38 | The Lion King
Investment
How to
Create
a stellar
Business
Plan
By Ifeyinwa Olloh
A
nyone starting a business must
have a business plan. Numerous
studies have shown that one of
the major reasons new businesses fail is
poor planning. A business plan serves
two purposes: it provides a road map
for your business and it enhances your
chances of obtaining finance.
Developing a business plan is not as
hard as it seems. Here are four simple
steps in developing one:
Step 1: Know Your Business
You must have very sound knowledge
of the business in order to prepare a
business plan. This means doing lots of
research. You can carry out research
by reading everything you can about
the industry or talking to those who are
already in it. Learn everything you can
about your business and industry.
Step 2: Determine Your Pur-
poses for the Plan
A business plan serves to crystallise your
business vision and guide you in fulfilling
that vision; it is also frequently used to
entice potential investors. If you are
self-financing your business, you design
the plan mostly for your benefit, but if
you are seeking for outside investors,
you will need to target them. So, before
you create your plan, determine wheth-
er you will solicit for outside investors.
Step 3: Determine Your Audi-
ence
If you plan to recruit investors, you need
to build a plan to suit them. Outside
investors, who range from friends and
family members to banks, will invest
through either loaning you the money,
buying shares in your company or some
combination of the two. Determine their
level of sophistication and what they
are looking for in a potential business
investment. Remember that regardless
of their level of sophistication, they are
all looking for four things:
1.
Trust in you - You build trust by
demonstrating sound ethics and
integrity so your business plan should
demonstrate those qualities.
2.
Understanding of the business - It is
your job to clearly articulate your
mission statement, your product
offerings and how you will make
money. You may have to tailor your
plan to suit your audience: less-so-
phisticated investors may be scared
off by industry jargon, while invest-
ment professionals will probably
expect it.
3.
Financial confidence - Clearly
articulate the risks of investing in
your business. Also, show investors
how they can recoup their money
- whether your venture succeeds or
fails.
4.
A good return on investment – Keep
your eyes on return on investments
(ROI).Typically, investors will look to
beat a certain internal rate of return.
Your job is to make sure your project-
ed returns are in line with those of
similar industries.
Step 4: Create Your Business
Plan
Develop an outline of your business
plan first. Consider every aspect of your
business and how it will affect your busi-
ness plan. Remember, this business plan
is a road map. It must guide you. It must
also communicate to investors what
you are doing and why they should
invest with you.
Your business plan should be se-
quenced in this order:
•
Mission Statement
•
Executive Summary
•
Product or Service Offerings
•
Target Market
•
Marketing Plan
•
Industry and Competitive Analysis
•
Pro-Forma Financials
•
Resume of the Company Principals
•
Your Offering (what type of financ-
ing you are seeking)
•
Appendix (any other pertinent
information)
You will also need to state personal
seed capital you are investing in the
venture. Financiers want (and often
require) entrepreneurs to put their own
funds in the venture, and the greater
the portion you invest, relative to your
net worth, the better.
