What are the key components of a good business plan? Is it largely about the numbers?
My name’s Barry Horowitz. I’m a growth and strategy consultant.
The numbers are an important part the financial projections but they’re far from being the most important part of a business plan.
What Assumptions are you Making with your Business Plan?
Among the most important elements are really the assumptions underlying your business plan. These include things around your value proposition. A value proposition is what problem you solve, who has that problem why is it a big problem or why is it a big opportunity, and will they really pay for solving the problem?
How Are You Reaching Your Target Audience?
There are many plans that are written for everybody. “Everybody is going to love this thing!” However, very few things work that way. You really need to have clearly identified the specific target segments. Who really is going to care about this and who is not? Who are you going to focus your attention on? You also need to describe the business model: how are you going to get to those customers? How do they pay you?
Do You Have an A Team?
One of the most important things that investors really look for in a business plan is the people on your team. Why is your team going to be able to make this plan work? What are your qualifications? What are your experiences?
A lot of times you’ll hear investors talk about whether if they had a choice with an A-team and a B idea or an A-idea and a B-team, often they’d go for the A-team. The reason is that that team is going to understand what might be happening, such as changes in the market, and they’ll react and make sure that the business is correct.
While the financial projections are important and they help investors understand how you’re thinking about the market and how are you going to build your business, but the biggest, most important issue in a business plan is your value proposition. The big problem you solve, the business model, how you are going to go about doing it, the team you have, and why you’re likely to win. They’re trying to figure out if you’re going to win in the market because if you do, they’ll win as investors as well.