Right now, maybe you find yourself in this situation: you have a good idea, but you can’t convince any investors that your business is worth it. Meanwhile, your marketing plan is stagnant and you cannot develop any action to make your company known. And so it is difficult for you to get clients. And so it is difficult for you to get an investor to trust you. And start again. You begin to despair and think that you have not succeeded with your business idea.
Have you ever stopped to think that maybe there is nothing wrong with your business model and that you have simply put together an unconvincing business plan? It seems incredible, but many entrepreneurs have a good project, but they are not able to present it well when they prepare their business plan to request financing. In most of the business plans that come to me, the entrepreneurs either don’t explain who they are, or they don’t explain how much money they need, or they don’t explain how they are going to make money, or they aren’t able to explain what their idea is. And an investor is not an NGO.
A first warning sign that it is not working is when it is ensured that it has no competition in the market or, if it recognizes that there is, it does not explain what that competition is like.
1. Make sure you include a clear definition of the product or service and how the idea came about
This is the main failure of a business plan. A plan must make its advantages clear to the consumer-client. Keep in mind that investors will look closely at your product definition to define the strengths and weaknesses in the overall business plan. An investor is unnerved by commonplaces. Try to get to the point when explaining what you do for a living, how you came up with it and where you want to go. An investor wants the entrepreneur to be an entrepreneur.
INCORRECT
Business idea. “On the Internet there are more and more users. E-commerce is also one of the most advanced sales channels. This strategy will allow us to save structure costs when going to other countries. We want to position ourselves as leaders in the delicatessen sector on the Internet with a website that provides real value to the potential consumers we are targeting. We have a product of proven quality in the national territory, which will serve as a guarantee for the international market – it will be necessary to request quality certificates in different countries in order to support the marketing of products on the Internet”.
Motivation. “To expand the business, we are committed to expanding the universe of consumers by internationalizing the marketing of our products.”
RIGHT
Business idea.“Sale of artisan sausages to wholesalers, retailers and end customers in Spain and Europe, focusing on the German market. In a market, that of charcuterie, where manufacturing processes have become so industrialized, and large companies present almost identical products with few differentiating factors, we intend to market an artisanal product, where the quality of the raw materials, the process craftsmanship of its manufacture, the exact information on the composition of the products and the traceability of the raw materials that make up the product are sufficient differential values to convince a select clientele, who value above all the quality of the final product, and the safety of be consuming a product that complies with all hygienic and sanitary measures.gourmets . It has been decided to use the Internet for the sale because the target consumers are advanced users of the Internet and favorably accept the possibility of making purchases through this means. The website will be www.embutidos-salchichon.com , for which we have already requested the domain”.
Motivation. “The reasons are several. On the one hand, expand markets in the EU and make a product with ‘traceability’ available to customers that is having great acceptance in those markets where it arrives. Specifically, customers from northern and central Europe, who demand extensive information on the products they consume and who have a higher purchasing power, are potential consumers of our products, and at this time we do not have access to them. All this encourages us to make a marketing effort to get our products to physically distant markets that we can access thanks to the Internet”.
2. Don’t forget to calculate your break-even point
In too many plans, the experts with whom we have spoken agree, the balance point is missing. This calculation allows the company to know where it should place its production volume, with the intention of obtaining profits because its income is greater than its total costs and, therefore, producing more than the level at which it reaches the neutral point. When calculating how much you will sell, you also have to forecast sales by day, week, month and year. And it is convenient to mark the sales forecasts by seller.
RIGHT
Result of exploitation
First year: 33,500 euros Second year: 35,950 euros Third year: 59,585 euros
Net result
First year: 33,500 euros Second year: 25,165 euros Third year: 41,709 euros
Cash flow
First year: 36,500 euros Second year: 135,165 euros Third year: 179,709 euros
Break-even point: It is reached in the fifth month of the first year.
3. Includes an ‘exit plan’ in the event that you have an idea from the first moment of setting up the company and then selling it
It is important for the entrepreneur to know, from the start, what his chances of exit are. Sell this, for this. That is important. This is for a startup , not for a company that already has a turnover of 2 million euros. An entrepreneur does have to be aware of whether it is a affordable company if it works.
Your ‘exit plan’, if brief…
This section does not have to be extensive. It is necessary to include how it is going to be divestd, arguing the exits.
4. Includes an executive summary of one or two pages
You must include basic information about the project, the necessary investment and the equipment. It is your business card, but enlarged. What capital am I looking for and why am I looking for it? You may even want to talk about the team earlier in your business plan and slightly change the order.
This yes, the last
Don’t write it at the beginning. Leave it for the end, for when you have already written the bulk of the business plan. Although it is the shortest part, it is the most important for the sale of your idea/project. It is the block of your business plan that is going to enter through the eyes and it is what will get the attention so that an investor reads it. Maximum two pages… three, at most. You have less than two minutes to get the attention of an investor who has to read more than one project.
Say it with a letter
It is also useful to add a cover letter next to the executive summary. You always have to think about the person you are addressing, what your project is like and how your project adapts to whoever is reading it. If your project, for example, is technology-based and you request financing from venture capital, highlight the patents you have already signed and those in which your business is going to stand out technologically. If, for example, someone on your team is respected by investors, take advantage of this space as well.
5. The business plan must be realistic, without false expectations
Avoid any exaggeration of the style: “We are going to be world leaders, we will conquer 1% of the Chinese market, we have no competition, our technology is unique”. You always have to offer a realistic vision in the business plan to investors, without exaggeration, of your project. The issue of exaggerations is also very important. You have to sell sparingly. On many occasions you will meet people who know what they are talking about and who know the sector in which you are going to enter. And if you don’t know it, you should never create false expectations.
RIGHT
Aspects to assess:
◗ “Sausages for export are subject to similar treatment, packaging and labeling standards throughout Europe”.
◗ “Food traceability begins to be implemented, scheduled for the year…”.
◗ ”In Germany, 44% of artisan sausages are sold directly and the basic factor is trust”.
◗ “In Europe, Spanish food products are considered to be of high quality and have prestige”.
◗ “In Spain, the artisan product is sold in specialized stores (60%) and in specific spaces of large surfaces (20%)”.
Positioning:
◗ “Our packaging and labeling process complies with the regulations, in addition, we will add detailed information on the artisan curing treatments used and the exact composition of the raw materials used”.
◗ “We have already incorporated traceability in production processes, and it can be an important distinguishing element and allows us to access sales channels for organic products”.
◗ “Selling food on the Internet is not yet customary, but we will try to generate a brand and we will place the products in stores of typical products in German tourism areas so that they are recognized brands when they return to Germany. We want to position ourselves as a gourmet store on the Internet, which will allow us to compete as a specialized store.”
