Essential Questions your Business Plan Must Cover to Validate your Idea
Organizations need a roadmap, or business plan to reach short-term and long-term objectives. The plan outlines strategies for accomplishing operational and financial goals and helps get funding by demonstrating your company is well-managed and focused.
An effective business plan provides honest answers to these questions:
• What makes your idea desirable and unique? Identify the ‘reason-for-being’ for your offerings. Then determine if competitors offer a similar solution and if so, explain why a customer would choose you. Your product or service must solve problems or fulfill ‘wants’ and must be distinct from alternatives.
• How large is your market? After identifying your point(s) of difference, it’s important to define your customer and quantify the size of this audience. Adjust your estimates down by the percentage who will be willing to pay for your offering. You need to show there’s sufficient volume to sustain your business.
• How can you protect your point(s) of difference? Competitors monitor the marketplace and will copy good ideas. Include information explaining how you’ll protect your ideas, such as patents or unique materials.
• What will you do (and spend) to market your idea? Outline how you intend to reach your target market and the costs associated with advertising and marketing. Be sure to demonstrate a return on investment: if it costs $100 to reach a customer who only spends $50, you’ll need to reach customers more cost-effectively.
• How can you quickly and efficiently prove your idea is worthwhile? Getting funding to launch your idea doesn’t always need a large investment. Examine ways to pilot with small manufacturing runs or limited distribution in smaller markets. You’ll gather useful information about how to tweak your offering (and prove its viability) prior to a full launch.
• How much cash flow will you have? Include financial forecasts in your business plan to reassure lenders and investors that the economics of your idea are sound. You may need to detail a plan to use an SBA loan broker to help you get the financing you need.
Our team at Revap Group Capital can help find the right funding to support your business plan.