A winning business plan tells a story to funders about the business in question. Like any good story, the plan must be captivating and interesting, providing more within its pages than first meets the eye. Rather than being a story of the past, a business plan is just as much a story of the future, describing how the business will operate, act, and succeed over the coming years.
The plan begins with exposition, setting the stage for the business. This includes introducing the players, such as the founders, customers, and competitors. This also must include describing the market situation in detail, wherein a clear problem for a customer group will be presented. This problem, arises from an unsatisfied need for customers and the inability of current businesses and options to satisfy that need. This problem creates the market opportunity your business will act upon. The industry analysis, customer analysis, and competitive analysis sections offer this exposition and background.
The action of the “story” is the future plans of the business, detailed in the marketing, operations, and management plans. Marketing is the first step, as customers must be reached with the product or service through a combination of promotion, pricing, distribution, and branding. The operations plan explains the functions the business it will need to execute on a daily basis and how it will grow over time. The management team description details why the founders are qualified to lead and what their specific responsibilities will be. Together, these sections show a focused, competent business which moves forward decisively to take advantage of the market opportunity spotted and to find future opportunities.
If there is a climax to the story for a funder, it is in the financial projections. Assuming the opportunity is attractive, the strategy is in place, and the qualifications of the founders are appropriate, funders will expect to see returns which more than compensate them for the risk of investing in or lending to the company. Returns to funders may be shown through interest payments, dividends, or the growth in value of the company leading up to a strategic sale. The financial plan must provide narrative to show what these financial results will be and the financial statements must support these words with numbers.