Entrepreneurship. Rhonda Abrams
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Goes into Your Plan?
Guidelines for preparing your financial forms
Historical performance of your company
A word about confidentiality: Nondisclosure agreements
Preparing a digital presentation
Tricks for improving your chances in business plan competitions
Honest Advice on Business Planning
learning objectives
In this chapter, you’ll learn how to:
■ Recognize the importance of a business plan
■ Evaluate the purpose of a business plan for an entrepreneurial venture
■ Develop a successful, compelling business plan
■ Apply key business success factors to the business planning process
■ Determine what to include in a business plan and what to omit
■ Understand, analyze, and prepare a sources and use of funds sheet and an assumption sheet
■ Apply best practices when preparing financial forms
■ Determine the recipients of a business plan
■ Conduct a business plan presentation, both in person and electronically
■ Develop and execute an effective elevator pitch
■ Define a winning strategy for business planning classes and competitions
Why You Need a Business Plan
In this day and age, everyone’s in a hurry. In a world of 140-character tweets, can you really expect anyone to read a 30-page written business plan? Is a business plan even necessary to raise money today? Perhaps not, if you’re one of the founders of Google or eBay and you have another good idea. In that case, you may be able to raise millions just sketching your idea out on a napkin.
Still, virtually all entrepreneurs can benefit from developing a business plan, which requires thinking through the issues critical to their success and identifying the strategies to help them reach their goals. And if you’re trying to raise money from investors, you can expect funders to say, “Send me your business plan.” Even if funding sources say all they want is a few slides and some financial projections, you’ll benefit from having gone through the process of developing a business plan. Why? Because you can certainly expect that when you finally get that all-important pitch meeting with prospective funders, they’ll grill you on every aspect of your business. If you haven’t developed a thorough business plan, you won’t have good, polished answers to give them.
Whose money do you want?
When you need money for your business, don’t just seek a wealthy person with a checkbook. In most cases, you’re tied to your investors for the life of your business. So research and spend time getting to know potential investors. Find out where they’ve invested in the past, and speak with other entrepreneurs who’ve worked with them. For an in-depth look at financing see Chapter 8.
Developing a business plan can be a critical factor for successfully starting a company. A highly regarded study from the Illinois Institute of Technology that followed would-be entrepreneurs over a three-year period showed that individuals who intended to start a business were six times more likely to actually launch a business if they completed a business plan.
However, just because you need a business plan, that doesn’t mean you have to spend a huge amount of time writing, editing, and polishing a long written document. It’s the planning and not the physical plan that’s truly important. The process of developing your business plan is the biggest benefit—examining the critical aspects of your business, researching factors and trends affecting your success, asking yourself the tough questions.
While developing a business plan, you’ll likely change some aspects of your business. You may even conclude that your concept isn’t viable and decide to scrap the idea entirely. That’s what business planning is all about. Now’s the time to make those kinds of mistakes—on paper instead of in the real world.
How you’ll use your plan
Most likely, you want to use your business plan as one or more of the following:
■ A tool for raising funds (either investments or loans)
■ An internal document to guide your company’s development
■ A recruitment