• jzitek@harborcapitalgroupinc.com
  • +1 612-978-7222
  • Bloomington, MN 55437


The Elements Of Your Business Plan



 

Your business plan is the primary document you will use to convince investors and others to work with you or invest in your startup. This business plan is not a one size fits all. You will want to tailor your material to what the audience wants. For example, if it is a venture capital company with recently raised funds, they will be looking for a longer-term view. If it is a venture capital company that has been investing for a while, they may be interested in more of shorter-term outlook and faster exit, 

Following is the typical format for a business plan. It is intended as a guide because different kinds of companies will have different requirements. 

1 Executive Summary

Describe (summary only) what your company is, what it does, and why it will be successful. Include your story, products and services, goals, company leadership and team, growth plans, financial information, and why and use of the funds you need.  

2 Company Description

This section goes into more detail about your company. What are the problems you are solving, how you solve them, and the benefits to the buyer from buying your product or service? You can go into detail here with a list of specific customers, markets, organizations you serve, and any partnerships you have established.

Explain the competitive advantages your product has over the competition and if that advantage is long term—for example, Intellectual property, Patents, Trademarks, .etc.

Describe the strengths of your company, including product, market, or industry expertise.

3 Market Analysis

What are your target industries and markets?  What is the outlook for size and growth in each target market?  Who are your competitors, and how do you compare to them. Do any of them have a significant advantage (market share, business model, IP, etc.) over the others in the market? What about pricing and market share?

Why is your solution to the problem better, faster, cheaper, etc.?  Are there any barriers to entry?

 4 Organization and Management

Start with your legal structure (incorporation or Limite Liability Company), which be essential depending on the type of investor you seek. Mostly, angel investors are with LLCs, but venture capital companies want companies that are incorporated.

Explain your company’s structure and who will head up each department. Use an organizational chart, if possible, to talk about how each department head is qualified to run that department.

5 Service or Product Group

Explain your line of products or services in some detail, including their features, functions, and benefits. Describe how each of these products benefits the customer. What is the product life cycle? How long will you be in Beta?

Do you have any plans for future patents, trademarks, or other product designs that will protect the uniqueness of your products or services?

6 Marketing and Sales

What is your sales story? Describe how you plan to get, keep, and expand sales to your target audience. What marketing methods will you use? Will you be using outside agencies or inhouse personnel for marketing and sales. What kind of experience do these marketing and salespeople have? 

 How long is the sales cycle? What kind of funnels will help develop prospects? Will you be using any distributors or wholesalers. If so, who are they, and what procedures and compensation are involved?

7 Funding Request

Describe your funding requirements in as much detail you can. If it is for one year, five years, or are you planning to fund by milestones? What type of funding are you looking for: debt, equity, loans, or some combination. Are you looking for a strategic partner or multiple investors?

How do you plan to use this funding: product development, sales, marketing, equipment, facilities, salaries, etc.

8 Financial Projections

Sone of the documents that will be requested includes the capitalization table, income statements, balance sheets, cash flow statements, capital expenditures, and budgets. Also, you will need to prepare a Pro Forma which uses assumptions and hypothetical events that occurred in the past and may occur in the future. This comprehensive financial overview gives outsiders a good look at your business from an economic viewpoint going into the next five years.

 9 Appendix 

Thie appendix includes documents that support your business plan like resumes, licenses, patents, legal documents, permits, any contract documents, etc.

 


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