8) What does a good business plan look like?
Your business plan should be a concise written summary which addresses most of the above questions. You should view it as an excellent opportunity to sort out your thoughts and to put them onto paper in a well-organized way.
While there is no one way to organize a business, here is a structure which you might follow. In any case, you should provide good answers to all of these points:
– Executive summary
– Business concept and implementation strategy
– Target market
– Description of the (nanotechnology-based) product or application
– Commercialization and sales planning
– Management, staffing and organization
– Opportunities and risks
– Financing plan
1. Executive summary
You should always begin with an executive summary which brings together the key points of your business plan. As you revise and improve your business plan, you must be sure to update the executive summary, or else to write it only at the end, after you are fully satisfied with the rest of your business plan.
The executive summary should provide a concise business overview along with the key objectives of the business plan. The importance of the executive summary can hardly be overstated; its quality will usually determine whether a potential investor even reads the rest of the business plan. In no more than two pages, it should briefly describe the following:
– The business concept
– The new product or application
– The business strategy
You should not put anything into the executive summary which is not properly addressed in the full business plan. It is a place to summarize the rest of the document in a concise and compelling way, not a place to introduce new material.
Practical tip: Successful venture capital investors in a specialized field like nanotechnology might have 15 new business plans on their desks to review in a busy week. Their time is very limited. Be sure to get your business idea across in the first few pages. Make every paragraph count.
2. Business concept and implementation strategy
In this section, you should explain your business concept. What is it all about? You should not only describe your business idea but also outline the ways and means of how you will implement it into a commercially viable business.
Your implementation strategy should be clear and concise and should include key milestone dates as well.
3. Target market
A meaningful analysis of the target market is essential for every business plan. In order both to convince potential investors and to develop a realistic business plan, you must do a thorough analysis of both your industry and your market, including a well-founded estimate of your potential future revenues. Particularly for start-up ventures, inadequate market analysis is one of the leading causes of business failure.
The analysis should carefully consider the market size, the potentially available market share and future market growth. It should also address barriers to entry and any other market constraints. If you know of any laws or regulations which impact the market, you should be sure to mention them in this section.
It is also essential to demonstrate an understanding of your competition. You should provide an overview of the products and services offered by your competitors, together with an assessment of their strengths and weaknesses.
Practical tip: Commissioning an external market study is no guarantee of success, or even of correct information. There can be some direct and indirect benefits in digging into the market yourself, not to mention saving the considerable expense of an external study. One of the biggest benefits is that you'll get to know your own market much better and maybe even make some useful business contacts. Try to make a good roadmap for yourself!
4. Description of the (nanotechnology-based) product or application
In this section of the business plan, you should describe the new applications or products which are the basis of your business venture.
Experience shows that new products of this kind generally only succeed in the market when they can achieve competitive advantage by differentiating themselves in terms of customer benefits. Investors in start-up ventures usually expect to hear some convincing unique selling propositions (USPs), so you should be sure to address this in a meaningful way.
Practical tip: When describing your product or application, you should avoid overly technical explanations which the reader may not have the necessary scientific or technical background to understand. Be sure, however, to mention any patents or other intellectual property protection.
5. Commercialization and sales planning
You have a wonderful product idea. That's all well and good, but how will you market it? How will you make your company and product known to potential customers? In describing your marketing strategy, you should demonstrate the importance which you place on the successful commercialization of your idea.
If you know something about the approach and business expertise of your potential investor, be sure to consider it carefully. What other assistance do you hope to receive from this investor, particularly in commercialization? What other nanotech companies does the investor have in its investment portfolio, and how could this business experience help your company?
Practical tip: Don't forget to include a realistic timetable for your marketing activities. This should include all the key steps which will be needed not only in the first months or years following initial market introduction but also in the preparation phase.
6. Management, staffing and organization
This is your chance to present your management team. What relevant experience do you and your business partners have? What are your professional qualifications? You should go on to discuss the other key positions in your new organization, and the people who will staff these.
You should keep it to the point and emphasize those aspects which are important to business success and implementation of your business idea. Venture capital investors will be particularly interested in your industry expertise, your track record, your people skills, and your professional experience.
7. Opportunities and risks
A "SWOT analysis" (Strengths, Weaknesses, Opportunities und Threats) is an excellent framework to show that you understand the challenges which you face. An honest and candid analysis of your weaknesses and of the risks you face will not be held against you. Rather, it will demonstrate that you can think critically and that you've thought long and hard about your business venture.
8. Financing plan
An essential element of any business plan is a detailed and carefully considered financing plan for the business venture. In this section, you should put all of the analysis and planning of the previous sections into hard numbers, show how much investment capital is needed, and how it will be utilized.
The detailed financial and financing plan should generally be presented for a period of three to five years. As with the rest of the business plan, there are no strict requirements for how to organize this. Use whatever format works best.
Practical tip: It is important that your figures are meaningful, that you've really thought them through, and that the potential investor can follow them. But don't make them overly complicated! As with the rest of the business plan, it is not helpful to overload the reader with non-essential technical details.
The appendix to the business plan is your opportunity to include additional information, as well as attachments such as CVs and company documents. This is also the right place to include tables, illustrations, or other information that doesn't fit in the above sections. However, here too you should refrain from overloading the reader with unnecessary or overly technical information.
Here are some examples of additional information or documents which may typically be found in the appendix:
Information on the company's legal entity including legal form, trade register extract or incorporation documents, and shareholder agreements
Photos, graphics, illustrations, or organizational charts
Supporting information for the financial plan, e.g. spreadsheets
Patents, business permits, licenses, etc.
Brochures or other promotional materials
CVs, professional qualifications, references, etc.