Basics of Business Plans
Business plans are a required part of any new venture. They help convince investors to invest in your company. They set the path and focus of your business. They help define the goals for the next few months and years. But mostly, they get you to focus on your company.
What goes into a business plan? Well, that depends on the purpose and for who it is to be seen. Most business plans will contain a few of the same sections, but depending on where you are presenting the business plan, they will have different requirements and information that they will want to review. At the very least, this document is the who, what, when, where and how of your future. However, in practice, your business plan will contain three main parts, your Executive Summary, your Financial Outlook and everything else.
The first and most important aspect of your business plan is the Executive Summary. This is a brief summary of your entire plan that summarizes the purpose, goals and outlook for your company. It’s typically less than 200 words (you’ve read about 200 words so far) and should wow your reader. For many investors, this is the part and only part of your entire 15-25 page business plan that they will read. If you grab their attention here, the rest of your document becomes important. Do a bad job here, they won’t even look inside.
The next important portion of the business plan is your Financial Outlook. Investors will often look here next to see what kind of economic outcome you are predicting from your venture. The predictions, assumptions, market size and return on investment will all be found here and should reflect a positive and optimistic outcome of your venture based on assumptions that you are making about your company and its outlook. If the investor disagrees with your assumptions and the numbers look reasonable, you are on your way to the next steps. Keep in mind, investors will sour if they think your proposed return on investment is too low or is too high, thus it becomes an art form.
The last portion is the rest of the document. Interestingly enough, you will need the rest of the document prior to writing your Executive Summary as try as you might, you cannot summarize what you haven’t written yet. The details inside the remaining portion will differ based on who you are approaching for funding as well as the length of the document. Again, following directions is required. If they ask for 8 sections with a total of 16 pages in total length, your business plan should have 8 sections and no more than 16 pages in length; shorter is ok, however longer will get your document automatically rejected in many cases. And auto rejection makes sense, after all, if you cannot follow basic rules that everyone else is following, how can they trust you with their money?
How can I help you? At Six Sigma Southwest, I have written and help written many business plans. Some were accepted to prestigious competitions. I also have access to a huge library of information that gives information on markets, which can be hard for startups to find. I have also met and discussed many business plans with Angel Investors. While no two investors are the same, they all have the same desire, to make money. I can help your new business venture create a successful business plan that will help attract funding. To find out more, contact me at Six Sigma Southwest and learn how I can help you get started!
