5 Essential Business Plan Topics When Raising Venture Capital
Wondering whether or not to write a business plan? Do you really need one? Well, unless you have a spectacular track record as an entrepreneur or an exceptionally great new business idea, you cannot raise money to fund your startup
without a business plan.
Furthermore, the business plans that result in successful outcomes usually contain insights into the customers who will buy your company's products. Make sure you do a great job at conveying your understanding of the customer.
Here's how. First, you have to figure out the group of customers that you want to sell to. Then, you have to develop an interview guide, which is a list of questions: why current products don't meet their needs, what an ideal product would look like, how they decide among competing vendors, and where they perceive an unmet need.
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You should then interview at least 25 potential customers and make sure your analysis of their answers to these questions is in your business plan. Include key quotes from those potential customers that reinforce your conclusions.
Whether you're writing a complete business plan from scratch or using a business plan presentation template, here are 5 topics that you must cover to make it great:
1) Executive Summary
If you had two minutes going down an escalator with a potential investor, you should talk them through your executive summary. This should answer questions such as: What is your company's mission? Why is it important to you? Why do you think your company can make money pursuing that mission? What is your track record of winning? How much money do you need? What kind of return can I expect if I give you the money?
2) Product Description
If you have more than two minutes, the investor will want to know more details. The product description should describe your company's mission and present the details of the product that you have in mind to achieve that mission. This description should also focus on specific product attributes that you think will make it better than the competition.
3) Target Market
This section details which group of potential customers your company will target. It describes why you picked that market, its revenues and growth rate, the key factors driving growth, and typical net profit margins in that market. This section must present the results of your customer interviews.
4) Sustainable Competitive Advantage
Here you will explain the key factors, ranked by importance, a potential customer uses to decide among competing suppliers. It will also describe how well those customers perceive that competitors perform on the various factors. It will next describe how your product will outperform competitors on the key factors. Include any intellectual property, such as patents, you have in order to maintain your advantage. Finally, set market share goals and describe what your company will do to achieve those goals.
5) Management Team
This section will present biographies of the members of your team. If you have no prior entrepreneurial experience, investors will be looking for signs that you and your team are winners. This could show up in outstanding academic, athletic, or extra-curricular accomplishments.
Remember, the most important part is how well you understand the customers. If you do a good job with that, you will significantly increase your chances of success. Download our startup guides
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