Reflection on Business Plans Content

business_plan_idea

In the last two years I’ve been reviewing numerous business plans from young entrepreneurs looking to raise seed funding for their startups.

Some business plans impressed me by the extent of research made to thoroughly assess a business opportunity. However, a number of business plans failed to capture some important components. Below are some of my observations.

(1)  Business plan contains too many details about technology and insufficient research of the market, competition and customers

A business plan is not a research article and as such there is no need to give in-depth analysis of all features that your technology has. A technology is not attractive commercially unless it solves real problems for many people and thus creates a sizable market opportunity. As a result, I am not convinced that there is a commercial opportunity when a business plan talks about technology features but fails to clearly explain the market opportunity.

(2)   No engagement with potential customers & no primary market research data.

I read many business plans whose market research is limited to relatively generic statistics and forecasts published by data analytics and consultancy firms. There is nothing wrong to use existing market data, but it is in most cases not sufficient.  A startup needs to have a thorough understanding of its market niche and customers. The best way to develop such knowledge is to engage directly with your potential customers. Learn first-hand about problems they have, and how your solution can make their lives easier.

(3)   Unrealistic assumptions

There can be inaccurate assumptions leading to relatively minor mistakes in your estimates of the potential market or pricing for your products or services. However, in your business planning you should not make assumptions which if incorrect can ruin a whole business plan.

 (4)   The market potential is small & thus cannot give sufficient return on investment

I’ve seen business plans which were exceptionally well organised and had all important elements required for execution of a business opportunity. But the market potential was so small that it would be very difficult for investors to get sufficient return. The most important requirement for equity investors is a large market opportunity in a fast-growing industry sector. Otherwise a startup will not be able to achieve a good venture deal.

facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

If we can help you in anyway or you require any further information, please do not hesitate to Contact Us.