Effective Business Plan Format

May 9th, 2011 | Uncategorized | SK | Comments Off

The business plan for Bioceptive has earned rave reviews.  I was surprised to know that our business plan was well liked.  We also got comments that such well laid out plans are not common.  Hence, this blog to publicize the format of business plan that has worked well for many of my business plans and also has got good reviews.

Technology commercialization generally requires significant investment for the company to be successful.  To get attention from appropriate people one needs a solid business plan which resonates with investors who probably won’t have expertise in your technical area.  Also, they have limited time and so you want to convey information in a manner that helps them answer their questions about your business.

  • Problem/Opportunity

It is sometimes counter intuitive to start with problem or opportunity.  However, clear identification of the problem right at the start of the business plan draws a reader’s attention to the plan and the next section.

  • Solution

Solution is the product or service you want to create to address the problem.  Providing details to how and why the solution will be effective is important.

  • Market

Your product or solution is worth nothing if there is no significant demand for your product/service.  A good way to determine market is by identifying target market first.  Once the target market is identified then the size of addressable market is easier to calculate.  Target market is best identified by correctly segmenting the market.

  • Competition

Generally, people think that if I have no competition then I will be more attractive as a business.  However, no competition could also mean there is no market for the product or service.  Here one should identify competitors and at the same time detail the competitive advantage.  One can cover barriers to entry in this section or a separate section itself.

  • Management team

It is widely said in investing circles that investors invest in management or people and the idea comes second.  A good team is important for the success of business and everyone likes a strong team with complimentary skill sets.

  • Operations

It is important to lay out the steps needed to launch the product or service.  Also, it is important to figure out the major steps that will be taken the long term for the success of the company.  If the business is operations heavy then a lot of detail is needed in this section.

  • Sales and Marketing

Marketing and sales are important for the success of a business.  A savvy investor would like to know whether the marketing and sales strategy is clear.

  • Financials

Everyone would like to know your expected revenues and expenses during the course of the business.  Investors like to see a bottom-up analysis rather than top-down analysis of markets as well as expenses.

  • Exit Strategy

Every investor wants to get his/her money back along with hefty gains.  They only can expect a return of investment when the company sells itself or goes public.  Identifying a few potential acquirers in the business plan is important as it tells the person reading the plan that you know your product/service.

  • Investment

The funding requirements, burn rate and tasks the funding will be used for is important for an investor.  This section is optional and depends on the company.  Generally, companies show a separate term sheet or Private Placement Memorandum (PPM) to investors who show interest in investing.

  • References

As always, references supporting your assumptions or your claims should be mentioned along with marking them during the course of the business plan.

One can always add appendices with more supporting information as well as details of financials that one did not include in the main body of the plan.

Presentations of business plan should follow the same trend as listed above as it has proven to be the most effective way to present.

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