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How to structure a Business Plan

Last time Marco already stated, that you have to be thoughtful to whom and how you can and will pitch your idea. That it’s important, because they do not know you, nor your field of profession. You have to consider, that the listener (e.g. Business Angel, Investor and s.o.) in front you is not familiar with your work. Show what you will do different than others. You have to convince them in about 1 to 15 Minutes that you are worth their money and time. That is one hell of a task, but if you stick to the essence of your idea, you will gain interest in you and your ideas.


Business Idea

If you do that right, you better have a business plan up your sleeve that will give way more details on you and your idea. In summary you do kind of the same things as with pitching. The biggest difference is the details on the idea. First you should start with a few pages describing your idea and what kind of issue your innovation addresses. Is it a product or a service? Show them how you estimate your future proceeds to finance your work. This is a crucial part of your business plan that you can complete easily if you think about it. “I am convinced, that my innovation will be profitable, I know that there is a market for it, and I can prove it with solid data!”. Brilliant, then you know how your customers will get the product/service and how they will pay you, right?


In our case, I stated in a previous post that we plan to develop a hybrid model that allows us to generate income, experience and security to establish a healthy but ever growing company.


The Team

After you blew them away with some more details on how you will be successful you to introduce your team. Feel free to be a bit creative and tell them something personal but be professional. Afterwards you should show that you are the founder to execute on those ideas. Also, why your team member Dave is an important member of the company and how everyone will benefit from his skills. For example in our case Marco is the developer with many years of experience and very skilled in programming. Well, and in my case I simply can count above 2… It may help, that I have also a certain sense for markets, some professions in human resource management and allocating/aggregating money. Plus, I like to talk about topics that I have strong opinions on. Marco and I know each other since university times. We shared many interests, for instance music, playing guitar, discussing things like gameplay decisions in video games we loved and hated and so on. If you can convey that you are convinced by your idea and can observe the market with a wide perspective and an open mindset, you can transport the deriving energy through your business plan to the reader.


After scratching the surface of your ideas you should take a deep dive into your innovation. Be as detailed as possible and use all the specific terms you could not use when you pitched your idea in the first place. You should show that you are the expert on this topic. Don’t be shy about the novelty you can give customers. You should also show that other market participants are not able to provide substitutes to your product/service.


Your Company

If you finished this you can explain how the company will be developed. In general, you can diversify business development into five stages. You explain how you plan the seed/founding stage when you start your business. Then, how and what happens to make your company grow in the growing stage. In that second stage you typically reach the so called break even point when your revenues excell your costs. Afterwards you should show what you do in the maturity stage, were you reach your revenue and profit maximum. On a technical point of view there are two more stages. That would be the saturation and degeneration stage. Consider those two carefully! There is no way you want these to happen. Describe why and how you will prevent a possible demise of your company. For example by planning on developing new products or going into new markets and so on.


The Market

When you’ve finished this part you take a look on market and competition. You define a target market and an audience. Look at the size of the market and your future competition and possible substitutes. Substitute means, there may be competing products replacing yours. This topic can get quite complex, but it can give your reader and yourself a very nice overview and awareness on your target and possible future markets.


Why you?

Now you should define and explain the customer benefit. What are the current problems that customers have when they use or do things the way they are used to? Why should they buy your stuff? When will you sell the first unit? What makes you different from all the other companies out there? Can you provide the answer to a question not yet asked? Can an already existing company copy your work? If so, how long does it take? What do you want to do to prevent competitors from taking your advantage?

You have to answer all these questions to win the trust of the customer. When you can represent yourself, your innovation, and your roadmap to success in a plausible way, then — and only then — you can convince others to think in the same way.


The Finance Plan

If all of the above is said, you now should show in numbers how your plan unfolds. The finance plan. This is typically a 3 to 5 year forecast on how your company will start and succeed in that period of time. You plan things like personnel, equipment, location, taxes, revenues, marketing, and borrowing requirements. You show numbers in detail to explain why you need money and how much money will your benefactors get in return. Especially the last part here is crucial. Investors want money and the right of co-determination. Don’t show that you will get rich, show that they will get rich and that the company whose business plan they are reading right now will be a thriving success.


SWOT Analysis

With this issue resolved, you can give an honest overview on risks and chances of your business model with the so called SWOT analysis. Explain the Strengths of your company. What can you do, that others cannot. Explain the Weaknesses that could lead to problems. What are gaps of knowledge for example. What are the Opportunities you can take? Be the first in the market before someone other does what you do. And last, what are the Risks involved? Are there any risks in your model? Can the market change over night? Will you still be relevant in a few years? What are technological risks? Can you assure, that the resources you need will be available forever? If you can resolve the analysis open minded and self-aware you give a credible overview to your benefactors. And who knows, maybe they already know solutions to some of your problems.


With that said, I hope I could have provided a nice little overview on the hardships and opportunities of writing a business plan to you. It is quite a bit of work but it will always pay off. It is not only for others to read something nice about you. It also helps you quite a lot to think about topics, that can otherwise be easily overlooked. Next time Marco will tell you about our market research. It is going to more businessy stuff, I hope you are looking forward to it!



Stefan

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