Creating a winning business plan can be daunting, these tips to stay focused for success.
WHY ARE BUSINESS PLANS NEEDED
A business plan is a must for entrepreneurs and businesses. Business plans help those who want to do things well and create and a bright future. With a well-written business plan, you have a great start but are not guaranteed success. It would help if you began with the correct business model. Additionally, you’ll increase your chances of getting assistance from others when you show you are ready with a plan. Many successful entrepreneurs consider having a good business plan the only way to achieve success.
ELEMENTS OF A GOOD BUSINESS PLAN
The winning business model must clearly detail the market, the customers, and users of the services or products. And, the plan needs to include the product or service and how people can get it.
As an example, a group of students has a solution that is a great business opportunity. They work out a business plan with all the possible scenarios, the estimated sales, and the expected benefits. They prepare a careful dossier with all the advantages of the project, and this document presents them to investors. Investors look for business plans with a market foundation rather than the products or technology it offers. The market potential, sales, profits of products or services are much more attractive than the products themselves. It is important to demonstrate a market for the products or services that your company is proposing.
CUSTOMER UTILITY IS IMPORTANT FOR A WINNING BUSINESS PLAN
When marketers reference customers, they are typically talking about the entire consumer experience. Entrepreneurs design their products with quality standards and production costs in mind. For example, in a round of financing before venture capital companies, a company presents its textile products, exhibiting them as an undoubted quality compared to competitors. Although the textile sector was considered a segment of Industry with low profitability, the venture capital agent would support the project if it demonstrated a clear benefit to the consumer.
In doing so, they have shown the different investors the purpose of a product and that there is a market and the profits from production are a function of the market. The price is based on the consumer’s experience and not on the production costs of the item alone.
How we can sell our products is the first of the most critical aspects when giving credibility to the plan. If the product is new, it requires a strategy; if it launches an existing product, it requires another strategy. For example, for a new technology or service idea, we can create focus groups with potential clients to give their opinion on it and demonstrate the potential market or get ideas that we had not even imagined.
Discovering the potential market for our products is a very complicated and, in many cases, costly task; it is here that innovators or entrepreneurs should focus on finding strategies that respond to potential clients.
A product that is unknown whether or not it has a market is a product that has no value.
How much is the product or service worth? And, is it priced competitively? If the product or service is a disruption, what the cost and benefit over what it replaces? The objective of investors is to maximize the amount they invest in current and future products. As a business owner, you need to make sure your solution fulfills the need of homeowners and clients and is a lasting and quality product.
A successful business plan must calculate the value of the project and have negotiation strategies to get the best possible price. Investors are specialists in these aspects and are clearly ahead of us. The question is if we can do the same.
Some entrepreneurs think their financial plan is their business plan. However, this is not the case. Even if all the numbers line up in an excel spreadsheet, a true financial forecast and plan are necessary. It is important to make clear and realistic financial forecasts without making the mistake of deceiving ourselves. Forecasts do not have to be exact; let’s not forget that this is only the path that will help us achieve the final goal.
Take these tips into account, and you will surely go a long way:
- Create easy-to-understand financial models.
- Incorporate risk analysis into forecasts.
- Support through studies and documentation the data we offer in the forecasts.
- The main enemy we have in a new business is the lack of liquidity.
- We must analyze the first years in short periods of time; the idea is to make a monthly forecast for the first two years.
- Don’t overwhelm the investor with numbers, but present the conclusions clearly and graphs and tables supporting them.
- Clarity when choosing the indicators or ratios that measure our activity; the mistake we usually make is putting any indicator and not having a clear idea of the required indicators.
MAKE IT HAPPEN
Now you know how to present a good business model. Please consider that when we present a project to an investor or a bank, we see an order of preference when defining priorities. It is often not the money or the project itself that matters most, but you and the people behind it all.
Several bankers and lenders have agreed that the first thing when deciding to release money or not was the person, the second the project, and the third the guarantees.
Without leadership, it is very difficult for a project to succeed. Although a leader can achieve objectives, if the said leader does not have a realistic and convincing plan, it is difficult for him to achieve the objectives he had in mind.
Without leadership – and a great business model – we get nowhere.