31. January 2018
How to Create a Great Business Plan
Creating a business plan may seem like a mission impossible. Most people imagine a 60-page long document full of complicated mathematical equations, but it does not have to be this way. Actually, it should not be. A good business plan is simple, clear and short. We'll show you how to make one.
This is how we think
a business plan should look like
The foundation for creating a business plan is to write down answers to the following eight questions. Take a paper and a pencil; let’s start.
1. Vision and goals of our project
Why does our company even exist?
2. The problem that our company is trying to solve
What's the problem? How are customers handling it now and what are the gaps in these solutions?
What value does our company bring to the customers? How is our solution unique? Will it stand the test of time? How will it evolve in the future? Why is now the right time for our solution?
Write down a list of our key team members, their roles and links to their profiles on professional networks (LinkedIn).
4. Market potential
What is the relevant market for our product/service? Which foreign markets are we targeting? Why and when? Who is our typical customer? Who is our direct and indirect competition (including foreign competition)? What are we better at than they are?
5. Business model
How will we earn money from our product/service? What is the planned product/service cost for individual customer segments? What are the expected acquisition costs per paying customer? What is the sales/distribution model of the product/service (how do we get the product/service to the customer)? What is the predicted sales cycle (phase, conversion, time requirement)? Overview of key customers.
7. Summary of the Financial Model
Fill out the financial plan for the next 3 years and prepare a summary in the following structure for each year or add charts.
|- Product development|
|- Salaries (besides development)|
- Operation costs
|- Other (describe)|
|Number of customers|
Add whatever you think is important but did not appear in the previous sections.
Every business plan should be...
You have done a great deal of work by now. Let's take a look at a few points that will make your business plan rock. Make sure your business plan has all of the features described below.
It includes consideration of the company, the environment, the market, and further development.
Individual inputs and calculations are linked to each other.
Predictions and considerations are within real limits.
Inputs are verified and calculations are mathematically and logically correct.
The model allows for easy change of key inputs and assumptions.
It is divided into easily understandable parts.
It is in line with the business cycle of the project and the distribution of costs.
It includes all project areas.
These are the most
that entrepreneurs make
To make mistakes is human. But it's better to prevent them when you can.
- The plan is unclear.
- Information and inputs are not based on verified sources.
- The individual parts of the plan are not interconnected.
- The plan does not respect logical links (such as asset growth in relation to revenue growth).
- The plan does not include real restrictions (market size, production capacity, inventory quantity).
- Costs are significantly underestimated or omitted.
- The formula changes during the calculation on one line.
- A constant occurs in the formula.
- Inputs and calculations are not separated and marked.
- The plan does not include continuous and/or test calculations.
- The calculations and the formulas used are too complicated.
- No flags are used.
The sections in the plan are not systematically separated.
The logical sequence of calculations is missing.
The plan does not contain a summary of the most important variables.
The plan is not flexible enough and does not include other variants.
After this evaluation, your plan should look great. But it can look even better.
- Create the plan together with the whole team.
- Build a story around your business.
- Try to make your business plan complex and inclusive of all eight points.
- But, keep it simple! Less is more.
- Concentrate your attention on the financial plan that is important for every investor.
- Use as many relevant informational resources as possible (the past, market comparisons, statistics, predictions of economic and market developments, etc.).
- Always make sure the numbers match.
- Do not forget to create a realistic, a pessimistic and an optimistic scenario.
- Be specific, give examples and connect all categories.
- Regularly check and update the plan.
- And, importantly, have fun and be creative.
Your business plan is ready.
Now, it is time to amaze investors.