What's Involved in a Solid Business Plan?

What's Involved in a Solid Business Plan?
by Tamara Jacobs

The recent crime incident that occurred in a San Francisco home that was rented via the Air BnB website has stirred up a lot of controversy and has led to some sceptics to question their entire business model.

Sometimes the flaws of a business plan don't present themselves until a tragic incident occurs, or a splash of PR blows it all out of proportion. Which begs the question, what makes a good business plan?

A business plan should, without fail, include an executive summary, an overview of the business' aims, its product or service, its management team, including their CVs, and financial forecasts.

Financial forecasts tend to be the top priority of venture capitalists, banks and other private investors. When outlining them, a sales and marketing strategy should be included, with information on how the product or service will be priced, which channels will be used to market as well as any advertising and marketing plans.

A sales forecast should be included, as well as a cashflow forecast and a projected profit and loss account for at least the next five years. All key risks should be clearly outlined to investors as well as any extenuating action the new business can take.

But what about issues such as reputation and how increased popularity will affect a business model? This is an issue for Air BnB as the business owners know that with increased popularity it is inivitable that crimials will become familiarised with their business. This is considered by some to be a fundamental flaw in their business plan and unfortunately one that cannot be reversed.

What are some of the other deal killers in a business plan?

1. When you're too happy with the product and not focused enough on how it will solve an existing problem.

2. A Me-First plan. Again, it focuses too much on the state-of-the-art technology or how brilliant the idea is and ignores the fact that it should be addressing an existing need in the market.

3. You're not sure who/what the initial target market is. It's easier to win a large share of a small market than it is to win a small share of a big market.

What Investors are looking for:

1. A detailed analysis of the sales forecasts ie. does the revenue model depend on a large number of small transactions or a small number of large transactions to survive?

2. Whether the proposed team has the experience to tackle the challenges of the industry in question.

3. A business plan that is realistic about the challenges and problems that might arise.

There will always be holes and issues that are overlooked or were completely unforeseeable, but the more thorough your business plan, the more likely it is to get financial backing.

Adaptive Consultancy is a digital agency specialising in web development, design, ecommerce and internet marketing. Services include SEO, paid search, email and social media marketing. For more on internet marketing businesses visit http://www.adaptiveconsultancy.com/internet-marketing-agency

Tamara Jacobs may be contacted at tamara@adaptiveconsultancy.com

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