Bankable Business Plans

1. A bankable business plan meets funders' needs and communicates your vision

Your plan speaks for you. If your plan is inadequate or unfocused, people will assume that you are inadequate and unfocused.

Purpose and audience. A bankable business plan serves the specific purpose of attracting financial support by addressing the needs and concerns of potential funders, whether they are bankers, investors, or partners. It should clearly communicate your business concept, strategy, and financial projections in a way that inspires confidence in your ability to execute the plan successfully.

Key components. An effective plan includes:

• Executive summary that hooks readers
• Detailed market analysis
• Clear competitive advantage
• Realistic financial projections
• Qualifications of key team members

Avoid common pitfalls. Don't rely on generic templates or formulas. Your plan should be uniquely tailored to your business and demonstrate your thorough understanding of the market opportunity. Be honest about potential risks and challenges, while emphasizing your strategies to overcome them.

2. Define your company's purpose and initial resource requirements

What Will Your Business Accomplish For Your Customers?

Customer focus. Clearly articulate how your product or service will meet customer needs better than existing alternatives. This could involve:

• Solving a problem more effectively
• Offering greater convenience
• Providing higher quality
• Delivering better value

Resource assessment. Conduct a thorough inventory of what you'll need to get started:

• Tangible resources: Equipment, supplies, office space
• Intangible resources: Licenses, patents, specialized knowledge
• Human resources: Key personnel, advisors, contractors

Realistic budgeting. Research costs carefully and create detailed estimates for:

• Startup expenses
• Operating costs for the first year
• Marketing and sales budgets
• Buffer for unexpected expenses

Be conservative in your estimates to avoid running out of capital before you can gain traction.

3. Develop a winning strategy and analyze your target market

Create a Powerful Competitive Advantage

Competitive positioning. Choose between two fundamental strategies:

1. Low-Cost Leadership: Offering the lowest prices through operational efficiency
2. Differentiation: Providing unique features or superior quality

Clearly explain how your strategy gives you an edge over competitors.

Market analysis. Conduct thorough research to understand:

• Market size and growth potential
• Customer demographics and psychographics
• Competitor landscape and market share
• Industry trends and regulations

Validate your concept. Before committing significant resources:

• Conduct surveys or focus groups
• Create prototypes for testing
• Analyze similar businesses in other markets
• Seek expert opinions in your industry

Use this data to refine your strategy and demonstrate market viability to potential funders.

4. Create a strong marketing campaign and dynamic sales effort

Marketing describes how you will position and let your potential customers know about your product or service.

The Four Ps of Marketing:

1. Product: Clearly define features, benefits, and unique selling points
2. Price: Determine pricing strategy (premium, competitive, penetration)
3. Place: Identify distribution channels and locations
4. Promotion: Plan advertising, PR, and other promotional activities

Sales strategy. Develop a concrete plan for:

• Hiring and training sales staff
• Setting realistic sales targets
• Creating compelling sales materials
• Establishing a follow-up and relationship-building process

Measure and adapt. Implement systems to track marketing and sales effectiveness:

• Monitor key performance indicators (KPIs)
• Conduct regular performance reviews
• Be prepared to adjust strategies based on real-world results

Remember that even the best products need effective marketing and a strong sales effort to succeed in the marketplace.

5. Design your company structure and target appropriate funding sources

Entrepreneurship Is A Team Sport

Organizational design. Choose a structure that supports your business goals:

• Functional: Organized by departments (finance, marketing, etc.)
• Product-based: Divisions focused on specific product lines
• Matrix: Combines functional and project-based structures
• Geographic: Regional divisions for different markets

Consider how your structure will evolve as the company grows.

Key personnel. Identify critical roles and the qualifications needed:

• Management team
• Technical experts
• Advisory board members

Highlight the unique skills and experience each person brings to the venture.

Funding options. Research and target the most appropriate sources:

• Personal savings and friends/family
• Bank loans (including SBA-guaranteed loans)
• Angel investors
• Venture capital
• Crowdfunding platforms

Tailor your pitch to address the specific concerns and goals of each funding source.

6. Present compelling financial data and use industry benchmarks

The accuracy of your financial figures and projections is absolutely critical in convincing investors, loan sources, and partners that your business concept is worthy of support.

Essential financial statements:

• Income statements (projected for 3-5 years)
• Cash flow projections
• Balance sheets
• Break-even analysis

Key assumptions. Clearly explain the basis for your projections:

• Sales growth rates
• Gross margins
• Operating expenses
• Capital expenditures

Industry comparisons. Use resources like the Risk Management Association (RMA) data to benchmark your projections against industry averages. This adds credibility and helps identify areas where your business may outperform or face challenges.

Scenario planning. Present multiple scenarios (best case, expected case, worst case) to demonstrate your understanding of potential risks and opportunities.

7. Polish your plan's presentation and prepare for in-person meetings

Despite all the electronic communication methods available today, nothing is more effective than an in-person meeting.

Professional presentation. Ensure your plan looks polished and professional:

• Use clear, readable fonts and formatting
• Include a table of contents and page numbers
• Proofread carefully for errors
• Consider professional binding for hard copies

Executive summary. Craft a compelling 1-2 page summary that covers:

• Business concept and opportunity
• Target market and competitive advantage
• Financial highlights and funding needs
• Key team members and their qualifications

This may be the only part some busy investors read, so make it count.

In-person meetings. Prepare thoroughly for face-to-face presentations:

• Practice your pitch until it feels natural
• Anticipate potential questions and objections
• Bring supporting materials (prototypes, demos, etc.)
• Follow up promptly after the meeting

Remember, your passion and knowledge of the business are just as important as the written plan in convincing others to support your venture.

Last updated: December 15, 2024