Pointers on Putting Together Your Business Plan
Ready to start writing your business plan? Here are
some basic but essential strategies to keep in mind as
you begin putting in together.
Getting started
The hardest part of creating a business plan is getting
started. Start with some of the easy steps first. Describe
your business and your product or services. Talk about
the market you are targeting. And explain what stage of
development your company is in. If you get hung up on
a particular part of the plan, skip it for now and come
back to it later. Don't worry about making a perfect first
draft -- just get some thoughts down to get the process
going. You can always polish it up later.
Keep in mind your audience
While writing of your business plan, keep in mind your
intended audience and why you are writing the plan. For
example, if you are trying to attract equity investors,
you will want to emphasize the big upside profit potential.
At the same time, you need to be especially careful to
adequately disclose the risks and uncertainties in your
business because investors often look for someone to sue
if their investment disappears. If you are trying to get
debt financing, you want to emphasize not the huge upside
profit potential but the certainty that the debt can be
repaid. In fact, talk of big profits may scare away debt
financiers because high-profit potential usually means
high risks.
Think competitively throughout your plan
In today's crowded marketplace, you're probably going
to have serious competition, no matter how creative your
business concept is. That is why you need to think competitively
throughout your business plan. You need to realistically
identify where you will do things in similar manner as
your competitors, where you will do things differently,
where your strengths and weaknesses are. To try to run
a major aspect of your business significantly better than
your competitors may be a difficult challenge. Hence,
it is often better to focus on planning on being different
from your competition and competing with them less directly.
Can you find a particular market niche to focus on? Can
you find a unique strategy? Can you position your products
differently? Can you use different sales or marketing
vehicles?
Don't overreach with your business plan
A lot of business plans sound good on paper but don't
work in the real world. It's difficult to attract people
to a new product or service. Just because it's better
doesn't mean people are going to switch to it! People
or companies have established buying patterns and are
currently doing business with someone else. To get them
to do business with you, you need to do more than simply
attract them to your business. You have to take them away
from someone else's business. It's also quite possible
that when you enter the marketplace, your competitors
may react with their own new products or services or by
cutting their prices. And while it's easy to overestimate
sales projections, it's just as easy to underestimate
costs -- especially for a start-up. There is always going
to be a hefty amount of cost overruns, expensive problems,
and items that you simply overlooked. So forecast conservatively
and try to have some extra cash in reserve.
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