Business Plan for Start-Ups

By December 20, 2016Lifestyle

Once the start-ups are bootstrapped or funded by the founder’s own capital or money borrowed from friends and relatives, or have raised angel funding from professional angel investors, it is imperative for start-ups to look for more avenues to raise funds if they want to really make their start-up a success story. Many a times, the founders hesitate to bring in funds from outsiders as that would mean losing some control and ownership over their venture. This is a Catch-22 like situation – the venture needs huge capital to breathe and sustain, yet the founders would want to retain complete control and ownership. Which one to choose – putting life into the enterprise and letting go of control and ownership or retain a tight control in the hope of finding some funds here and there and let the enterprise die a slow death? Well, a lot depends upon the viability and feasibility of the project, too!!!

To approach professional venture capitalists, the first thing the founder needs is a well-drafted and well-presented business plan. Besides giving a holistic picture of the business to the investor, a written business plan also tells the founder what his idea is, how it has been implemented so far and what is the trajectory it will take. It also brings focus to the founder on the important aspects of the business.

DO’s in a Business Plan

While writing the business plan, the most important thing to bear in mind is the underlying concept of the business and its commercial viability. The plan must be presented in a logical sequence and must be well-organized. Having said that, it does not mean that one should fill pages to present the business plan. The roadmap should be clearly defined in as concise a manner as possible.

The investor is most interested in the safety of and return on his funds rather than how eloquently you have presented your plans to him. Hence, the most crucial aspect of the business plan is the market for your products/services. Where do you see the opportunity for your products/services and the gap in the current market, and a few year down the line, which your business can fill? What are the threats you foresee and how you will overcome those threats? If you nail this aspect, you have almost achieved your purpose.

Do a detail and exhaustive research on the market trends for your products/services and present the data in the business plan. The data presented should be realistic and should support your business premise. Put emphasis on your business’ competitive advantages over other businesses in the same industry.

Next comes the financial projections. The financial projections must be realistic and achievable and must mention at what stage the business would become self-sustainable. The projections should be given on a monthly basis and not on a yearly basis.

And yes, the business plan must include current and future competition and how fast can your business grow to be ahead of that competition. Venture capitalists prefer businesses that can grow rapidly and give them big returns in a lesser period of time.

Above all, the management and organization of the business. The business plan must include the management and organization structure of the company, the experience and abilities of the team to generate confidence in the venture capitalist to invest in the business.

The business plan must contain an Executive Summary which is a snapshot of the company and its vision and mission and goals.

DON’Ts

The business plan must not be over-balanced in its market competitiveness, marketing and sales strategy and financial projections. The venture capitalists come with huge experience behind them and can easily gauge if the projections made are overboard or the competition, both present and future, has been overlooked or underestimated. Hence, detail research and market analysis and trends is essential before even starting your business plan.

Once you are ready with your business plan, all you have to look is for the right VC to be willing to partner with you in your vision and invest in your business.

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