For a start-up a detailed concept in writing, called a business plan is indispensable. The business plan is more than only a description of a project. It is the realisation concept, it provides information about the management of a company, contains resources of turnover and expenses, of profits and growth of the business.
A good business plan provides all the information an investor needs to decide for or against an investment in the described project. It is clearly structured and provides facts without digression. The business plan contains about 20 to 30 pages, including all attachments.
Structure of a business plan
Every business plan starts with a summary of maximum two pages. This summary should visualize the project to the reader. It decides weather the whole business plan will be read or not. So the summary has to provide all important aspects and has to arouse interest in the reader.
Here you present your business idea. First describe the problem which will be solved by your idea from the customers view. Describe how your concept will solve this problem and explain particulary what differs your concept from others. Expose the advantage for the customer using your service or product. It is important to document the benefit from the customers view because thereby you show the expected customer acceptance. A few graphics like a picture of the product or a diagram of the customers saving of costs using your product will contribute to a better understanding. But avoid to be too detailed. Especially drawn-out technical declarations are less interesting for investors.
Whether an investor invests in you company or not depends basically on the dependance to you and your team to ensure success. Because no matter how good your business idea is, it depends on the people in the background. From the investors view an ideal entrepreneur team consists of 3 to 6 individuals, ideally covering all important areas of the company by their individual education and experience. The tasks within the team should be clearly shared, the members of the team should compliment one another.
Introduce the single members of the team in short and show the experience and specialized skills of each and show why he qualifies for his field of duty within the team. Explain too which experience and know-how is missing in your team so far. For example if you are looking for another senior executive you should not hide this. This shows in fact that you have concerned all aspects and that you estimate your skills and tasks accurately.
Market and Marketing
Here the reader will get an overview about the market you want to serve, first. Which profits are realized in this market, how has the turnover developed and what is the development forecast in the future ? Possibly you support your testimony with concret figures, perhaps in the form of a diagram.
After a general overview about the market you show which customers come into consideration and why. Illuminate the competition situation and explain the advantage of your concept over each competitor and why it is so unique.
How many people within a defined area will be interessted in your product and how many of them will become your customer within a defined timeframe. Describe your marketing strategy how you will address the customer and how to place your company on the market. This includes all marketing activities, e.g. ads, direct marketing or strategic partnerships with other companies. Which influence will have design and pricing on the marketing and how to organize the distribution. All information has to be conclusive and logical to show that you have concerned all facets of the market.
Each business contains risks. When you show that you know the risks of your business and that you are able to appraise them, you will increase your credibility. Explain on which factors the success of the enterprise depends on and how you will avoid risks right from the beginning.
In this chapture you will explain the exact course of business, from the development of the product to the distribution to the customer respectively the exact procedure of your service. Point out where your company is different to others and how the customer will take advantage from your offer.
The time flow of the formation of the company is divided into several stages. Planning, testing phase, bringing onto the market, expansion are some of the steps an entrepreneur will pass through. Create a timetable to show when the single milestones will be obtained. This timetable should be preferably realistic because deviations in the realization will lead to a loss of confidence at the investors.
Here the investor shall learn, how much capital will be needed, where it will come from and which rate of return is expected. It should be made clear, how the investment will look alike and how the investor will get his money back.
A cash flow statement shows what capital is needed overall and for what you will spend the money. The expenses are classified in investments in the equipment of the company, raw materials and supplies and the running costs. While the expenses are mostly down to experience, for the figures of the revenues you have to rely on estimation. Show how you get to this assumption. Compare the expenses to the revenues. That shows how much capital is to throw in until the break even point is reached. The break even is the point where the revenue is equal to the expenses.
You should provide a comprehensive financial statement for the next 5 to 10 years in form of a table. This statement compares revenues and expenses and shows the expected operational profit. Naturally the plan shows loss in the starting phase which passes over to profit after reaching the break even. The profit should rise gradually. Only if the profit exceeds the loss from the beginning by far your concept is profitable and interesting for investors.
Explanations to the business plan can be added as attachment. Common attachments are illustrations of cash-flow, supposed financial statements and balance sheets. Personal data sheets of the leading team members can be added here as well as pictures or graphics of the product or technical details.