What are the steps to creating a winning business plan? This is an essential question when using safe notes for a round of funding.
Business planning is a critical foundation for any successful venture. It is the must do, first step to creating a business. Though, if you already skipped or skimped on this, it isn’t too late to go back and make it right. Or you may have hit a hurdle, crisis or encountered a massive shift in the economy or your industry, and need to reset and strategize things.
Here are the steps to completing a strong business plan that will carry you forward to the results you really want and need…
The Importance Of Your Business Plan
If you already tried to rush and start your business without one, you’ve probably already encountered some of the big issues that creates, and the value of completing a plan in advance.
If you haven’t, use this opportunity to save you all of that wasted time, resources and heartache.
It’s what you don’t know that you don’t know that kills you. So, one of the main roles and benefits of this process for your business is unmasking and then answering what you don’t know.
It is identifying the things that you missed, need and what you didn’t consider you needed to think through yet.
Focus is also extremely important. Young companies can’t afford to expend a lot of time and resources flailing around or taking detours. Your plan gives you direction, helps you to be effective, and get the most out of your human resources, time and money. It’s those with the most focus that will win.
There are also many uses for your business plan. Beyond your own personal uses, this can include:
- Raising capital from investors
- Borrowing money
- Recruiting key team members, co founders and advisors
- Securing strategic business partners
- Obtaining licenses
- Securing leases
- Setting up your action plan, milestones to be achieved and next steps
There is one big caveat that you have to know about here.
While some seal their own doom by not doing enough business planning, others get stuck in it. Ideas are cheap. The world moves fast. One of the big risks here is getting stuck in the planning phase and never moving forward. Or at least being mired here until you miss the opportunity.
While you need to be prepared with a business plan for when you need it. The truth is that far less people are going to care about your plan than you may think. No one is going to read all the way through a long plan, even if they want to see you did the work.
Just when you think you nailed it all, everything else out there in the world will probably change.
So, it is vital to do the plan. Just err on the side of speed, rather than perfection and length.
Shortlist Your Business Ideas
Before you really commit to one thing you may explore many different ideas.
Brainstorm, challenge your ideas, and take your time to really identify the right one. One that is unique, packs a lot of value, that can go really big and long, which you can excel at, and are willing to commit at least 10 years to, if not the rest of your life.
It has to check all of these boxes to really have legs and be worth all the work that is ahead.
Research, Research, Research
One of the top reasons that most startups fail, and fail to raise any capital from investors is that their business idea is not unique.
Be sure you’ve done the homework, and know what competition is already out there, or coming down the pipe.
You also need to have a strong handle on all of the data, metrics and other figures in this domain. It’s a nice idea to improve something, but there is almost always a reason that things haven’t changed from the status quo yet. Be sure you really understand why that is.
Choose A Business Plan Template
Do not try and disrupt or recreate the wheel here. Be efficient by using an existing business plan template. There are plenty of free ones out there.
There are a variety of styles of business plan to pick from.
There are both long traditional plans, and those as short as one page. Both can work. Though keep in mind why you are going through this process. Will one page be enough to ensure you are on solid footing. Are you willing to bet everything on that? At the same time, don’t expect many people to read through a long voluminous manuscript.
You’ll eventually need a pitch deck too. A tool which can be much more versatile and usable on a daily basis. Though many entrepreneurs struggle creating a concise and powerful pitch deck from the onset. It may be much easier to do your full plan, and then reverse engineer and distill it down into an effective pitch deck.
Start Filling In The Blanks
Once you have selected a business plan template, get to work filling in the blanks. If you’ve done all the homework and research upfront, you may be able to complete the whole thing in a day. If not, you’ll need to pause and go back and research and get answers to fill in the blanks as you go. This can make it a multi-day, or even multi-week process. Just don’t let it run into months.
The Executive Summary
This is probably the most important page in your business plan. In fact, it is also a stand alone document. One which will be used much more than your full plan.
People will want to see this first, and decide whether they are interested or not. In fact, many will make up their minds on your summary alone.
This should be 1-3 pages. Summarizing the rest of your plan in a factual way.
Again, if you have trouble starting small and simple, complete the rest, and then condense it for a powerful executive summary.
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and NYU Stern School of Business.