Once you have an excellent idea for a new startup, the next thing you need is an effective team to realize your vision and a business plan to explain your idea to the world of potential investors. As an added value, a good business plan will clarify your understanding of the opportunities and minimize the risks of the enterprise.
This post will touch on the necessary characteristics of an effective business plan. One of the scopes of a business plan is to accurately represent the company’s raison d’etre and plans attractively and exhaustively to investors who bring capital to the table.
An effective business plan must be convincing, optimistic, and realistic.
Investors will recognize a dedicated and passionate team and will be more likely to grant money to such a group. However, before trusting their money to your project, they need to feel safe knowing they will obtain a good ROI.
Tip: Use verifiable facts to describe your corporate positions.
Remember that nobody wants to lose money. A poor man has all to gain by investing his talents to make money, but an investor can only lose money by making bad choices.
Therefore, a good business plan must give the impression that there is little or no risk in investing in a promising project with a clear market share.
The five sections of a business plan
A business plan has, by definition, five sections. These sections are divided in subsections that clarify how the company intends to interact with the market and turn a profit. These five sections are:
- An executive summary
- A company description
- One, or more, marketing plans
- Financial projections
- A team description
The executive summary
This is arguably the essential section of a good business plan because, as the name suggests, it gives an overview of the entire document. This section must touch on various aspects of the companies’ structure and scope.
These sub-sections must include a business overview, a description of the target market, market competitors (and why you have the edge), finances, team, and funds.
The company description
This is often the most synthetic and shortest part of a good business plan. It briefly describes the company’s history, plans for the future, team structure, and legal status.
The marketing and sales plan
This section will be the most analytical section of the document. It should include well-presented graphs and facts demonstrating a good idea of how your services or products will interact and perform on the market. Here it is fundamental to analyze the target audience, a competitor analysis, and a SWOT analysis.
Tip: Include more than one marketing plan or an exit strategy if things go differently than they are.
Financial projections
Necessary to convince investors that the company has an effective long-term plan. It must contain the present financial condition of the company, projected app development cost, expenses, and income. The payments and income should be separated and united in a cash flow estimate.
The team description
Here it would be best if you described the complete composition of the team. All the experts and management personnel must be listed in this section. Usually, these positions include an experienced CEO, CTO, CMO, and CSO. These are the people that investors will trust with their money, and therefore it is convenient to demonstrate that they are very experienced and competent in their respective fields.
The section on funds
This section details how much money is necessary to reach the final stage of development and how you intend to raise the required capital.
In Conclusion
A business plan is fundamental for any startup to attract investors. However, it also benefits the company as it comprehensively analyses the business’s nature, scope, vision, and environment.
This information concentrated in a single organic document is always a bringer of more clarity. Moreover, it can inspire new and radical solutions to reach the business goals that the team dreams of realizing.
As proof of this, take a look at Statista.com data on why startups failed in 2021, and it will be clear how a good business plan can help avoid going down the same road.