12 Tips for a Successful Business Plan

Improve Your Capital Funding Opportunities
Everywhere you turn there are gurus, middlemen and business development specialist who have their own "To-Do" lists readily offered up to anybody seeking capital for the start-up or expansion of a business venture. In most every case, a business plan is as important as a loan application in the process of seeking that money. What follows is a list of 12 topics you want to address when preparing your presentation for solicitation of funding:

1. Be Prepared: Write a business plan
By going through the process of writing your business plan you will have thought through all of the issues that an investor considers when judging the viability of your business. Even if they don't look at your entire business plan on the first pass you'll be prepared to respond to important issues and concerns of the potential investor or lender. Business plan software can walk you through the plan development process, step-by-step, breaking it down into manageable segments. It also helps you understand what to write and why it is important to your plan. This step-by-step process will also lead to the development of the basic information to create financial projections related to balance sheets, profit & loss and cash flow statements. What you need to look for is software that allows customizing the plan to your specific needs.

The Executive Summary should contain the following:
• The primary objectives of your company.
• Your key personnel.
• The market you address, its needs, how those needs are currently met, and how you address its shortcomings.
• Detailed description of your product or service, including how it addresses customer needs and desires.
• Financial projections for five years, profit point, break-even point, and ROI for investors.

2. Be Flexible to Change in Your Business Model
As you begin to implement the business plan the real world may not embrace your business model. Determine what works and doesn't work. Be willing to alter your plans accordingly. You may even find greater market potential that requires re-thinking the entire business plan.

3. Consider Alternatives to Product Distribution
Failing to understand how your product should be distributed is a sure way to turn away investors. Do your homework on the various distribution channels. Know their expectations and working models. Find the channel that works with your pricing model and facilitates your growth requirements. If possible, develop partners with brand names that can provide credibility and growth potential.

4. Be Flexible with Investors on Issues of Control
Don't focus on retaining control of your company. Focus on what makes the company profitable. Investors need to see that you are willing to assume some level of risk and are not intent on hoarding stock. Great businesses have been built by entrepreneurs that understood their limitations and hired executives who knew more than they did. Focusing on profits creates capital opportunities. Focusing on control creates potential barriers to investors.

5. Develop a Strong Management Team
A business plan is only as good as the people responsible for making the business succeed. Identify who will run the business, their achievements and ability to make the business a success. Get commitments from qualified personnel for operations, financial management, development, marketing and sales. If not yet identified, make note of those key positions for which you must identify and recruit the appropriate individual who retains the necessary education and experience. Don't hide your weaknesses or shortcomings. Identify them and how you intend to overcome.

6. Give Customers a Reason to Buy from You
There must be a need and desire for your product. No longer will a clever idea, by itself, bring in the money. You need customers willing to test your product. Paying customers validate your pricing strategy.

7. Be Reasonable & Conservative on Near-term Revenues & Profit Projections
The biggest red flag to an investor is revenue projections that increase by the same percent each year. You should anticipate various increase levels as your business progresses through different stages of growth. Your engineering, sales and marketing expenses will also change with these growth stages. Conduct the research of your industry to determine expected ratios for expenses and revenue per employee. Investors will take you seriously when they see that you have a clear understanding of the financial implications.

8. Give Investors Alternative Exit Strategies
Understand what motivates an investor, their expectations, exit strategy, and their minimally acceptable return on investment (ROI). The investor has many alternative investment opportunities. If the investor is going to take a risk on your concept he or she has to "BELIEVE". Demonstrate your potential for profitability with thorough descriptions of the market, your personnel and your product concept.

9. Don't Ignore the Competition
Customers always have a choice. They can either choose to do things the way they have always done them, find alternative solutions, or purchase your product. Identify your competitors, their strengths, and weaknesses and emerging technologies. Without this knowledge you will not be able to plan on how to respond to their retaliation.

10. Accurately & Honestly Define Your Market
Do your market research. Investors can easily discern between substantive and superficial data. Define and locate your market niche then determine its TAM (Total Available Market) and SAM (Served Available Market). Through the use of surveys (primary data) and secondary data you can calculate the approximate percentage of the SAM your company can penetrate, and how much to increase the SAM. Stating that you will capture the entire TAM is a clear indicator you don't understand the market and your potential in that market.

11. Don't Ignore Requirements of Incorporation, Patents, Trademarks & Copyrights
In some industries (i.e. pharmaceuticals) it is critical that competition be dissuaded through the use of patents, which protect your research and development investments and provide a window of opportunity to realize a share of revenues before competitive offerings arrive in the marketplace. Trademarks, copyrights, non-disclosure agreements, employee agreements, etc. are a necessary part of the protection of a company's intellectual assets and branding. Incorporation will help to protect the investors and company assets in the event of legal proceedings against your company.

12. Identify the Methods & Costs of Getting Your Message to the Marketplace
Investors want to know what methods will be employed to gain customer attention, customer acquisition costs, average and target per-customer revenues, customer breakeven milestones and product life cycles. They also want to see your future plans for retaining existing customers. In most every business sector the returning customer represents the most reliable source of near and long-term revenues and profits.