Thursday, December 8, 2011

Breaking Down the Business Plan

Some people might think that a business plan isn’t really necessary for startups or that they are just a waste of time, but I would argue that a business plan can actually save you a lot of time and money because it will make you think about whether your idea will really work and if it can become a stable (and standalone) business. It’s really a selling document in order to sell your idea not only to your funders, but also yourself. You need to convince yourself that the idea is actually worth pursuing.

The business plan is the roadmap for your business. There are a lot of great templates that are available, (and often they are free of charge) so be sure to take advantage of those examples. One program that was recommended to me recently is Grow Think, which will break down the business plan process for you so that all you need to do is answer a few questions and then it will auto-generate your business plan based on your responses and order them in the correct sections. It can even help create your financial projections for you once you answer questions about the pricing and growth trajectory.
I would also recommend having a few scenarios for your financial projections – at the very least think about the worst case and conservative case. It’s also important to realize that most people who read or look at your business plan will know that your projections are probably inflated, so be sure to take that into consideration when creating your assumptions.
The executive summary is the most important part of your business plan. It should be no more than a two page recap of everything in your business plan. The executive summary will often might be the only part that is read by the people you distribute your business plan to, so be sure to include the following sections in your executive summary: overview, product/service (discuss both the benefits and features), marketing, company history & management, and financials.

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