Great business plans

Provide pragmatic advice and services to entrepreneurs and ns expressed by forbes contributors are their you think you only need a business plan to go fishing for capital, you are sorely mistaken. Better yet, well-articulated business plans force business owners to constantly weigh the strengths and weaknesses of their , yes, these documents are de rigueur when courting professional depth: 10 tips and traps in making great business ment-grade business plans--usually about 20 pages long--are grounded in deep knowledge of an industry and the money-making opportunities within it. I can't do that work for you, but i can highlight the 10 key elements that matter most--to business owners and their investors. Every plan must start with an explanation of the problem the business aims to solve--not a description of the company and product. Convince investors that your team has the chops and determination to start new businesses, and demonstrate deep knowledge in the company's specific domain. The best plans anticipate and answer every question an investor could possibly ask, except maybe: "where do i sign? Depth: 10 tips and traps in making great business plans in depth: the 10 dumbest things businesses buy in depth: the 10 business questions you should never stop es-benz inc. Conference & internet marketing services for small retirement plans for small antivirus software for small businesses. Ways to finance your credit card processors for small business in crm software for small businesses in e-commerce platforms for hr outsourcing for small business in to build a profit-sharing to choose a payroll web hosting services for small . Straight to your up for today's 5 must to write a great business plan: key first in a comprehensive series to help you craft the perfect business plan for your haden is a ghostwriter, speaker, linkedin influencer, and contributing editor to buting editor, inc. With great timing, solid business skills, entrepreneurial drive, and a little luck, some founders build thriving businesses without ever creating even an informal business the chances are more likely that those entrepreneurs a business plan make success inevitable? But great planning often means the difference between success and your entrepreneurial dreams are concerned, you should do everything possible to set the stage for that's why a great business plan is one that helps you business plans are fantasies. That's because many aspiring entrepreneurs see a business plan as simply a tool--filled with strategies and projections and hyperbole--that will convince lenders or investors the business makes 's a huge and foremost, your business plan should convince you that your idea makes sense--because your time, your money, and your effort are on the a solid business plan should be a blueprint for a successful business. It should flesh out strategic plans, develop marketing and sales plans, create the foundation for smooth operations, and maybe--just maybe--convince a lender or investor to jump on many entrepreneurs, developing a business plan is the first step in the process of deciding whether to actually start a business.

How to make a great business plan

Determining if an idea fails on paper can help a prospective founder avoid wasting time and money on a business with no realistic hope of , at a minimum, your plan should:Be as objective and rational as possible. What may have seemed like a good idea for a business can, after some thought and analysis, prove not viable because of heavy competition, insufficient funding, or a nonexistent market. Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow. Communicate the company's purpose and vision, describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace. Good business plan delves into each of the above categories, but it should also accomplish other objectives. It provides concrete, factual evidence showing your idea for a business is in fact sound and reasonable and has every chance of must your business plan convince? And foremost, your business plan should convince you that your idea for a business is not just a dream but can be a viable reality. After you objectively evaluate your capital needs, products or services, competition, marketing plans, and potential to make a profit, you'll have a much better grasp on your chances for if you're not convinced, fine: take a step back and refine your ideas and your can your business plan convince? If you need seed money from a bank or friends and relatives, your business plan can help you make a great case. Financial projections describe where you plan to business plan shows how you will get there. Lending naturally involves risk, and a great business plan can help lenders understand and quantity that risk, increasing your chances for approval. Where friends and family are concerned, sharing your business plan may not be necessary (although it certainly could help). Investors--including angel investors or venture capitalists--generally require a business plan in order to evaluate your business. Early on, your business is more of an idea than a reality, so your business plan can help prospective employees understand your goals--and, more important, their place in helping you achieve those goals.

Writing a great business plan

Setting up a joint venture with an established partner could make all the difference in getting your business off the above all, your business plan should convince you that it makes sense to move you map out your plan, you may discover issues or challenges you had not the market isn't as large as you thought. Maybe, after evaluating the competition, you realize your plan to be the low-cost provider isn't feasible since the profit margins will be too low to cover your you might realize the fundamental idea for your business is sound, but how you implement that idea should change. Successful businesses identify opportunities and challenges and react ng a business plan lets you spot opportunities and challenges without risk. It's the perfect way to review and revise your ideas and concepts before you ever spend a people see writing a business plan as a "necessary evil" required to attract financing or investors. Instead, see your plan as a no-cost way to explore the viability of your potential business and avoid costly time we'll take a closer look at the main components of a business plan. We'll start with the executive from this series:How to write a great business plan: key concepts how to write a great business plan: the executive summary how to write a great business plan: overview and objectives how to write a great business plan: products and services how to write a great business plan: market opportunities how to write a great business plan: sales and marketing how to write a great business plan: competitive analysis how to write a great business plan: operations how to write a great business plan: management team how to write a great business plan: financial hed on: apr 1, 2015. 3 free articles article is available only to harvard business review magazine read the free executive summary of this article, simply close this you are already a magazine subscriber, please sign in to get to write a great business the july–august 1997 –august 1997 seasoned investor knows that detailed financial projections for a new company are an act of imagination. Nevertheless, most business plans pour far too much ink on the numbers–and far too little on the information that really matters. William sahlman suggests that a great business plan is one that focuses on a series of questions. A great business plan is not easy to compose, sahlman acknowledges, largely because most entrepreneurs are wild-eyed optimists. A better deal, not to mention a better shot at success, awaits entrepreneurs who use areas of business attract as much attention as new ventures, and few aspects of new-venture creation attract as much attention as the business plan. A growing number of annual business-plan contests are springing up across the united states and, increasingly, in other countries. Indeed, judging by all the hoopla surrounding business plans, you would think that the only things standing between a would-be entrepreneur and spectacular success are glossy five-color charts, a bundle of meticulous-looking spreadsheets, and a decade of month-by-month financial g could be further from the truth. In my experience with hundreds of entrepreneurial startups, business plans rank no higher than 2—on a scale from 1 to 10—as a predictor of a new venture’s success.

And sometimes, in fact, the more elaborately crafted the document, the more likely the venture is to, well, flop, for lack of a more euphemistic ’s wrong with most business plans? These maneuvers create a vicious circle of inaccuracy that benefits no ’t misunderstand me: business plans should include some numbers. But those numbers should appear mainly in the form of a business model that shows the entrepreneurial team has thought through the key drivers of the venture’s success or failure. The model should also address the break-even issue: at what level of sales does the business begin to make a profit? You want to speak the language of investors—and also make sure you have asked yourself the right questions before setting out on the most daunting journey of a businessperson’s career—i recommend basing your business plan on the framework that follows. A profile of the business itself—what it will sell and to whom, whether the business can grow and how fast, what its economics are, who and what stand in the way of context. An assessment of everything that can go wrong and right, and a discussion of how the entrepreneurial team can ss plans: for entrepreneurs only? Accompanying article talks mainly about business plans in a familiar context, as a tool for entrepreneurs. All new ventures—whether they are funded by venture capitalists or, as is the case with intrapreneurial businesses, by shareholders—need to pass the same acid tests. It is only after the new business is launched that these numbers explode at the organization’s front problem could be avoided in large part if intrapreneurial ventures followed the guidelines set out in the accompanying article. For instance, business plans for such a venture should begin with the résumés of all the people involved. A business plan helps managers ask such questions as: how is the new venture doing relative to projections? Perhaps useful lessons can be learned by studying the world of independent ventures, one lesson being: write a great business assumption behind the framework is that great businesses have attributes that are easy to identify but hard to assemble. The opportunity has an attractive, sustainable business model; it is possible to create a competitive edge and defend it.

Many options exist for expanding the scale and scope of the business, and these options are unique to the enterprise and its team. Value can be extracted from the business in a number of ways either through a positive harvest event—a sale—or by scaling down or liquidating. If only reality were so i receive a business plan, i always read the résumé section first. A business plan should candidly describe each team member’s knowledge of the new venture’s type of product or service; its production processes; and the market itself, from competitors to customers. The surprise element of working with a start-up is somewhat y, the people part of a business plan should receive special care because, simply stated, that’s where most intelligent investors focus their attention. These plans are filled with tantalizing ideas for new products and services that will change the world and reap billions in the process—or so they say. And if there is nothing solid about their experience and abilities to herald, then the entrepreneurial team should think again about launching the it comes to the opportunity itself, a good business plan begins by focusing on two questions: is the total market for the venture’s product or service large, rapidly growing, or both? And, indeed, many will not invest in a company that cannot reach a significant scale (that is, $50 million in annual revenues) within five guide to building your business case ebook + sheen with amy for attractiveness, investors are obviously looking for markets that actually allow businesses to make some money. The profit margins of bloomberg and first call put the disk drive business to opportunity of a lifetime—or is it? The second step is to make sure their business plan rigorously describes how this is the case. And if it isn’t the case, their business plan needs to specify how the venture will still manage to make enough of a profit that investors (or potential employees or suppliers, for that matter) will want to it examines the new venture’s industry, a business plan must describe in detail how the company will build and launch its product or service into the marketplace. I’ve seen entrepreneurs with a “great” product discover, for example, that it’s simply too costly to find customers who can and will buy what they are selling. Economically viable access to customers is the key to business, yet many entrepreneurs take the field of dreams approach to this notion: build it, and they will come. It is tough to guess how much people will pay for something, but a business plan must address that topic.

A business plan must demonstrate that careful consideration has been given to the new venture’s pricing list of questions about the new venture’s opportunity focuses on the direct revenues and the costs of producing and marketing a product. A sensible proposal, however, also involves assessing the business model from a perspective that takes into account the investment required—that is, the balance sheet side of the equation. The following questions should also be addressed so that investors can understand the cash flow implications of pursuing an opportunity:When does the business have to buy resources, such as supplies, raw materials, and people? Of course, are looking for businesses in which management can buy low, sell high, collect early, and pay late. The business plan needs to spell out how close to that ideal the new venture is expected to come. Even if the answer is “not very”—and it usually is—at least the truth is out there to opportunity section of a business plan must also bring a few other issues to the surface. Similarly, building on the success of its personal-finance software program quicken, intuit now sells software for electronic banking, small-business accounting, and tax preparation, as well as personal-printing supplies and on-line information services—to name just a few of its highly profitable ancillary , lots of business plans runneth over on the subject of the new venture’s potential for growth and expansion. Sometimes, the inventor refuses to spend the money required by or share the rewards sufficiently with the business side of the company. Whatever the reason, better-mousetrap businesses have an uncanny way of r opportunity trap that business plans—and entrepreneurs in general—need to pay attention to is the tricky business of arbitrage. Some of the industry consolidations going on today reflect a different kind of arbitrage—the ability to buy small businesses at a wholesale price, roll them up together into a larger package, and take them public at a retail price, all without necessarily adding value in the er the reason, better-mousetrap businesses have an uncanny way of advantage of arbitrage opportunities is a viable and potentially profitable way to enter a business. The trick in these businesses is to use the arbitrage profits to build a more enduring business model, and business plans must explain how and when that will for competition, it probably goes without saying that all business plans should carefully and thoroughly cover this territory, yet some don’t. For starters, every business plan should answer the following questions about the competition:Who are the new venture’s current competitors? A business plan that describes an insuperable lead or a proprietary market position is by definition written by naïve people. That goes not just for the competition section of the business plan but for the entire discussion of the opportunity.

And at yet another level are factors like technology that define the limits of what a business or its competitors can t often has a tremendous impact on every aspect of the entrepreneurial process, from identification of opportunity to harvest. A shift in context turns an unattractive business into an attractive one, and vice versa. Tax reforms enacted in 1986 created havoc for companies in the real estate business, eliminating almost every positive incentive to invest. Many previously successful operations went out of business soon after the new rules were put in business plan should contain certain pieces of evidence related to context. Second, and more important, they should demonstrate that they know the venture’s context will inevitably change and describe how those changes might affect the business. Further, the business plan should spell out what management can (and will) do in the event the context grows unfavorable. Finally, the business plan should explain the ways (if any) in which management can affect context in a positive way. I’ve come to think of a good business plan as a snapshot of an event in the future. But the best business plans go beyond that; they are like movies of the future. They unfold possibilities of action and business plans, in other words, discuss people, opportunity, and context as a moving target. Therefore, any business plan worth the time it takes to write or read needs to focus attention on the dynamic aspects of the entrepreneurial izing risk and it comes to the matter of risk and reward in a new venture, a business plan benefits enormously from the inclusion of two graphs. But to be honest, even that kind of picture belongs in the business plan because it is a fair warning to investors that the new venture’s team is completely out of touch with reality and should be avoided at all second picture complements the first. And finally, there is a small chance that the initial outlay of cash will spawn a 200% internal rate of return, which might have occurred if you had happened to invest in microsoft when it was a private lly, this picture helps investors determine what class of investment the business plan is presenting. It’s then up to the investors to decide how much risk they want to live with against what kind of , the people who write business plans might be inclined to skew the picture to make it look as if the probability of a significant return is downright huge and the possibility of loss is negligible.

It is ultimately the responsibility of management to change the distribution, to increase the likelihood and consequences of success, and to decrease the likelihood and implications of of the great myths about entrepreneurs is that they are risk seekers. As harvard business school professor (and venture capitalist) howard stevenson says, true entrepreneurs want to capture all the reward and give all the risk to others. The best business is a post office box to which people send cashier’s checks. Its business plan would benefit enormously by stating that management intends to hedge its exposure through the financial-futures market by purchasing a contract that does well when interest rates go up. Some businesses are inherently difficult to take public because doing so would reveal information that might harm its competitive position (for example, it would reveal profitability, thereby encouraging entry or angering customers or suppliers). Some ventures are not companies, but rather products—they are not sustainable as independent of the greatest myths about entrepreneurs is that they are risk seekers. All sane people want to avoid ore, the business plan should talk candidly about the end of the process. How will the investor eventually get money out of the business, assuming it is successful, even if only marginally so? A business plan should be the place where that map is drawn, for, as every traveler knows, a journey is a lot less risky when you have a business plan is written, of course, the goal is to land a deal. Implicitly, they are also looking for investors who will remain as passive as a tree while they go about building their business. My experience has proven again and again that sensible deals have the following six characteristics:They emphasize trust rather than legal do not blow apart if actual differs slightly from do not provide perverse incentives that will cause one or both parties to behave are written on a pile of papers no greater than one-quarter inch even these six simple rules miss an important point. Such an exercise reveals the true economics of the business and can help enormously in determining how much money the new venture actually requires and in what stages. I consider it a prerequisite of putting together a winning the many sins committed by business plan writers is arrogance. Business plan must not be an albatross that hangs around the neck of the entrepreneurial team, dragging it into oblivion.

Instead, a business plan must be a call for action, one that recognizes management’s responsibility to fix what is broken proactively and in real time. But there is little doubt that crafting a business plan so that it thoroughly and candidly addresses the ingredients of success—people, opportunity, context, and the risk/reward picture—is vitally important. In the absence of a crystal ball, in fact, a business plan built of the right information and analysis can only be called indispensable. Version of this article appeared in the july–august 1997 issue of harvard business m a. D’arbeloff-mba class of 1955 professor of business administration at the harvard business article is about strategic reneurial reneurial management.