Before you hire people, before you go to raise money and before you start to seriously commit your own financial resources, you must create a business plan for your venture.

By constructing a business plan, you will in effect be validating your product/market idea.

Table Of Contents

1. Executive Summary

In your executive summary, you will need to summarize the value proposition of your business in a 2 to 3 page narrative. You have to assume that the person receiving your business plan does NOT have time to read your full document. On average, the typical Venture Capital partner receives 3 to 5 business plans per week; he/she does not have time to read them all. Your executive summary is the vehicle buy which you hook the reader onto your idea and inspire them to want to read on further.

In this summary, it is critical that you convey to the reader the 5 main characteristics listed above:

1) a description of the product/service you want to offer;

2) an overview of the marketplace and competitors in your market place (here you'll need to emphasize WHY customers will want to choose your product/service, instead of those from established competitors;

3) a description of the technology required to develop your products;

4) a summary of the resources needed to develop the product and bring it to market; and

5) incorporation of feedback you have received from those who have read earlier drafts of your Executive Summary.

• Describe the market you are serving:
  
  • What makes it grow
    
• Define the value proposition of your products (how will you compete price/performance/lower cost-of-ownership)
  
• Anticipate what the competition will do once you introduce your product
  
• What Intellectual Property will you be developing  (click here for tips on developing and securing your IP)
  
• Pricing
  
• Estimate the cost of your product. Is your product economically viable?
  
• Assess yourself: Do you have a competitive advantage?
  
• Assess yourself: Are you a company or just a product?

3. Size of the opportunity:

• Size the TAM/SAM
  
• Identify the potential trends/technologies that could effect the development and growth of the TAM/SAM. Disruptive technologies.

4. Resources Required to execute your planning:

• Management Team / Critical Hires
  
• Equipment/Technology
  
• Capital

5. Financial Plan:

• Revenue Plan. Show in detail how you plan to generate your revenue. You can do this one of two ways. First, you can estimate the total size of the market you want to target and then estimate the share of this market you want to capture. This is commonly referred to as a "tops-down" forecast. If this is how you want to approach this task, we have developed a spreadsheet tool: Mid-Range - 3 Year Forecasting Model which assists you in putting together this type of revenue plan. Second, you can identify the customers you want to target and then estimate the revenue you will generate from each of these customers. This is commonly referred to as a "bottoms-up" forecast. If this is how you want to approach this task, we have developed a spreadsheet tool: Revenue Forecasting Model which assists you in putting together this type of revenue plan.
  
  Click here to visit our Business Tools section to download these spreadsheets. They are listed in the Business Planning Spreadsheets section.
  
  
• Profit & Loss Statement: Click here to view a Sample Income Statement
  
  • Revenues
  • Product & Service costs (corresponding Gross Profit)
  • Operating Expenses (Research Development and Engineering, Sales and Marketing, and General & Administrative expenses)
  • Operating Income
    
    
    
• Balance Sheet  Click here to view a Sample Balance Sheet
  
• Cash Flow (Most important financial schedule in your business plan: 1) how much cash do you need?; when do you get to break-even?".

Note: We have just developed a new integrated financial plan spreadsheet which allows you to construct a complete income statement, balance and cash flow forecast by inputting your revenue, cost and capital expenditures. The spreadsheets are formatted so that they can be used to present your plans to management, board members and investors. This easy-to-use tool, Integrated Business Plan Financial Forecast, is offered in three formats: 12 month, 12 quarters (3 year), and 3 year annual.

Click here to visit our Business Tools section to download these spreadsheets. They are listed in the Business Planning Spreadsheets section.

6. Plans for raising cash for your business:

• Identify potential sources of funds
  
• Venture Capital
  
• Banks
  
• Angel Investors
  
• Large companies ("strategic investors")

Click here to visit our RAISING CASH section with ideas on how to raise funds and pitch to potential investors.