Business plan MeaningA document prepared by a company's management, detailing the past, present, and future of the company,

usually designed to attract capital investment. Definition A written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement Why do I need a business plan? Realism Outside advice Recognize change Balance growth and opportunity Create results oriented business Benefits of business planning

Determine your break-even point Define your Enterprise objectives, operations, future, etc. Address various aspects of your products or services Understand your market, prospects, and other factors Determine your image, pricing, promotion and other strategies Analyse your competition Structure your development and production or delivery methods Finally, you have thought through your processes and are ready to write your executive summary.

benefits of a business plan Many businesses fail because they dont have a clear strategy and objectives. Writing a

business plan forces you to address the details of your own business proposal and clarify exactly what you have to do to make it a reality. Any shortcomings or potential problems will soon become obvious if you take the time to look at your business idea objectively. In this way you make your mistakes on paper rather than in reality. A good business plan will:

Give you a sense of direction and an action plan. Keep you and your staff focused. Demonstrate the seriousness of your intentions to banks, investors, colleagues and employees. Enable you to identify problems early on and take appropriate action. Set targets and measure your success. Help you recruit better, higher-level employees.

A business plan is not only for business start-ups. It is an evolving document that should be reviewed regularly. It will always be a useful tool to persuade others to invest time, money and effort in your business. Writing a business plan A business plan outlines your vision for the future of your business, looking at where you are now, where you want to be by a given date and how you intend to get there. Nine business plan pitfalls:In our experience of assisting with their business plans more than 1000 startups, small businesses, middle market and Fortune 500 companies, we have noted the following common business plan pitfalls Pitfall #1: Making Financial Projections Too Aggressive. Many investors skip straight to the financial section of the business plan. It is critical that the assumptions and projections in this section be realistic. Plans that show penetration, operating margin and revenues per employee figures that are poorly reasoned, internally inconsistent or simply unrealistic greatly damage the credibility of the entire business plan. In contrast, sober, well-reasoned financial assumptions and projections communicate operational maturity and credibility. By accessing and basing projections on the financial performance of public companies in their marketplace, ventures can prove that their assumptions and projections are attainable.. Pitfall #2: Defining the Market Size for a Company too Broadly. Defining the market size for a venture too broadly provides little to no value for the

investor. For example, mentioning the size of the U.S. healthcare or global electronics markets is generally extraneous since no company could capture a meaningful percentage of either market. Rather, a more meaningful metric is the relevant market size, which equals the company's sales if it were to capture 100% of its specific niche of the market. Defining and communicating a credible relevant market size, and a plan to capture a significant share within this market is far more powerful and believable to investors Pitfall #3: Focusing Too Much on the Company's Proprietary Technology While proprietary technology is a significant factor in investment decisions, it is much more important to show how this technology satisfies a large, unfulfilled customer need. Many companies fail because they do not understand the needs of their customers. Understanding true customer wants and needs, identifying which target markets most exemplify these needs, and outlining a plan to penetrate these markets are critical to funding and execution success Pitfall #4: Stressing First Mover Advantage. A business plan must include strategies that demonstrate the venture can and will build long-term barriers around its customers. Simply claiming a first mover advantage is not compelling in today's funding environment. The methods through which the company will retain customers should be detailed in the business plan. Such methods could include implementing customer relationship management (CRM) tools, building network externalities (e.g., the more people that use the product or service the harder it is for a competitor to penetrate the market), ongoing value-added services, etc.

Pitfall #5: Indiscriminately Incorporating Investor Feedback into Your Business Plan. Investors, like the rest of us, have different tastes. One investor may love a concept and/or business plan while the next may hate both. It is important to understand this as business plans are working documents and are always undergoing iterations. Management teams must not rush to incorporate each potential investor's comments. Instead, have several investors, partners and other business colleagues review the plan and provide feedback. Incorporate common concerns and probe other comments to determine if they are valid. Pitfall #6: Asking Investors to Sign a Non-Disclosure. Most investors will not sign Nondisclosure Agreements. This is because a business' strategy and/or concept are typically not confidential. It is possible that a key partnership is confidential, for example, but for the most part the execution of the strategy and concept is what will make the company successful. If the concept and/or strategy must remain confidential, this often implies that there are no barriers to competitive entry. If a

competitor or host of competitors can quickly copy the concept, then the business model is probably not sustainable. On the other hand, proprietary technology is confidential. The business plan should not discuss the confidential aspects of the technology but should discuss the benefits of the technology and how these benefits fulfill a large customer need. A serious investor will review the actual technology during the due diligence process. A discussion regarding signing an Non-Disclosure Agreement would be appropriate at this point. Pitfall #7: Not Tailoring Management Team Biographies to the Venture's Development Phase. The Management Team section should include biographies of key team members and detail their responsibilities. These biographies should be tailored to the companys stage since different skill sets are needed to launch, grow and/or maintain a company. A start-up company should emphasize its managements success launching and growing ventures. On the other hand, a more mature company should emphasize how team members have successfully operated within the framework of larger enterprises. Pitfall #8: Focusing Too Much on the Future. Investments and valuations for companies are based on a firm's projected future performance. However, the best indicator of future performance is past performance, or a company's past track record. Business plans must show what milestones and accomplishments a company has achieved. Past success in achieving goals gives investors the confidence that the team will execute in the future. Pitfall #9: Not Including Successful Companies in the Competitive Discussion. Too many business plans want to show how unique their company is and, as such, list no or few competitors. However, this often has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customer need to support the venture's products and/or services. In fact, when positioned properly, including successful and/or public companies in a competitive space can be a positive sign since it implies that the market size is big. It also gives investors the assurance that if management executes well, the venture has substantial profit and liquidity potential.