Traditional wisdom and MBA’s from Harvard will tell you that you have to create a huge business plan full of market analysis, sales strategy, funding plan, and everything else. I have personally witnessed businesses in the Silicon Valley secure $30 million in in funding with a one paged document. Yes, these times are gone but the point is not lost. You need a business plan but do not spend time creating a 30 page document.
I used to think that I needed elaborate business plans to take to a bank and show them this plan supported by all types of industry analysis and spread sheets with 3-5 year pro form cash flow statements. Once I got done with showing them my plan, I figured they would quickly finance me since I clearly outlined how my industry is a billion dollar industry. This is nonsense. I created a 90 page business document, pitched it to people, and no one got past the first page. A couple of bankers got to page 2 and maybe 3% of the people got to a page 3.
I recommend creating a business plan no greater than 3-5 pages. Your business plan needs to identify your goal and your overall objective. It needs to detail how you are going to begin, detail who your market is, and how you will sell and distribute your product or service to this clearly defined market. All this should be done in no greater than 5 pages. The problem with banks is that in order to get bank financing, the bank needs to see a sales history of at least 24 months. No bank will fund a brand new business with zero earnings. If it does, you are very rare and I would be very thankful.
This situation means that you need to create your product or service yourself and prove that it can sell by selling it for 2 years on your own. This will give you confidence in your product or service and help you when you’re in front of the bank. This part of any business plan is the toughest most grueling part of the plan. This is why it is not realistic to spend days and months putting together a 50 page plan. No one will even need your plan for 2-3 years until you prove it on your own. This is what made Master P credible to investors and record distributors. He had sales of his own. But his plan was short and small. This is what you need to focus on: simple planning and relentless execution of this small plan to achieve results over a 24 month period.
by Gerard Spinks