A great pitch deck need confidence. Based on years of experience writing winning business plans, Abhishek Sareen lays out the complete guide on how to create the best business plan from scratch.
Over the years of my professional career in management consulting, new business development and corporate strategy, I have been involved in creating business plans in various sectors. I have also pitched them to investment committees for funding a new business unit.
I learned many things in these years, like financial modelling, setting up an organization structure, positioning, etc. However, the most I’ve learned about creating a business plan was recently when I was creating a pitch deck for Shilpa Ahuja Media along with my co-founder wife. The importance of visual storytelling and giving a structure to your business plan are just as important as its core elements. These things not only make it more understandable for the investors, but improve the founder’s thought clarity too.
Here I’m sharing the learnings from all my experiences that will help anyone create the best business plan, whether you’re an entrepreneur or a working professional.
What is a Business Plan
A business plan is a document that outlines the goals of an individual or company, and the activities & resources that will be used to achieve these goals. A business plan is not just about writing down what you want to do, it’s about how you are going to do it and why. It’s about creating a relatable story through identifying a real problem, and showing how your business is going to solve it.
Creating the Best Business Plan – Planning
A business plan should include the following elements:
- Target Market & Opportunity
- Customer insights
- Problem statement
- Product’s value proposition
- Competition & Current Solutions
- Road map
- Demo, screenshots, mockups, etc.
- Marketing strategy
- Financial projections
- Key team members
We’ll discuss each component below in detail.
Other than these points, you can also include annexures to discuss extra points, or detail these out further. You can also include some other points like why is the timing of your solution relevant now, or unique advantages your solution has. Beware of the word “strategy”, as a lot of people shall talk about it, but very few people understand it. Do read this article for your reference if you want to understand what is strategy.
These are the basics. But creating the best business plan is all about going into detail for each of these. It’s about showing your own belief in your idea. It’s also about showcasing your brand. These days, it’s common for investors to expect well-designed pitch decks that are presented with images, infographics and bold colors or fonts. Be sure to design it in a way that reflects your brand. It needs to be easy to understand and concise.
Why Do You Need a Business Plan
One of the main purpose of a business plan is to raise money from investors or banks. It’s thus very important to keep in mind who your audience is. If someone is going to put money in your money business idea, they would like to know each and every aspect of your plan and how you plan to make money. Your plan’s depth also reflects your confidence, and that’s one of the most important things an investor would be looking for. After all it’s the people behind the business that an investor will really invest in.
Other than the investors, a business plan can also be really helpful for business partners to understand and align each other’s vision for the company. For business owners, it can give thought-clarity and help them discover key challenges or weaknesses.
Key Components of a Business Plan
Every business is unique in the mind of its creator. However, potential business investors have got used to a set format and general conventions, as it helps them quickly evaluate several business plans. The flow of a business plan should be as follows:
1. Vision and Value Proposition
The best business plan starts with a one sentence overview of your business and where you are planning to take it. Vision sets the tone and premise for the entire business plan. It’s the core idea of the founder, what value the business aims to deliver. It’s the direction which anybody may refer to, when you think you are losing your focus.
Don’t go into too much detail here, keep it short and easily understandable, almost like a tweet. The clarity of you vision and value proposition is key, and reflects your self-confidence in the business idea to your potential investors. It’s very common that you may go astray from the core idea you had initially envisaged, so make sure the rest of the business plan, each aspect of it, aligns with this page.
2. The Problem
Every good business idea solves an existing problem – a real problem that people have experienced and can understand. Since you’re going to deliver a solution to your customer, you must first identify the problem. Unless you recognize and define the problem, you would not be able to address it. Once you recognize the pain points of your a potential customer, you would then be able to deliver a solution or product’s value proposition effectively.
Make sure you’re defining a real world problem, and the state in such a way that it is easily relatable for your potential investor. Creating the best business plan is a lot about storytelling, so be sure to start it in an engaging way.
3. Target Market and Opportunity
Once the you have clearly defined your problem, you need to narrow down your focus and define your potential target market. It’s very important to define your ideal customer segment and profile them. You may target a potential market segment, but those need not always be your only customer base. You can always make it broader and have customers in other segments too.
For example, if you are launching a product for the youth, there is a very high probability other older customers may also buy your product or service. Once you are clear about your target market segment, you then need to calculate the opportunity size. While calculating the potential opportunity, you need to be very precise. You need to have a plausible calculation logic and estimate the opportunity that your business is going to address. You can always mention other market segments that may use your products.
In a lot of cases, a brand think they will be catering to particular target segment, however in reality a different customer segment my find its use and functionality and become major buyer for it. It’s not uncommon that a brands internal perception about itself is different from the potential customer perception it. However, once you narrow your focus to target segment, your value proposition becomes sharper.
4. The Solution
This is the part where you detail out your solution or how you going to deliver value to your intended target customer. You could define your solution with the help of use cases, compare your solution with other possible offerings in the market. You can also create mock ups to communicate your idea as vividly as possible. Your proposed solution is the heart of your business plan. In a lot of cases the consumers cannot define a need for products or solutions they want, and it’s the entrepreneurs insight or gut feel that defines the product. Sometimes a products availability itself create its demand.
Market or consumer research may be a good tool to understand your consumer’s psyche, but in a lot of cases it’s deceptive. Consumer in reality often don’t really know what they want from product or service. They may think they want something, but the reality could be the complete opposite. This intricate knowledge can be termed as customer insight, which can only be learned by first-hand experience.
5. Revenue Model or Business Model
Based on the market opportunity and solution, you can now put numbers to justify your business plan. Calculate the potential revenue & profits that your business will generate over 5 to 10 years of time. What are the different possible ways that your business solution will generate revenue so that you can make a profit. A business is usually valued by the maximum possible revenue that it can generate in a year, the profits, and number of potential customers it can cater to. The best business plan should try to maximize profits and valuation through a large customer base.
6. Traction and Validation/Roadmap
Here you put down the steps how you would approach building your business step by step. Once in progress, what are the key result areas that you shall achieve to measure your businesses performance. You can break down the roadmap year by year over a period of 5 or 10 years.
7. Marketing and Sales strategy
It’s easy to define your product and make a plan to sell it, but the big question here is, how would you go about selling your product. If you can’t sell your product, your product is of no use. Here you define your product sales pitch, your pricing policy, your distribution strategy, and your advertising message or communication strategy. This should be effective enough to be able to generate the revenue and profit as detailed in your revenue models. You can read my article on marketing here.
8. The Team
Your team is the most important asset. In the end if someone is going to put money in your business, they are eventually putting their faith in you or the individuals that make up the core team behind the business idea that you are selling. At the end of your business presentation, it’s you and your team will be judged. You thus need to market your credibility through your work experience, your insights and your motivation behind this business idea.
Once your revenue streams are clear, you also need to account for the expenses that you shall incur in order to generate this revenue. This will be the starting point of your financial business model. Using this data, you can then take help of some financial expert, who can then help you build profit & loss statement, balance sheet, cash flow statement, etc.
Your financials should also summarizes how the invested money would be used, and when could an investor expect to receive their money back.
10. Competition & Benchmarking
It’s very important to be aware of who your possible competitors are in the market. You would need to benchmark yourself with all possible players. Many a times we tend to shy away from the activity and think you may not have any competitors, but that would not be true as your product or service will compete with other products or category in some way or other.
This slide on competition & benchmarking needs take into account all possible competitive scenarios. This an extremely important exercise and helps you reflect in a mirror, where you compare your solution with potential competitors.
You can analyze what market gaps your competition are filling and what you would be doing differently. This can be shown through table matrix or infographic.
11. Demo and Screenshots
Your business plan also needs to be low on text, and should be easy to understand using charts and info-graphics. Demos and screenshot should be presented so that your potential investors can visualize your business idea as much as possible, as a picture speaks a thousand words.
12. Relevant Annexures
Some say your business plan need short and concise, but I believe the best business plan is the one that is thorough. A detailed business plan can always be shortened, but the vice versa isn’t true. Your true investors who are considering to put their money, will want to make sure you have taken nothing for granted. You also need to take the right advise from the right people. People who aren’t your investors may find your business plan presentation or document boring and verbose, as they are unlikely to put their money at stake, so you need to be careful who you take advice from.
There is no perfect business plan pitch and there is no ideal investor. Since you have created a business plan, you have to be ready for all kinds questions and interrogations.
Once during a business presentation I was asked something (related to international market players) which was beyond the scope of my presentation. Still I had some prepared some extra slides and kept them in backup. To be frank I has asked myself, if I was an investor what question would I ask. So I just prepared a few extra slides just in case. You can thus be prepared of possible questions and details and keep relevant information related to possible partnership that you many want to engage in business, detailed market research, detailed financial, sensitivity analysis, etc.
Good vs. Great Business Plan
Here are some tips to go over and above the basics, and make the best business plan. It should be:
A good business plan is one that has a clear and concise goal, a well-defined market, a sound financial plan and a good understanding of risks. A great business plan is one that has all of the above but also includes an innovative idea or solution to a problem.
If you are about to create something truly unique, it’s highly likely that people may not understand it in the first go, as it’s unlike any conventional business idea. A great business plan is like a complicated story told well.
Oftentimes, founders complain that their idea is so innovative that others can’t understand or appreciate it. But that’s just because they can’t explain it well. You thus need to be creative and persistent enough to make sure your business idea is communicated to and understood by the intended person. This may be not be easy as it sounds, however that’s the challenge.
One should not expect to be able to create the best business plan in one sitting. It may take a several iterations to create a good business plan. You may have clarity of thought in your mind, but to give it the shape of a document or presentation is another skill.
Think of potential questions or concerns, and address them in the business plan or annexures. Remove information that’s not addressing the defined problem, or that’s convoluting the plan overall.
Avoid lengthy explanations or unnecessary points.
The best business plan avoids too many words and long paragraphs. This was the #1 feedback we received from other entrepreneurs who had received funding that we showed our pitch deck to.
Use images or infographics to drive your points. Visually represent your data and ideas where you can. Highlight key points using a bold font or bigger font size. Add an accent color to highlight headings or important points.
Easily Understandable for Someone in a Different Field
A lot of times we assume, the person reading the business plan would have the same level of understanding as the founder or business plan creator, but that is seldom the case.
A business plan creator needs to empathize with the level of understanding of their potential investor and present the information at their level. You should not consider them very dumb, but not very well informed about your field either.
What Makes a Bad Business Plan
While making business plan, it’s very important to have your priorities right. In my personal experience you should spend a majority of time designing and defining your products or service. If your product or service is good, it will sell itself. On the other hand if your product or service is not well thought out and doesn’t convincingly deliver the core functionality, no amount of marketing can make it a success.
Your business idea needs to be scalable, thus the best business plan is one that shows the potential to be big. If your business idea’s scope is small and has limited growth potential, you are not thinking big enough. You should also lay out a plan for the future on how will you expand your business once you have achieved your planned goals.
All business plans have an element of risk. You should be able to articulate those risks for your investors. If you haven’t done that, its mean you are too optimistic about your plan and haven’t planned for any contingencies. By doing a risk assessment and evaluating potential solutions, you are being realistic about your business plan’s execution.
Abhishek Sareen is a sales & marketing professional with over 16 years of experience. He started his career as a management consultant at Kurt Salmon Associates and has worked in marketing & brand management, international business in sectors like precision steel tubes for automotive industry, consumer goods and retail.
He’s is a passionate cyclist and participated in several endurance competitive events. His interests are in behavioral psychology, economics and chess. He is a graduate in Computer Science and an MBA in Marketing. He completed his executive education from IIM-A in 2016 focusing on business strategy.