A good business plan is a rational investment

A good business plan is a rational investment

09.08.2018

How to write a good business plan? How will investors get money when you succeed?

Perhaps you think that the only thing that separates a starting entrepreneur from an outstanding success is the absence of a nice business plan, with colorful graphs, tables with detailed calculations and monthly financial forecasts for the next decade. But experienced investors know that most often such business plans are nothing more than an attempt of wishful thinking. What do they really want to see?

William Sahlman, a professor at the Harvard Business School, names the four criteria for the success of any new project - and any good business plan.

Firstly, imagine the founders of the project and those involved in its development, as well as third parties involved in it: lawyers, accountants, suppliers. Most experienced investors will be interested in people, since the priority for them is the skills of carrying out the tasks. You need to prove that you have the skills, experience and contacts necessary to achieve success.

Secondly, tell us about the opportunities that reflect the essence of your business: what are you going to sell, whom, how much and so on. Do not forget to tell about the competition. If you make a business plan as if there is no equal to you in the market, you will not be taken seriously. In a thoughtful business plan, the strengths and weaknesses of the project are openly discussed.

Thirdly, describe the context. In other words, you need to show not only that you see the general picture, but also how you will act in a situation when these external factors will start changing.

Finally, talk about the risks and rewards. What will happen if one of the founders leaves the company? What will happen if demand sharply grows? Evaluate all possible events - both negative and positive - and explain how your team will react to them.

“But wait, - you will say, - what about the numbers?” Of course, there must be numbers in the business plan. But they should be present primarily in the form of a business model that shows that your team has thought through the key components of the success or failures of the project.

A business plan that contains the right answers and questions is a powerful tool. It allows entrepreneurs to enter into profitable deals and increase their chances for success.

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