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7- Writing a business plan

Funders you approach, ranging from banks to angel investors, will need to see documentation that walks them through your business’ added-value, what your product or service does, the state of the market, financial projections, current financial status, team, and other important aspects. This is what is called a business plan.

The business plan is important because it is in writing, and is a document investors and yourself can, and will, refer to in order to address issues or aspects that were not mentioned during a meeting or pitch, and which are not publicly available.

Investors can request a business plan either prior to or following an initial meeting or pitch. The business plan should contain the following sections and answer the following questions:

BUSINESS PLAN
1 Problem What is the problem your service or product is trying to address? What gap in the market exists that you are trying to capitalize on?
2 Solution What is your product or service? How does it currently address, or intend to address, the gap or problem in the market?
3 Market Size What does the market look like now? Who are the major players? What share of the market will you capture?
4 Business Model How will your service or product generate money? If you’re a social enterprise, how will it generate impact alongside financial returns? You should have a tested and monetized model that has evidence of generated sales and profit.
5 Competition Who are your competitors in the market and what are their strengths and weaknesses? Do they currently have, or could in the future develop, a service or product that fulfils client needs similar to yours?
6 Market Plan What does your plan to go-to-market look like? If your product or service is not yet fully operational, how soon will it be and how soon will you be able to generate returns on investment?
7 Team Who is on your startup’s team? What significant skills and experience do they bring and that provide a serious advantage to your startup?
8 Traction What progress have you made so far and what is your quantifiable impact? You should be able to showcase numbers, including figures on the number of clients, retention, upselling, and cross-selling rates.
9 Financials What numbers do you have on your operations, including costs, revenues, net profits, and various other metrics, such as average revenue per customer, monthly customer growth, churn rate (the rate at which you lose existing customers), etc.? You should also have projections for your company over the next several years.
This section should also show how much money you have received, the instrument used (grants, debt, equity, mezzanine, or other), from whom, and in exchange for what (ownership, interest payments, or nothing at all). It will also include your valuation—how much your startup is valued on the market—which will in turn affect the amount of funding you receive in the form of equity.
10 Fundraising How much money are you requesting from your investor? In exchange for what? What do you plan to do with it?