My rule of thumb is that a business plan should read as if the target reader(s) are investors. Even if you’re writing it for yourself, the question you should continually ask is: ‘given the information below, would I invest?’
- explain what your vision is; what’s the end goal? what does success look like?
- is the vision to be the largest company in the industry? the fastest? the cheapest? the best quality? best customer experience/service?
- what is the industry, the technology, what’s the opportunity? Why does it matter?
- how big of a market is it? Are you trying to get a small part of a huge market, or a huge part of a small market?
- is this a brand new offering, or an improvement on existing offerings? what are the current solutions? give any necessary history or diagrams on process
- now that you’ve explained some background the what people/companies are currently doing, explain the problem that you are trying to solve
- what are people’s pain points with the current solution? does the current solution cost them more time/money than your solution?
- what is your solution, and how is it different than the current solution?
- what are the main features or models that you will offer?
- how do the benefits of the new solution translate into Return on Investment (ROI) or Key Performance Indicators (KPIs) metrics for the customer as compared with the current solution?
Sustainable Competitive Advantage
- you’ve explained why your solution is better, now explain why other people can’t do the same thing. why do you have a sustainable competitive advantage?
- can you execute better or faster than the current competition? why?
- What advantage(s) do you have?
- What is the moat? what keeps competitors from copying you? (example: patents)
- note: no need to go into detail on your competition, which you will do below in “Industry Analysis”, just give an overview of why you will beat the competition
- what markets or niches are you targeting? where are they located? how are they similar different?
- how large are they? how easy are they to reach?
- who are the top companies that you will target?
Marketing & Growth
- what is your process to manufacture and package? how will you address quality control?
- what is your sales and distribution methods?
- how do you address feedback, comments, questions, defects? what is the warranty?
- how will you build a brand?
- how are you going to get customers’ attention? which tactics will you use? where will you find them?
- what is your sales process/funnel? how are you going to drive them through your sales process? how are you going to convince them to buy your product?
- what are your expected conversion rates, cost of acquisition, customer lifetime value?
Industry Analysis (Porter’s Five Forces)
rivalry among existing competitors
- who is the current competition?
- how much market % do they have? what are their current sales? what are their advantages and disadvantages over your company, your product?
- how, specifically, are you going to beat them?
- how is the competition, as a whole and as individual companies, going to respond to your product?
threats of new entrants
- if you can make money in the industry, can’t others? aside from who is currently in the industry, what are the risks of others entering the industry?
- what are the barriers to entry?
bargaining power of buyers
- how much bargaining power do your buyers have?
- are your products differentiated? are they critical to the success of the buyer? are they within their budget?
bargaining power of suppliers
- how much bargaining power do your suppliers have?
threat of substitute products or services
- is your product easily substituted? (rising gas prices? ride a bike)
- explain why this team is in a good position to execute on this opportunity, why is leadership a good fit for the market? what experience do they have?
- explain the various responsibilities and who is in charge of what
- who are the business advisors, technical advisors, strategic relationships?
- where is everyone located, and what is your plan for communication if the team is distributed?
- how is the business structured?
- how are you going to make money? what are all the different ways? what are the future opportunities?
- what is your pricing strategy?
- what are your major costs? what are your margins?
- how are you going to reduce costs over time?
- prepare cashflow statements and forecasts to show your expectations
- High-level overview of strategy
- this may be a summary of the most important aspects of the business plan
- Key Performance Indicators (KPIs)
- how will the company continue to measure success?
- Actions and Next Steps
Risks/Assumptions & Mitigations
- what are your key risks or assumptions? what are your mitigation strategies?
- how much money do you need, how much equity will they get, and how will you use the money?