Business Plans are written with the intention of getting presented to venture capitalists in hopes of securing funds for the business venture. Of course there are other reasons in which to write a business plan, but securing capital is the primary one. Venture capitalists can at times look through hundreds of plans – so it’s important to incorporate the specific things they do look for when you’re writing a plan.
I’m currently writing a business plan for an independent music publishing company and after researching information presented by venture capitalists Daymond John and XXXX, there are a few things I’ve incorporated and changed about my business plan along the way.
Daymond John stresses the importance of laying out a complete plan. This means doing your homework about similar businesses in the market and researching every aspect of your business. In designing my business plan I have carefully researched what others in the industry are doing, as well as what they are not doing. A good analysis of the market is an important part of a business plan because it allows venture capitalists to see where your company would fit in.
John also stresses the importance of being able to explain how your business operates to an individual who is not in the industry you are venturing into. This piece of advice has caused me to write a detailed operations section in my business plan. While the company operations might seem trivial to me, or even to others who understand how music licensing works, to a venture capitalist unfamiliar with the music industry these concepts are foreign. Giving them insight into company operations is essential.
Kevin Harrington stresses the importance of having a big marketing budget. He insists that 20 to 30 percent of a businesses’ initial budget should be towards marketing. This has caused me to change my marketing scheme. While originally thought to be a small marketing campaign, I have reworked my marketing and advertising budget so that there are different marketing channels being targeted every month, from different angles.
Harrington also says that a great executive summary is important – you need to show how you are going to benefit the investor and how the investor is going to make money. You need to show how you can benefit the investor. While I have yet to begin writing my executive summary, I know that I am going to have to work extra hard on it because sometimes it is the only thing that an investor will actually look at.
Overall, it’s important to understand that an investor is going to be investing in you and that your business plan is a reflection of you.
Sources:
Daymond John's Top 30 Tips and Advice From 2010
Ten Questions FUBU CEO, Daymond John, Asks Entreprenuers
Advice from the 'Shark Tank': How to Swim with the Big Fish
ABC Shark Tank Kevin Harrington Shares His Wisdom
