10 Tipsto Craft a Strong Business Plan

1. Know your competitors 

Be prepared to name them and tell what makes you different from (and better than) each of them. But do not disparage your competition.

2. Know your audience

You’ll probably want several versions of your business plan—one for bankers or venture capitalists, one for individual investors, one for companies that may want to do a joint venture with you rather than fund you, etc.

3. Have proof 

Have proof to back up every claim you make. If you expect to be the leader in your field in six months, you have to say why you think so. If you say your product will take the market by storm, you have to support this statement with facts. If you say your management team is fully qualified to make the business a success, be sure staff resumes demonstrate the experience needed.

4. Be conservative 

Be conservative in all financial estimates and projections. If you feel certain you\'ll capture 50 percent of the market in the first year, you can say why you think so and hint at what those numbers may be. But make your financial projections more conservative—for example, a 10 percent market share is much more credible. 

5. Be realistic 

Be realistic with time and resources available. If you\'re working with a big company now, you may think things will happen faster than they will once you have to buy the supplies, write the checks and answer the phones yourself. Being overly optimistic with time and resources is a common error entrepreneurs make. Being realistic is important because it lends credibility to your presentation. Always assume things will take 15 percent longer than you anticipated. Therefore, 20 weeks is now 23 weeks.

6. Be logical

Think like a banker, and write what they would want to see.

7. Have a strong management team

Make sure it has good credentials and expertise. Your team members don’t have to have worked in the field, but you do need to draw parallels between what they\'ve done and the skills needed to make your venture succeed. Don’t have all the skills you need? Consider adding an advisory board of people skilled in your field, and include their resumes.

8. Document why your idea will work

Have others done something similar that was successful? Have you made a prototype? Include all the variables that can have an impact on the result or outcome of your idea. Show why some of the variables don’t apply to your situation or explain how you intend to overcome them or make them better.

9. Describe your facility and location 

Describe your facilities and location for performing the work. If you\'ll need to expand, discuss when, where and why.

10. Discuss payout options for the investors

Some investors want a hands-on role; some want to put associates on your board of directors; some don’t want to be involved in day-to-day activities. All investors want to know when they can get their money back and at what rate of return. Most want out within three to five years. Provide a brief description of options for investors, or at least mention that you\'re ready to discuss options with any serious prospect.