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Follow these steps to write a start-up business plan
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Melissa Krinzman, founder and managing director of Venture Architects LLC, a company with offices in New York and Miami that develops business plans for early- and growth-stage companies, acknowledges up front that start-ups should be wary of anyone who says they’re a business plan expert. “We consider ourselves students of business planning because there’s no one right way to write a plan,” Krinzman says.
That said, a good business plan helps to define a start-up’s agenda and move the company to the next rung of the ladder when seeking capital. “We do not believe that business plans get you the money, but they can stop you from getting the money, and we have seen that time and time again,” Krinzman says. So before you formulate your plan, consider these seven strategies:
Start with your financial projections. “At the end of the day, if the business doesn’t make money, you shouldn’t be in business,” Krinzman insists. “Many people don’t start with the numbers. They move forward and get stuck.”
Avoid valuing your company. Although financial projections are essential, don’t put a valuation in your business yet, Krinzman advises. “It just looks silly, and you negotiate against yourself,” she says. “The idea is to first get a meeting and engage an investor in a conversation. The valuation piece is much better to discuss face to face than on a piece of paper.”
Work from the end. Define your audience for the plan, then work backwards. “What do you want to achieve?” Krinzman asks. “If you start with your end goal in mind and work backwards, you’ll have a much stronger plan.”
Streamline the information. “We always say fat business plans fall fastest from tall buildings, but they don’t really win you the capital,” Krinzman says, noting that business plans should be no longer than 30 pages and contain no extraneous information.
Stay focused. Investors don’t care about anything except the core business. “Over the years, we’ve seen a lot of mysteries,” Krinzman says. “After reading the first few pages, we have no idea what the company does, who the customers or target market are, or what the product or service does. We just walk away.”
Eliminate adjectives. A business plan is not a marketing document, Krinzman emphasizes. “It doesn’t have to be boring, but we are not interested in words like ‘unique’ or ‘revolutionary.’ That kind of language will turn off investors.”
Include an executive summary. Boil down your business plan to a few takeaway points, Krinzman advises. Ultimately, potential investors want to know if the start-up has defined a critical problem that needs to be solved. Does your team have the ability to execute? Can you become profitable by providing the right product, service or technology at the right price? For university researchers, the executive summary might simply be labeled “technology, team, and time to market.”
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