Summary List Placement
One of the first steps to launching a business is creating a written plan.
Whether it’s used to pitch investors or just as a roadmap for your team, the best plans are flexible and have weighed all the inherent risks. They’re also conservative and passionate at the same time.
For advice on how to create a strong business plan, Business Insider spoke to Steve Wunker, a managing director at New Markets Advisors, a consulting firm with clients ranging from international giants to recent startups.
Here are eight things founders should consider when preparing their plan.
Cash is king
Cash is the literal lifeblood of a business, and your plan should be clear about where its money comes from and where it goes.
For a brand new company, Wunker says revenue numbers are a “work of fiction,” while your expenses are very real.
“You really have to have a clear sense of what is an unavoidable cost versus what is a variable cost,” he said. “When you think about expenses, think not just about when they’re incurred but when the cash is going to have to come out of the bank.”
Pay special attention to risk
In addition to outlining the expected costs of business, Wunker says it’s critical to think through the many ways it could surprise you, especially if you’re hoping to use other people’s money to grow the company.
“Your initial iteration of the business shouldn’t attempt to be the business in miniature; rather it should focus on what are the key risks or uncertainties and reduce those as thoroughly, quickly, and cheaply as possible,” Wunker said. “That will give you and your financial backers the confidence to invest in feeling out the business.”
Balance passion with skepticism
As a founder you’ll have many different roles and responsibilities. As a team leader, it’s up to you to inspire others to work with you, invest in you, or buy your stuff.
On the flip side, Wunker says founders that have a healthy skepticism about the realities of their business are more able to anticipate potential challenges.
“Entrepreneurs have a very tough time doing that,” he said. “They have to be passionate otherwise they wouldn’t be starting up their idea.”
Get help from others with different experience and perspective
If you’re having a hard time taking off the rose-colored glasses, Wunker suggests that you “find cynical people to share your ideas with.”
As you gather and evaluate feedback, be sure to put things in balanced perspective.
“It doesn’t mean you shouldn’t do the business, but it means that you’ve really thought about everything that might go wrong and how you can mitigate the risks,” Wunker said.
Consider your audience
Your business plan has two primary readers: investors and yourself.
“If you’re trying to raise money then you’re going to need that for investors and to some extent the plan is a sales document. It’s got to be a balanced sales document, otherwise investors aren’t going to look at it creditably,” Wunker said.
If you don’t need outside funding, the document can simply serve as a reminder of the …read more
Source:: Business Insider