By: Gwen Moran
Business plans don’t have to be a lengthy ordeal. But you’re more likely to get off to a good start if you think through critical questions about how you’ll make money and run the show.
Five questions your business plan should answer:
1. How will you win market share?
Your plan should define your ideal target customer and how you’ll market, sell and distribute your products or services to buyers. Within the plan, detail the size of your market based on geography, population of target customers or other defining factors. Then, identify the competition and explain how your company will win over enough of that market to grow.
2. Who will run the company?
Investors want to see a crackerjack team of smart people. Play up the strengths of your management and any key employees. Highlight previous experience and success stories, and clearly explain each person’s role.
3. How much money do you need?
Many startups underestimate the amount of money it will take to start and sustain the business until cash flow stabilizes and the business becomes profitable. Be sure you’ve allotted enough money for salaries, office space and other business needs for the first year or two, even if you’re bootstrapping.
Ultimately, the business will have to bring in enough money to meet all of those expenses to survive, so estimate generously.
4. How much money do you expect to make–and when?
While inflating expected costs is often a good idea, the opposite is true for sales and profitability projections. Be conservative when you’re predicting sales and income. Basing budgets on overly optimistic revenue expectations is a quick way to run into money trouble.
5. Why is your business idea a winner?
Every aspect of your business plan, especially the executive summary upfront, should reinforce the strengths of your business. Of course, you should never overlook challenges or weaknesses, but your plan is the perfect place to explain those threats and how your business will address and overcome them. One of the greatest aspects of a business plan is that it allows you to explore your business idea’s viability before you ever invest a dime, possibly saving you the expense and heartache of a failed undertaking.