a direct competitor that is about to emerge. So, understand what your real, sustainable competitive advantage is, and state it clearly.

6. The Model

How specifically are you going to generate revenues, and from whom? Why is your model leverageable and scaleable? What impressive levels will you reach within three to five years?

7. The Team

Why is your team uniquely qualified to win? Don't tell us you have 48 combined years of expertise in widget development; tell us your CTO was the lead widget developer for Intel, and she was on the original IEEE standards committee for arc-widgets. Don't just regurgitate a shortened form of each founder's resume; explain why the background of each team member fits. If you can, state the names of brand name companies your team has worked for. Don't drop a name if it's an unknown name, and don't drop a name if you aren't happy to give the contact as a reference at a later date.

Some other general points:

• Use simple sentences
• Do not lead with broad, sweeping statements about the market opportunity. What matters is not market size, but rather compelling pain. Investors would rather invest in a company solving a desperate problem for a small growing market, than a company providing an incremental improvement for a large established market.  
• Don't acronym your own name. Sun Microsystems did not build its brand by calling itself "SMI."
• Drop names, if they are real; don't drop names if they are smoke. If you are in positive negotiations with a big companies you shoudl mention them by name. But if you consulted for Cisco's HR department one week, don't say you worked for Cisco.
• Avoid adjectives that sound impressive but carry no substance. "Next generation" and "dynamic" probably don't mean anything to your readers and tend to be irritating.
• State your value proposition and competitive advantage in positive terms, not negative terms. It is what you can do that is important, not what others cannot do. With the one or two most obvious competitors, however, you may need to be very explicit: "Unlike Cisco's firewall solution, our software can operate
• Dont lie.  
• Go back and reread each sentence when you think you're done: Is each sentence clear, concise and compelling?

 

Courtesy of Garage Technology Ventures.