Two Critical But Often Ignored Business Plan Ingredients
Each year literally hundreds of thousands of entrepreneurs and business owners will develop a business plan. Most will incorporate the 10 key sections most business plan templates include. But even then, most miss two ingredients that are crucial, particularly if you are seeking outside funding for your plan.
Let’s go through these two items so you don’t fall victim to this mistake.
1. Be sure to cite past accomplishments in your business plan
Lenders and investors are making a bet when they fund your company. They are betting you will have future success. And if they are correct, they will earn a healthy return. So, what is the best indicator to someone you will have future success? The answer is past success.
Past successes are so powerful that many multimillion-dollar checks have been written to Silicon Valley entrepreneurs who don’t even have a firm idea. That’s because if you’re an entrepreneur who has sold or taken multiple companies public, investors know the chances are high you’ll do it again; they will fund whatever venture you conceive.
Because past successes are the best indicators of future successes, be sure to document all past successes in your business plan. For established companies, think about the difference between your company when it started and where it stands now. Then document all the positive changes that have occurred such as:
- Sales milestones you’ve reached
- Hiring milestones (e.g., hiring your first, fifth, twentieth or even hundredth employee)
- Partnership agreements you’ve signed
- Customer relationships you’ve secured
- Products you’ve developed or patented
- Marketing campaigns you’ve launched
Importantly, even if you’re a startup, you’ve accomplished goals both in your career and in your new business. With regards to the new business, maybe you’ve:
- Signed a lease
- Secured a partnership
- Forged an agreement with a customer
- Hired an employee
- Built an advisory board or found a mentor
- Conceived a unique business name
- Built a website
Essentially, every key goal you’ve accomplished should be listed in your business plan as each will lend credibility that you’ll be successful going forward.
Many entrepreneurs get hung up on not telling their business ideas to others since they think doing so will ruin the success of their business opportunity. Rarely is this the case, and if it is, it’s only when the idea is a completely new concept for which you can be the first mover.
But, if you’re not the first mover on a new concept, you’re only going to be successful if your company has unique qualifications. For example, let’s say you have an idea to open a pizza shop in your town. The question to ask then is why are you uniquely qualified to run a successful pizza shop. Here are some potential answers:
- You have 15 years experience running a pizza shop.
- You have relationships with equipment suppliers who can get you great equipment at below market prices.
- You have secret recipes that allow you to make high-quality pizza.
- You have relationships with product suppliers that your competitors don’t, allowing you to offer products competitors can’t.
- You have 10 years of social media marketing experience that will allow you to effectively promote your pizza shop.
- You have 12 years experience managing a team of retail employees and maximizing their productivity.
A good way to think about your unique qualifications is to ask yourself what would happen if someone launched a pizza shop next to yours. Would you or your new competitor win the battle? The winner would depend on the unique qualifications of you and your competitor.