Business Plans: Shooting the Moon?

March 3, 2009sparxoo_admin

By Ethan Lyon, Senior Writer

The Goal
The purpose of a business plan is to articulate business goals and your strategy.  If you are seeking funding, the goal is to impress your prospective investors.

Spin: Be Realistic
The business proposition should be aspirational but real. If your business goals are obviously too lofty and impossible, investors will be turned off and most likely not want to invest.

If you wanted to create a space liner that traveled between Earth and Mars, an investor will most likely balk at your idea. However, you can strike a middle ground.

Going with the space analogy, in 1961, President John F. Kennedy stated the mission of the U.S.: “to put a man on the moon and return him safely by the end of the decade.” Kennedy’s goal was between impossible and possible. Had he made the statement 20 years prior, he would probably have been laughed at. So, maybe the trips to Mars might not be a viable idea now, but maybe 20 years down the road, it just might be.

The point: be realistic. We all have dreams, but some are more investible.

Pre-Plan Checklist
Before you begin to invest in your idea, consider the following:

1. Who is going to benefit from your product?
As a business owner, you need to serve somebody or some function in order to be successful. If your product is not going to help somebody or in other words, be purposeful, your business is going to fail. Do you think Steve Jobs started Macintosh with the goal of becoming a billionaire? No, he wanted to create a product to help the everyday person compute. Steve Jobs took the equivalent of ancient Sanskrit and turned it into Walt Whitman. The goal was to help people. If your business can help people, you can succeed. Remember, there are two roads that you can follow: 1) help people or 2) help yourself. One is going to be much more fruitful than the other.

2. Identify the risks in the marketplace
If you’re idea is to create the number one search engine in the world, your success rate is most likely slim to none. However, you can modify your goals to make them viable, therefore more attractive to investors.

3. How are you going to reduce these perceived risks?
Instead of competing with the heavy-hitters, such as Google and Yahoo, tailor your product to a niche audience. Put a personal touch on your idea and make it unique.
So once you have a viable idea, you need to sell it to investors. How are you going to make money?

4. How are investors going to benefit (i.e. make money from your proposition)
There are several different ways Internet companies generate revenue. Finding the most efficient way for your company to make money is key to your attractiveness to investors.

Last Bit Before You Go…
The more time you spend grappling with your idea now, the greater the pay-off will be in the end. Make sure you have done your research on the market and how you are going to fit into it. An investor wants to know what you are going to do, how you are going to do it, and why you are going to be successful. If you haven’t an answer to these questions, go back to the drawing board until you are confident you can sell your idea.

Once you have an idea you are confident enough to sell, you can move into the next stage: write a business plan.