Business Plan

First, are the financial statements. While it is easy to create good looking Income Statements, Balance Sheets, budgets and Cash Flow documents they must be believable and doable. It's true that these documents are guesses, and sometimes wishes that the business desires, but they must demonstrate a rational and realistic picture of the business environment. Typically, those assessing the plans will understand what the numbers mean and will determine if the numbers have a chance of representing a true picture of what the business will do. Particularly, the spending plans revealed in the budgets will be reviewed very carefully. For instance, if much of the money will be spent on salaries of executives, they will be skeptical of the chances of success. Expenses are a reality in business, but they must be reasonable and appropriate. The reviewers will typically have metrics to bind the spending and resource allocations.

Next, are the customers and competitors. These two groups must be thoroughly researched and understood. For customers, it must be determined what they desire and that they are capable of purchasing the product or service being provided. These desires and abilities can be assessed through studies, test markets, research into similar products, and perhaps focus groups. Competitors are also very important. Similar products must be viewed to determine that your product or service better fulfills the buyers' needs. Too, will the price of your offering be lower or higher than the competition? If it is higher, the additional price must be justified for the product to succeed. This will be addressed in the next area--Making the plan work.

Another very important part of the business plan will be to demonstrate that it will work. This is done in several ways. The financials show how the money will be spent (and acquired). The budgets will show how the spending will be allocated. The marketing portions will demonstrate how the product or service will be presented to the buyers. Finally, the plan will demonstrate how the resources utilized are capable of doing the job. It will show the key personnel, skills, marketing plans, and manufacturing equipment necessary to accomplish the desired results. It will offer a vision of how these tools will assure success in the endeavor. An interesting additional requirement of the business plan will be to convince the reader they must be involved in this next 'big thing.'

As demonstrated above, the areas of the business plan are all important. They have overlapping and supporting roles. They demonstrate this is the way to accomplish the project and ultimately convince people to invest in the project; because it is a safe map to a successful outcome both for the propositioners and the investors.