A business plan in simple words is a document that communicates the decisive features, the goals and how they can be attained and financial projections about any business enterprise. An important thing that has to be kept in mind while preparing the business plan is about the reader of the plan and once you are aware of the readers then the plan should concentrate on that particular audience.
The simple plan should not be too long an average plan has a length of approximately 40 pages as this is a manageable length for the readers. What you should include in a business plan is not fixed. It depends on the type of audience and what you want to achieve from this document. Though a simple plan covers the following topics:
•Executive summary
•Business description
•Environmental analysis
•Industry of business
•Competitors analysis
•Marketing plan
•Operational plan
•Management Team
•Financial projections
Preparing a business plan is not as simple as it looks. It requires knowledge from different disciplines of business like marketing, finance, human resource management, operations management and supply chain management. A well written simple business plan can assist a business to look reliable, logical as well as attractive for anyone who is not familiar with the business. Reading the business plans made by other entrepreneurs enables you to get a feel how to go about the business.
The aim of business can be different for profit and non-profit organization like for profitable organizations the spotlight is on making of wealth whereas for non-profit and governmental organizations the objectives and goals of the business can be on providing facility and convenience to the general public or society. Though, not for profit businesses can aim on optimizing revenues.
Before presenting the plan to the venture capitalist it is advisable to get other people to go through the simple business plan. When you are sending the document it is never recommended to send the document to every venture capitalist as many people only look at the plan when it has been recommended by someone.
Make sure that you put in realistic financial figures when doing the financial projections of the business as many investors like to see the profits that the company is going to earn. You should provide financial forecasting for five years because many venture capitalists are not interested in the short term profits but they have their eyes on the long term profits and growth of the business.
Other important calculations like Break even, Payback period should also be calculated. Therefore, you should know about the competitors, the demand of products and services you are providing, cost of production, employees that would be required, external factors that could influence your business as all these information would help in calculating the figures more accurately.
Investors would hardly spend 5 to 10 minutes on the initial review of your business plan and during this time they would be going through the executive summary to get an idea about the company.
For that reason, executive summary of the business plan should try to convince the investors about the idea of the business. Though, how venture capitalist evaluate a business plan is not predictable as it is an art, not a science.
One last thing that writing a high-quality simple business plan does not promise you success, but it can help in decreasing the probability of failure.