To get a dream off the ground, you may want to start by drafting a businessplan. Writing things down will force you to map out the company andiron out any kinks. It is also your most effective tool tolure investors. "Given our current economic climate, now more than ever,you must be convincing to the bone," says Burke Franklin, founder ofJIAN, a developer of business planning software products likeBizPlanBuilder.
Here are 10 questions your plan must answer:
1. Who, what and why?
Those are the main questions you'll need to answer in a business plan.Who are you? What makes you different from the competition? Why do youthink there is a market for your product or service? If you can't answerthese basic questions, then don't waste everyone's time.
2. How about those hows?
Be prepared to answer a flurry of other questions. For example, how isyour business structured? How will you make money? How much money willyou need and how will you spend it? How will you reach your customer?
3. How experienced are you?
If you have it, flaunt it -- experience that is. That will reassureinvestors that you're not a novice. But if this is your first start-up,then showcase the talent behind you: mentors, advisors, board membersand staff. By highlighting the experienced team behind you, you're notonly allaying investors' fears, you are proving to them that you canmake this a success, hence a worthwhile investment.
4. Does the future look bright?
This may be the hardest part of the plan: forecast five years into thefuture where your business will be. After all, you haven't even openedyour doors yet. But investors want to know what you'll do to make thecompany grow.
5. What's in it for them?
After you've explained who you are and why you believe that you have a viablebusiness, you must describe how and when investors will make money.In some cases, they expect a significant return for their investment."The more money these investors have, the tighter they become," explainsBurke Franklin, who is also author of
Business Black Belt
(JIAN). "Theywant to make sure you know what you're doing from start to finish."
6. What did you say?
Write in clear, plain English, recommends Franklin. Many eyes will bereading this document. "It's the fundamental music that everyone playsfrom," he adds.
7. How flexible is flexible?
The business plan is your company's blueprint but your needs and aimsmay change as you stay in business. So think of it as an ever-evolvingdocument. Lea Strickland, president and CEO of
a strategic business consulting firm,recommends writing theplan to include information tailored for an angel investor, aninstitutional investor, a venture capitalist and an investment banker.
"When you go for venture capitalists, it's a different level ofinvestment, so the higher the expectation of the business plan," explainsStrickland. "Some may not want to see a business plan, just thepresentation, but you must have answers from the business plan.Institutional investors may move away from the business plan and wantmore of a security document." When meeting with a specific type ofinvestor, simply remove the parts that don't apply.
8. Should you hire a consultant?
If you're strapped for time or lacking some fundamentals, hiring abusiness plan expert can be a sound investment. A company like
can draw one up within four weeks,starting at $1,200. Software like BizPlanBuilder retails for $129.Whichever path you choose, keep in mind that you're looking for someonewith the experience to fill in your gaps.
"A good consultant is someone who understands fund raising andfinancials, but also understands marketing and business and how it allcomes together," recommends Strickland. "If they are not giving youhomework to get them up to speed and not digging in and challenging you,they are not a good match, or the right fit, or don't have the skills youneed." Drop him, if after a month, you don't see parts of the businessplan take shape.
But in some cases, a consultant can't do much unless you meet himhalfway. The process, adds Strickland, will go much faster if you get asmuch of your research, financials and paperwork together before hiringsomeone.
9. Can you defend yourself?
Just because you hired someone to write your business plan does not meanyou write a check and, four months later, get the document in the mail.You have to know and understand the document inside and out, says BryanHowe, CEO of MasterPlans. You, and not the consultant, will be the onestanding in front of investors defending the plan.
10. When do we start?
has it right: Just do it. Stop talking about it. Stop thinkingabout it. Turn on the computer and begin writing. "Start with somethingyou know best, like your biography or product," says Howe. "From there,it'll flow easier."
If you have a story idea, please email Lan.firstname.lastname@example.org.
Lan Nguyen is a freelance writer based in New York City. She has written for the New York Daily News, The Wall Street Journal, Worth magazine and Star magazine.