You can't start a good business with just an idea. You need to write a plan, detailing how to build a business around that idea. Preparing a business plan is an exercise that disciplines the business skill of decision making. Since the business plan plays such a pivotal role, you don't just plan your business, you also need to plan your plan.
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Thoroughly research your industry, including customer purchasing behavior, motivations and fears, overall market trends, as well as competitor positioning, size, and market share. Clearly think through your objectives, strategies and plan of execution. Make realistic projections that are based on careful research, without being unreasonably optimistic. Well-prepared investors will check your plan's numbers with industry data or third-party studies. If the numbers don't match, those investors are not likely to fund your business.
Decide how you want to use your business plan, before you write it. Focus very carefully on the executive summary, management and marketing and financial aspects, if you intend to use the plan to attract investors. Also, have a
clearly-defined purpose for the investors' seed money. Attract employees by emphasizing aspects of compensation, such as stock options, as well as location, work environment, corporate culture and opportunities for growth and advancement. A well-prepared business plan can also be shown to suppliers to prove you are a worthy customer.
Approach prospective investors. As a start-up business without a proven track record, your sound, well-researched business plan is your ticket to obtain funding. Be sure your business plan has a clearly-defined purpose for seed money in it. Consider the level of control you want over your business when approaching investors. Seed money usually takes the form of equity financing, in which investors receive partial ownership in the start-up in exchange for their funding. Because these investors may insist upon having some decision-making power in your business, consider whether their personalities and interests are compatible with yours. Consider angel investors, as well. In addition to their willingness to invest, angel investors often become a mentor in guiding a new business through the start-up phase while willingly staying out of the day-to-day management.
Category: Personal Finance