I need to put together a business plan for a potential investor...

I need to put together a business plan for a potential investor and am unsure where to start?

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While every business plan is slightly different, there are five core questions your business plan must answer:

Question 1: How will you win market share?

Define your ideal target customer, and explain how you will market, sell and distribute your product/service. Detail the size of your market based on geography, population and other defining factors. Be specific. If you are selling an app, not all smartphone users are your target market – only those who will find value in the app. You also need to identify the competition and how you will compete with them.

Question 2: Who will run the company?

Investors want to see a great team of smart people. Play up the strengths of your management and key employees. Highlight previous experience and successes. Clearly explain each person’s role.

Question 3: How much money do you need?

A common mistake start-ups make is underestimating how much money they will need to start and then run the business until cash flow stabilizes and the business becomes profitable.

Make sure you’ve allotted enough time. Whether or not you’re looking for funding, if you don’t have enough cash in the bank (or a plan to keep cash flowing in to the business), at some point you will not be able to sustain your start-up.

Question 4: How much money do you expect to make – and when?

While inflating expected costs can be a good idea, the opposite is true for sales and profitability projections. You want to be as conservative as possible when predicting income. You’ll quickly run into money troubles if you base your budgets on overly optimistic revenue expectations.

 

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Question 5: Why is your business idea a winner?

Every aspect of your business plan (especially the executive summary upfront) should reinforce the strengths of your business. You should never overlook challenges or weakness. The investors will recognize these anyway, and it’s better if you show them you are aware of them, and are addressing the issues.

Rather use the plan to recognize and address threats, and explain how you will overcome them. A business plan allows you to explore the viability of your business. If you can’t recognize threats, and if you don’t have a plan to address them, your business is a risk for investors, and you should be going back to the drawing board. It’s best to find this out sooner rather than later.