With the introduction of the small business enterprise ministry into South Africa I guess its safe to say that our small businesses aren’t doing so well or as well as they’re expected to. Even though there are a small percentage of entrepreneurs they greatly contribute to the country’s revenue. Being an entrepreneur is great but having the right start to your business to ensure that it doesn’t fail. Having a great business plan plays a vital role in ensuring success in your business.
The following is a list of things that will help you to have a great business plan and also contribute to your business becoming a successful contributor to the increase in small business enterprise revenue.
10. Definition Of The Problem:
Every great plan starts with definition of the problem and how the business aims to eradicating the problem. Lay out the definition in terms that a 12 year old could understand, if you can’t explain your passion to a kid then you don’t really understand or know what your passion is and quantify the “cost of pain” in Rands or time. Avoid the usual assertions like “every consumer needs this and that” and statements such as “next generation platform”–they don’t mean much and undermine your credibility.
9. Solution and Benefits:
This is simply the time to explain why your product works and what makes it different from the rest. Also include a customer-centric quantification of the benefits. Avoid using any jargon, not everyone understands your industry the way that you do.
8. Industry & Market-Sizing:
There’s no need to write a whole book about your business, just simply capture the evolution of the overall industry, market segmentation, market dynamics and customer landscape. It is also beneficial to include charts and graphs, with figures from accredited sources; they always tend to sell a story efficiently.
7. Explanation of the Business Model:
This part of your business plan should explain (again, clearly) how you will make money: who will be paying you and how much of that will you get to keep after expenses. A mere glance should yield a decent grasp of the business’ growth potential.
6. Competition and Sustainable Advantage:
Know your competitors and what they are offering and how your business will be better or greater. Give reasons as to why your business is different and can offer more than the next.
5. Marketing and Sales Strategy:
A basic map out of how you intend to market your business, including your pricing and distribution channels (which could also include strategic partnerships). This is a good place to map out a timeline of key milestones you would like to reach.
4. Executive team:
The right investors ultimately bet on people, not ideas. Convincing investors that your team has the correct tools and determination to start a new business, and demonstrate deep knowledge in the company’s specific domain. Include members of the Advisory Board and key industry players involved in the company.
3. Funding Requirements:
Thoroughly explain how you reached the capital that you are requesting for your business, and describe in depth how you plan to use that money when it is given to you. Show the amount of financial commitment founders and equity owners have in the company, including sweat equity (hours slaved in exchange for a percentage of the company, as opposed to cash salary).
2. Financial Forecast:
You should always include the revenue and expenses of the past 3 years if relevant to your business and it’s life span, thereafter project them for the next five. Clearly show and justify any growth assumptions that will contribute to your business growth and sustainability. Highlight the break-even point and have a clear forecast of financial events for the upcoming years.
1. Exit Strategy:
The final part to your business plan is required when courting outside investors eager to know when and how they will get their money out, and what sort of return they might expect. (Initial public offerings, the exit of choice for many investors, are few and far between these days.) Focus on building a truly sustainable business with a stable future in the industry.
Finally, the longest and fanciest doesn’t always win the race. Remember if you can’t explain to a 12 year old, go back to the ideas tank. The best plans anticipate and answer every question an investor could possibly ask, except maybe: “Where do we sign?”
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