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Business plans: ten essential ingredients


On Forbes.com, Martin Zwilling outlines a recipe for a great business plan, revealing the ten essential ingredients.

According to the author, investment-grade business plans usually consist of around 20 pages, which should also contain these ten key elements that matter most to business owners and investors…

1. Zwilling insists your business plan should begin by describing a problem your business aims to solve. "Lay it out in terms your mother could understand, and quantify the 'cost of pain' in dollars or time," he says.

2. Rather than offer a detailed product specification, simply explain the solution and benefits: how and why the product works, including a "customer-centric quantification of the benefits".

3. Zwilling advises that relevant charts, graphs and figures from accredited sources can be used effectively as part of a clear and concise explanation of your industry and market size.

4. Give a clear explanation of your business model: who pays you, and how much of that is profit. "A mere glance should yield a decent grasp of the business's growth potential," says Zwilling.

5. Provide a list and description of your competitors and detail your sustainable advantage over them.

6. Give a summary of your marketing and sales strategy, including pricing and distribution channels. "This is a good place to map out a timeline of key milestones," Zwilling suggests.
7. Include a profile of your executive team, including members of the advisory board and "key industry players" involved, demonstrating a "deep knowledge in the company's specific domain".

8. Show your workings for your funding requirements and give an in-depth description of how you are going to use the money. Also include details of the amount of financial commitment and equity the owners have in the business.

9. Detail revenue and expenses for the previous three years if possible and offer projections for the next five in your financial forecast, highlighting the break-even point.

10. Zwillig's tenth point concerns exit strategy. He says: "This section is required when courting outside investors eager to know when and how they will get their money out, and what sort of return they might expect… Plan to keep the business in the family? Ignore this section."

He also warns: "Plenty of entrepreneurs have built companies only with an eye to sell them. For many, this is the greased path to perdition. Focus instead on building a truly sustainable business. The money, fame and stock tickers will come."

The 10 Ingredients Of A Great Business Plan
Martin Zwilling