Business planning is becoming an integral part of the startup ecosystem. A well crafted business plan gives shape to budding ideas, showcases the unique proposition of the business and highlights the fiscal potential that might attract potential investors to fund the project. At times, entrepreneurs draft or invest in business plans which are limited to being large sized documents filled with architectural theories, sample ideas, the same old strategies and lots of irrelevant financial calculations. Now we know why 9 out of 10 new ventures or business struggle to survive.
A business plan is not just a theoretical constant process of drafting ideas, creating goals and defining the workings of a business, rather it a coherent plan that links all the key elements of the business into a real life and achievable platform. It is this business plan which acts as the guide and audit benchmark for the business.
We, having worked with more than 350 entrepreneurs across 55 countries have identified the key aspects of a robust business plan. Our experience shows that a good business plan should create a framework and highlight four key building blocks- People, Opportunity, Business Model and Flexibility.
People – The most important and toughest part for most new ventures, getting the right team in place. For an investor understanding the skill set of the founders, the team, their background, knowledge and expertise is very important. An investor needs to feel comfortable working with a set of people. Also from a pure play business perspective, having a team that can build and operate the business with limited external support is a huge plus.
Opportunity– This relates to the market, its potential and growth possibilities. In essence, it understands the true potential of a business, its competitors, trends and opportunities. Getting an exhaustive market research allows the business to set realistic expectations about its prospects and also gives potential investors data to quantify returns against historic trends. In addition, linking the business opportunity to the revenue model justifies the financial forecasts of the business.
Business Model – From an operational perspective it explains the relationship between external and internal stakeholders of an organization, application of business strategies and values that the business will deliver. A good business model will define the linkages that drive a business and map out the value chain potential. For a new venture being able to map out a comprehensive business model helps to generate tactics for stakeholder engagement and build a strong supply chain.
Flexibility–This deals with the potential risks involved in the business, sudden changes that may occur and answer the “What if” questions for the new venture. A business plan should be adaptable enough to cope with the changes in environment, market, prices and other conditions related to the business. An investor may seek out the flexibility of the business plan and will be impressed if they find risk mitigating solutions and contingency plans incorporated into it.
For an entrepreneur,it is important to have the passion and interest in the venture and craft it into a proper flexible business plan.
Keep in mind the following while drafting a business plan;
- Build a basic framework for writing the business plan which ticks all the boxes for an investor.
- Making realistic assumptions rather than optimistic ones, predicting the future and setting SMART business objectives.
- Highlight you team members and their capabilities
- Do not be afraid to layout the inherent risks of your business venture and its mitigation strategy.