A business plan is the pen-to-paper “rallying cry” of any start-up venture. Sound business plans not only help a company that needs to raise capital but also help create enduring value. The business plan acts as the operations manual for the company and as a reference tool for investors and board members. Developing the plan forces you to analyze corporate strengths, weaknesses, opportunities, and threats.
An effective business plan should:
1) Help focus ideas about a market opportunity and turn them into a realistic course of action.
2) Create a track for management to follow in the early years of a business.
3) Identify milestones and benchmarks that the management team can use to measure progress.
4) Be succinct, interesting, and sufficiently solid enough to attract prospective investors.
5) Be flexible enough to handle contingencies and unexpected events.
This guide focuses on developing a business plan to assist with financing the venture. It cannot be overemphasized that major investors are
inundated by investment opportunities; they can choose but a few. An investor’s decision frequently turns on the quality of the business plan.
Piquing, capturing, and retaining their interest is critical. Keep in mind that investors do not purchase good ideas. They are more interested in dynamic and flexible people who can execute a well reasoned plan for a business with strong opportunities in a growth market.
To effectively write the plan you must keep in mind what a good investor is looking for:
1) A specific and realistic source of value that differentially fulfills a specific and unmet need.
2) A team that can plan and execute the plan with success.
3) A sustainable and defensible product/service position. For more information regarding the specifics of obtaining venture capital, growing the business, going public, executing mergers and acquisitions, developing competitive executive compensation plans, look to the other literature in the StartUp Suite and to the knowledgeable professionals at Arthur Andersen.
The benefits of creating a business plan:
1st, a reality check when you first examine the feasibility of your business idea
2nd, your business resume
3rd, a timetable for operations
4th, a modeling tool
5th, a vehicle for tracking progress
6th, a blueprint against which operations are adjusted to achieve your goals
7th, a starting point for future planning
