As we dive into the business plan development portion of our studies, we review advice from some experts this week when it comes to writing business plans. From Executive Summaries to company descriptions and legal status, writing a business plan does not have to be overwhelming, especially when you break it down by each component. When you get through the basics, the next part is about knowing your industry and available market share.
Tim Berry is an author and entrepreneur. After receiving his MBA degree he was a Vice President at Creative Strategies International. As a consultant he developed business plans for Apple Computer's Latin American group from 1982 to 1987, for its Apple Pacific group from 1987 to 1990, and for Apple's Apple Japan group from 1991 to 1994.
Berry explains the ease in market research. Many companies post their financial earnings quarterly if not at least twice a year. He suggests looking for a trade association that focuses in your business area. "A good reference library can get you a reference book that lists trade associations. In most businesses, there are magazines that focus on your type of business, so they can sell ads to the businesses that want to sell to your type of business.”
He continues in another article about how to get your business funded. Berry first addresses some of the common financial myths around venture capital, bank funding, and that business plans don’t sell investors. So where should start-ups begin the search for money? Where you look for money, and how you look for money, depends on your company and the kind of money you need. Venture capital shouldn’t be thought of as a source of funding for any but a very few exceptional start-up businesses. Venture capital can’t afford to invest in start-ups unless there is a rare combination of product opportunity, market opportunity, and proven management. A venture capital investment has to have a reasonable chance of producing an increase in business value within three years. It needs to focus on newer products and markets that can reasonably project increasing sales over a short period of time. Venture capital is not the only source of investment for start-up businesses or small businesses. Many companies are financed by smaller investors in what is called “private placement.” Many entrepreneurs turn to friends and family for investment.
Next, Douglas Abrams discusses what investors are actually looking for in a business plan. Abrams is the founder and CEO of Expara and Expara IDM Ventures, a business accelerator for interactive and digital media companies. He is a lecturer on New Venture Creation for undergraduates and Technopreneurship for graduate students at NUS and has been a guest speaker and presenter for numerous public and private organizations in Singapore.
His success elements include developing an innovative product, having a value proposition and a market strategy, sustainable competitive advantage, and a business model with a financial plan. Having a new product that solves your customer’s problems will make or break the availability of your product as a must-have. Having a strategy to reach your market and compete with others allows you to make money, generate revenue and deliver a profit. On the other hand, Jason Cohen suggests we scrap the idea of a business plan all together and just run with our ideas.
A business plan helps start-ups organize their thoughts and necessities in one document. Sure you may not follow it word by and there may be significant changes, but at least it provides you with the basics and a plan to present to investors. Business plans are meant to evolve with your progress, which is why what you have written may not always be the exact plan. I have always said that it is hard to achieve your goals if you don;t know where you are or where you are going.
Abrams, Douglas. What do investors look for in a business plan? Retrieved October 28, 2011. http://douglasabrams.com/?p=14.
Berry, Tim. How to Get Your Business Funded. Retrieved October 28, 2011. http://articles.bplans.com/financing-a-business/how-to-get-your-business-funded/58
Berry, Tim. What market research should I do when starting a business? Bplans. Retrieved October 27, 2011. http://help.bplans.com/what-market-research-should-i-do-when-starting-a-business/1697/
Cohen, Jason. Don’t Write a Business Plan. A smart bear blog. Retrieved October 28, 2011. http://blog.asmartbear.com/business-plan.html
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