A business plan is a ‘Plan for your Business’.
It is
not a document that you make for the investors. It is a document that you
should prepare for yourself. Writing down your business plan helps you think through
the assumptions clearly, and often writing helps you identify impracticalities
in the through process.
Yes, for investor presentations too, a business
plan is necessary.
Broadly speaking, a business plan should communicate
the following to an investor:
- What are you selling and to whom?
- How large do you see the company growing to – what is your own aspiration for the company?
- How are you going to implement it?
- How are you going to make money?
- Why are you the right team for the investors to invest in ?
Components
of a Business Plan
Brief
business description
No more than one paragraph to describe your
business and the business opportunity. If it takes more than a paragraph to
describe your business, perhaps you need to revisit the drawing board. The
simpler the message, the quicker you will draw investor attention.
Team
This section should answer the question ‘Why is
this team/entrepreneur best suited to implement this business opportunity’.
Keep it simple. Include educational qualifications and work experience.
What is the
issue / pain point that your product / solution will address
This section will reflect the clarity of your
thinking about your business opportunity. Be precise and succinct.
What is the
size of the market opportunity
Investors like big ideas with big markets. Be clear
about who and where is going to buy your product/service and how much they
would pay for it.
Product / Technology
Overview
Highlight the uniqueness of the technology and
application and not the technical details of the solution.
What is the
value proposition
Why would consumers choose this over others?
Business
model / financial model
This is about how you will make money from this
business opportunity. The business model is important, not an excel sheet with
5 year detailed projections. Please remember, a 3/5-year excel sheet projection
is at best an educated guess. More than specific details, the financial model
should reflect the aspiration of the team.
Competitive
landscape
Who are you currently or in future likely to
compete against and what is your plan to win this battle?
Risk factors
to execution
What are the market risks, financial risks,
business model risks, execution risks, etc. that may hamper your plans?
Funding
objective and use of funds
Describe how much money you want to raise and what
you intend doing with these funds.
Fundraising
history and investors
Mention previous investment history including year,
amount and investors.
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