19 Questions to Supercharge Your Business Plan
If you don't already have a written business plan - write one!
Your business plan is a blueprint for your whole company. It
describes in detail your goals, the financial and technical
viability of your goals, and the strategy you will use (or are
using) to reach those goals. And your business plan is a working
tool - it is a yardstick to measure your progress and a compass
to keep you on course.
Must a business plan be written?
Yes! A plan which is not written usually has not been thought
through fully. And despite what you may have read, it is
doubtful that any business ever attracted capital on the back of
a napkin.
Use this checklist as a way to identify where your strategy, as
spelled out in your business plan, needs work. Each of the
questions below highlights an area considered critical to
technology investors.
1. Can the key ideas behind your product or service be stated in
one or two sentences? (y/n)
2. Does your company have at least one unique and compelling
competitive advantage, which cannot quickly or easily be
duplicated? (y/n) Examples are a special feature, a cost
advantage, a technical refinement, a new delivery system or a
special supplier.
3. Is your competitive advantage proprietary? (y/n) That is, can
it be copyrighted, patented, trademarked or otherwise protected?
Can you keep it exclusive to you?
4. Is your industry segment growing by 25% or more? (y/n) If
not, can your new product dominate its segment? If the answer is
no, you probably won't be able to generate the kind of financial
returns investors look for.
5. Does your product or service create a new market? (y/n)
Although generally positive, this could be a trap - in a brand
new market, the potential can be slow to develop. Lotus Notes
created a new category but took years to create value for
investors.
6. Is your market in "early momentum" - the market growth phase
where market revenues have recently taken off? (y/n) Venture
investors prefer markets in this stage because the
time-to-create-value is shorter and the growth potential still
large.
7. Is your target market segment 1) tightly defined over a
population sharing common characteristics, 2) large enough to
support significant profits, 3) served by communications
channels to reach that market - i.e., trade or special interest
publications, response mailing lists? (y/n)
8. Is your company filling a gap in the market, or do you have a
"gee-whiz" product which you think is so terrific that customers
will surely want to buy it? (y/n)
9. The benefit of your product or service to users is 1)
significant, 2) quantifiable and 3) cost-justified? (y/n). If
you provide a benefit which is important, and you can prove it -
there is a much higher probability of generating sales.
10. Is there a demonstrated market for your product? (y/n) If
you have an existing product, is your customer base expanding?
Investors would rather fund sales and production than product
development.
11. Is there wide appeal for your product or service? (y/n) Are
there enough potential customers in the target market that you
can earn significant profits, for a long time? Are there
follow-on products to sustain revenue and profit growth?
12. Does your company have the ability to sell your product?
(y/n) Particularly in companies where the founders have
technical backgrounds, a question to ask is "Who is going to
sell your product or service?" What about outside distributors?
13. Is there an experienced management team? (y/n) Investors
would rather fund a solid team instead of one lone genius with a
great idea. The team should be highly qualified in marketing,
sales, finance, and the product/service area itself. Of course,
a demonstrable track record helps.
14. Can you demonstrate a likely return of 5-15 times investors'
capital, over a period ranging from three to seven years? (y/n)
The actual parameters used by venture investors will vary based
on which stage you are in (idea, startup, development,
expansion, turnaround).
15. Is there a clear exit strategy for investors? (y/n) The most
common strategies for returning investors' capital are 1) going
public; 2) acquisition of your company; 3) new investors; 4)
founder's buyback or management buyout.
16. Have other investors already put money into the company,
particularly the senior management team? (y/n) This reduces the
apparent risk, reduces overall exposure, and shows that
management "has its money where its mouth is."
17. Have you clearly defined a structure for the investment you
seeking? (y/n) The structure should include: who is involved,
how much capital is needed, what minimum investment you will
accept, how much equity that will buy - and, of course, the
projected return on investment.
18. Are your financial projections realistic? (y/n) Have you
soundly justified your projected growth rates and other
financial assumptions?
19. Have you clearly examined the risks? (y/n) Investors like to
know that you have considered the risks. This is key - can you
turn your risks into opportunities?
Too many no's? Remember, each "no" opens up an area for you to
strengthen your business. Even if you aren't seeking capital,
each question highlights a critical success factor - which, when
mastered, will increase your profits, your performance, and your
future success.
In order to help you discover hidden value and opportunities in
your existing business, and to make it easier to spot potential
problems while you are just starting out, I've created the
Discover Hidden Value Business Building Guide. A remarkable aid
to accelerating the growth and profitability of your business,
this program of insight-provoking questions and checklists
enables you to rapidly diagnose, troubleshoot and optimize every
part of your business, from marketing to sales, customer service
to product development and finance to production.
About the author:
Paul Lemberg's clients call him the "unreasonable business
coach" because he insists they pursue goals and take actions far
outside their comfort zone, creating results including sky-high
profits, stellar revenue growth, and greater life satisfaction.
Paul is the President of Quantum Growth Coaching, the world's
only fully systemized business coaching program designed to help
entrepreneurs rapidly create More Profits and More Life.
Guaranteed.