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  • You might think that the only thing

  • standing between a would-be entrepreneur

  • and spectacular success is a glossy business

  • plan with five-color charts, detailed spreadsheets,

  • and a decade of month-by-month financial projections.

  • But experienced investors know that these are mostly

  • based on wishful thinking, not reality.

  • What do they really want to see?

  • Harvard Business School professor William Sahlman

  • argues there are four factors critical

  • to the success of every new venture

  • and every great business plan.

  • First, introduce the people starting and running

  • the venture as well as outside parties,

  • such as its lawyers, accountants, and suppliers.

  • Most savvy investors will focus their attention on people

  • because they believe that execution skills are

  • what matters most.

  • You need to prove you have the skills, experience, and network

  • necessary for success.

  • Next, the opportunity is a profile of the business itself,

  • what you're going to sell, to whom, for how much, and so on.

  • Be sure to talk about the competition.

  • If your business plan describes an unbeatable market position,

  • you'll sound naive.

  • A good business plan openly discuss its strengths

  • and vulnerabilities.

  • Third is context.

  • Here you need to show not only your understanding

  • of the big picture--

  • the regulatory environment, interest rates, and so on--

  • but how you will respond when these external factors

  • inevitably change.

  • Finally, talk about risk and reward.

  • What happens if one of the founders leaves?

  • What happens if demand skyrockets?

  • Assess everything that can go wrong and right

  • and explain how your team will actually respond.

  • But wait, you might be wondering,

  • what about the numbers?

  • Yes, business plans should include some numbers,

  • but those numbers should appear mainly

  • in the form of a business model that

  • shows your team has thought through key components

  • of the venture's success or failure.

  • When will the business begin to make a profit?

  • How will investors eventually get money

  • when the business succeeds?

  • A business plan that asks and answers the right questions

  • is a powerful tool.

  • A better deal, and a better shot at success

  • awaits entrepreneurs who use it.

You might think that the only thing

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The Explainer: Writing Great Business Plans

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    jbsatvtac1 posted on 2019/08/22
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