Business plans are not made overnight. They take considerable amount of time and effort and are acknowledged as a resume for your business for good reason. Like a business plan, a resume is no assurance for getting you a job but can significantly increase your chances of securing an interview. In the same way, a business plan may not get you the desired funds from venture capitalists but it will at least encourage them to take time to review it.
While every single section of the business plan has its own significance, the section with a detailed description of your target market’s competitive analysis and the products or services you are selling is the most important of all. This is because, only after thoroughly reviewing this section will the investor ask himself if he would like to capitalize on your idea with the targeted market.
Assuming the role of an investor, and looking from an investors perspective, this section is endeavored at helping entrepreneurs comprehend the information venture capitalists look for in this particular section of the business plan, inspiring the desired response. It also aims at getting your business plan approved, transforming an otherwise dust-eating document into an idea effectively transitioning towards the execution phase.
Starting and managing a start-up in its cradle is a challenge and without adequate planning and timely measures, it will take no time for things to go completely out of control. This is where a well-crafted and well-researched plan manifests its vitality. Being a fundamental starting point, a business plan articulates an idea’s potential and the strategies that will be used to accomplish the stipulated financial goals.
Since the business plan serves as a sales tool, it goes without saying that the section accounting your products, services and the market you plan to target is one of the most influential factors, which will allow an investor to determine whether or not funding your business is a wise decision.
Here it is important to understand that in a lot of cases, the product or service is defined, redefined and refined at more than one stage of the business development process. While the first definition of your offerings may not be the last, it should allow the reader to get a clear picture of the product/service around which you plan to build your business.
This section of the business plan should be able to communicate, completely and concisely, what a business is selling and what makes it distinct. It should identify the industry’s needs and gaps and how your product or services will play a role to fill those gaps.
In addition to all the services and products the company intends to provide, this section should address how the offerings will be produced and delivered. At this point, it is advocated that the section starts with simplified descriptions of the services and that the details should be provided later on.
A mistake common to most of the entrepreneurs is failing to realize that their understanding of business may not be same as others. In fact, the details should be listed in layman terms allowing any reader to fully comprehend the contents because it is only impractical to assume that a potential investor will be as knowledgeable as you are.
This section should discuss how the intellectual property will be secured and the technology that will be used. The investors will appreciate a description of the technical advantage as well. Apart from all the aspects listed above, it is important that this section of the business plan does not lose focus of the value proposition you company will offer. This implies exploiting the aspects that will encourage customers to switch their vendor or service provider.
When it comes to explaining the value your company will bring to the market, describe in detail how and why other products or services fail to satisfy customers and how you plan to bring about customer satisfaction. The factors that differentiate you from others and earn you that competitive advantage should be explained in a way that the reader is convinced that the company stands strong chances of succeeding, despite the aggressive competition.
To make investors realize that you have the ability to excel, support your assumption of how the business will develop and grow through market statistics and data surveys. The investor should be able to translate the targets you have set into a focused management team and a well thought-out plan-of- action.
This section should lay emphasis on the fact that your company does not offer a single product or service. An entrepreneur should give investors a roadmap communicating the long term goals of the company and how the resource allocation and funds are to be used during a company’s life cycle. All in all, relevant research for this section of the business plan can help you gather qualitative and quantitative information, which will allow you to secure the investor’s favor.