Many great business ideas never reach the marketplace simply due to an inability to obtain proper financing. Finance experts like Lorenzo Seu will tell you that the mistake of many is in not assessing and understanding the multiple layers of this process. Boasting an international career with many successful companies, Seu currently resides as the Head of Finance for NewtonX whose utilization of AI is revolutionizing the empowerment of business leaders at all levels. Microsoft, Greenbook, Fortune 500, and a host of the most recognizable companies on the planet have enlisted NewtonX, confirming the company’s preeminent approach to providing information. Lorenzo relates that there is also a desire to educate the leaders of tomorrow, as seen in his work judging (alongside experienced consultants from EY, KPMG, and other investment professionals) this year’s Queens college tech incubator. The entrepreneurs of today and tomorrow need a firm footing to bring their offerings to the world; a financial plan steeped in concepts proven essential to success is offered by Mr. Seu in the following steps.
1.Adapt Your Business Plan Presentation to the Audience
While there is a deluge of information on this topic available, many of them are a template that doesn’t adapt to a specific audience. You should prepare different business plan presentations. For example, a banker will likely be most interested in your ability to generate the cash flow that will reimburse a loan while potential investors are probably more interested in innovation than financial return. Clients and vendors want to feel confident that your business model ensures stability and longevity. To approach this variety properly consider the following factors:
- WHO? It is important to understand who will read and analyze the business plan
- GOAL: Depending on the reader, the goal is different. Are you trying to convince a banker for a loan? Are you trying to attract a new business partner? A new client? Your future investor?
- Overall, key financials are the same. However, the presentation should be adjusted according to the audience.
2.Know Everything About Your Market
A lot of business plans lack KPIs or do not explicitly demonstrate that management knows the market well enough to conquer competitors. The more your business plan is documented (market), the more you apply the market metrics (KPIs) to your start up, the better your business plan. Concentrate on these:
- Many startups base their business on innovative products or services.
- An in-depth analysis, or many researches are key to convincing new investors.
- Market insights and number needs to be provided in the business plan
- Investors will better understand what your market positioning is (vs. your competitors or existing products/services)
- A SWOT analysis is a great tool to analyze the startup (Strengths / Weaknesses / Opportunities / Threats) (https://www.investopedia.com/terms/s/swot.asp)
- Example of questions to address 1: STRENGTHS : What is the competitive advantage? => this is the number 1 question. A business plan won’t be validated without a clear answer.
- Example of market numbers, insights or KPIs (Key Performance indicators or metrics)
- What is the total market value in $? (i.e. Revenue)
- What is the number of existing clients?
- What is the market % growth forecast by market expert? (in the next 5- 10 years?)
- What are the KPIs of your market? (example: there are thousands):
- number of users, or subscriptions
- Customer turnover rate
- Average days of sales outstanding
- Attrition rate
3.Know Your Competitors
It should go without saying but there are others who are bringing the same or nearly the same offerings as your company. It’s a major mistake to disregard competitors, including new ones. Specialized press (innovation/tech/startups magazines) is easily accessed to provide information about who is currently working on a similar innovation. Take the time to:
- Identify all the existing competitors. This is key and a resourceful source of information if a business is able to identify strengths and weakness of the competitors.
- The business needs a clear strategy to face the competitors.
- Competitive advantage of the products
- Costs reduction
- Time reduction
- Speed of development
4.Don’t Skip the Details
While a business plan should be a summary of the project, it needs a certain amount of details: numbers, market, description of the projects. Specificity adds credibility with the inclusion of targets, dates, timeline, numbers, and KPIs; as much as possible.
Presenting a financial Business plan can be intimidating, especially for startup creators who don’t have a finance back ground or have never done it before. Keep it realistic and simple, there’s no need for complex financial modelling. There’s a number of free templates available and even a simplified model demonstrates how serious and realistic a startup project is. Founders are demonstrating that they’ve put proper thought into it and have asked themselves the right questions. A business plan without financials is not complete. All numbers and assumptions needs to be explained (e.g. revenue projections/costs). For example:
- Sales (volume)
- Pricing : how much you sell your product
- Hires : who? What and when?
- Costs :
- Cost of goods sold (or raw materials costs)
Even though details are important, you’ll want to include a well-structured executive summary to deliver a strong and short pitch. One to two pages is plenty and be sure to make it available for stakeholders to read first. Building a strong summary is not only a good exercise for the founder identifying the key takeaways but also a nice tool for the reader to digest the information. Be convincing.
7.Ask a Professional to Review Your Business Plan
Once the business plan is finished, it is strongly recommended to submit it to any kind of independent expert. It could be an accountant, a finance or investment professional (business angel) – ideally someone familiar with start-ups. Apply to business associations, incubators, alumni associations if needed. Experts can help you save a lot of time and energy as well as push you to ask the founder the right questions (presentation, figures, etc.).
8.Create a Timeline for Tomorrow, in 6 months, 1 year, and 5 years
Investors and stakeholders want to be reassured that you are considering the uncertainty the future might hold by planning in advance. Create your business plan with key milestones and a list of steps for greater credibility. Examples of these are:
- List of hires with dates
- Product development roadmaps
- Product or innovation new releases
- Fund raising timeline
9.Present Your Team, Especially for Small Startups.
In my experience, even a strong business plan would lack an essential piece without a presentation of the team. This is particularly true for very small company creation with 1 or 2 founders/members. For instance, if a founder plans to create a clothing/apparel company on their own, they need to show past success or why they would qualify in leading this specific business. Having a good idea is not enough to create a business. A good team is key to start a project, especially if founders begin with a very small number of people/founders. Founders need to be convincing; they need to introduce who they are, what they did, and why they can drive the new business. A good business plan should include one page or slide on the executive team (picture, short curriculum, role in the new start up).