What's the point of a business plan? If you think there's one answer to that question, you're heading down the path of failure
The four main audiences and reasons for a business plan
Investors: To raise funds to take advantage of a business opportunity (or sell the business)
Lenders: to raise funds to grow the business (cashflow or capital investment)
Government or industry body: To win a necessary business licence or permit
Owner and senior management: To define business goals and build a path to reach them
How should business plans convince their audience?
Investors are looking for reasons to believe. They have money that they want to risk in order to win. Most investors are smart. They are not putting all their eggs in one basket. Instead, they are looking for a range of opportunities where one in ten will do very well, and couple will do ok and rest will struggle. They go into each opportunity looking for the success. The business idea needs to have significant upside potential, even before they consider your ability to execute the plan.
Upside potential means that
(a) there is a genuine market opportunity
(b) the target market is sizeable, or is growing
(c) how you are different to competitors
(d) you own or can build barriers that make it hard for competitors to copy you
(e) the money injected by the investors will make a real difference to the chance of success
These business plans are the hardest. They are technically demanding, because investors know a lot more about the way a business makes money than you. They may also know more about your market and your competitors than you. So your financial models need to stand up to scrutiny.
The business plan "story" needs to take the investors through the five points above. This is the IVN approach (Integrated Valuation and Narrative) to business plans.
If you live in Melbourne and you want to learn more about successful business plans, please review
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