Who is The Audience for My Business Plan?
Michael explained that most startups forget that the most important audience member for their business plan is themselves. A business plan isn’t just something you create for other people, it can help you set targets and achieve goals. Michael also reminded us that you don’t have to stick to your plan! If you need to tweak your startup, or even pivot entirely, make sure you amend your business plan too.
- Your Friends, Family and Mentors
When you’ve written the first draft of your business plan, show it to all of the people who have been there with you from the beginning. If your mum has been coaxing you into entrepreneurship for years, show her. If your best mate has been a great source of support and advice, show him. These are the people who will give you honest, rational and truthful advice.
- Your Partners, Cofounders and Sweat-Equity partners.
Any person who has committed to an early-stage relationship with your in business really thinks that you can go places. It is important that you share your business plan with this group, as it is in their best interest that your business really flies!
These are the people with the moneybags and if these guys like you, they can change your life! If your business plan isn’t a little ragged ‘round the edges, you could miss out on investment. Think about what investors want to see in your plan.
How do I Make My Business Plan Attractive?
- Write an Easy to Read Executive Summary
Michael told startups to bear this in mind: investors have never heard of your business before! Therefore, in your Executive Summary - which is the introduction to your business plan - you need to describe the intentions of your business in language that is easy to understand. Leave out all industry-specific and techy terms. If an investor is put off by jargon, they’ll hit that delete button in double-quick time.
- If Your Financials Don’t Make Sense, You’re in Trouble!
If the words Profit & Loss, Cash Flow Forecast, Key Ratios and Cash Burn fill you with confusion and dread, get someone who’s a whizz with numbers to help you with your figures. The financials section of your Business Plan can make or break your investment pitch. Even if your startup is in rude financial health, if your BP includes inaccurate or poorly presented financials, an investor will lose patience.
Clear Up Any Intellectual Property Issues
Does your business rely very heavily on IP? If it does, make sure you own the Intellectual Property in question and ensure that it is protected. When you’ve confirmed ownership of your IP and safeguarded it, make this clear in your business plan. If an investor thinks that the principal idea behind your business could be hijacked due to poorly protected IP, they will run a mile.
Have I got a Credible Business?
- Be Honest
Michael warns that this is when you have to be very honest with yourself. The questions below will help this tricky process:
- Does my business solve a problem or a need?
If it does, great! On the other hand, if you struggle to define a clear problem or a need that you business solves, you need to ask yourself: why and how will your business work? It is quite possible for a business that does not solve a problem or need to be successful. Michael told us all to look at Facebook: no-one needed it before it existed, and now nobody can live without it! If your business isn’t a problem solver, that’s fine, but you will need to know why it can still be a success.
- When does my business start making money?
You need to know when your first revenue stream will become active. Of course, some tech startups cannot make money at early stage, as they need to trial beta versions and build traction. This process is absolutely fine, and investors understand that, but you will need a very clear idea about when you’re going to start making money. That’s what VCs and Angels want to know!
- Will my business survive when the investors’ money runs out?
If your business is going to fold as soon as your investors’ money runs out, you don’t have a viable business. The idea of investment is to help you accelerate to the next level - it isn’t money to prop you up in the medium term!
There you have it. Thank you for reading Michael Buckworth’s answers to some business planning questions that face all startups. If you’d like to sink your teeth into a more conclusive guide to business planning. our old friend Gary Weinstein can provide. To meet Michael in person, and to chat through your startup-legal issues, check out the Club events calendar!
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