And we’re back! Bringing to you, fresh from our summer holiday, the eight post in our series of articles exploring the various aspects of being an entrepreneur. The articles are written by Eric Zoetmulder, a Commercial Lawyer, Management Consultant and VentureCorps Mentor with Endeavor Egypt. He can be contacted at eric@ocorco.com

Few words in entrepreneurship are less understood and more abused than “Business Plan”. Sure, your kernel of an idea that may become your business is a plan. So is that hefty document with all the fancy spreadsheets projecting million dollar sales well into the future.

A true business plan is a process, a continuum of thinking through everything that makes or breaks your business. A process that you start with that first business kernel and that really never stops. To do that well and impose a rigorous discipline in thinking, you’d best write it all down in detail. When you need to explain your plans, all you have to do is lift those parts that are relevant to your new partner, investor, new customer or first employee and make a professional and appropriate presentation.

Creating a business plan helps you evaluate the market for your product and size up the competition, to identify your business’ strengths and weaknesses, to figure out how much money you’ll need and gives you clear direction. Just remember that no business plan is ever finished, so be ready to tweak and re-write, all the time.

A good business plan answers important questions; What’s a reasonable expectation for sales, expenses, cash flow? What are your most important strengths and weaknesses, and opportunities and threats? What’s your key target market focus? Your ideal buyer?
What are the key metrics for your business?

Research the facts and write the plan yourself; the exercise is worth much more than the actual plan. Do not waste any money on software packages that claim to help you write a better plan. Your business is unique and no standard approach will replace the need for a through and through understanding of how you are going to make money. That goes just as well for a social impact venture, where you have the additional goal to make a difference. Even there, the first objective of a business is to survive to realise its social goal. Let’s have a look at some of the elements that you will find in any good business plan.

Are you solving a market pain or do you promote a solution looking for a problem? This is the most important issue in your plan and one that deserves a careful answer. Survey your target market and find out, relevant to your product, what issues or problems do consumers experience, why they have not yet filled the need, if they have tried to look for a solution and what that ideal solution should look like. Will they buy it or, if not, why?

What is your USP, your Unique Selling Proposition, what makes your product or service unique? What competitive advantage do you have over the competition? Can you price competitively and still have a good profit margin? Are you ready for the market or if you are in the development stage, what is the rollout stage or timeline to bring the product to market?

Spend lots of effort on your competition. Find out if and why they struggle or do well and every other detail you can lay your hands on. Compare each competitor with yourself and with the others. Is there room for another player in this market? Will you beat them, and if so, how?

Show that you know your market and that you have selected market segments which are most suitable for your new product and to make your venture profitable.
Describe expected demand for your product, the market share you expect to capture and who these customers are likely to be. Explain how growth of the market will affect your product sales. Use public data to show the size of your market and estimate expected revenue. Investors like their entrepreneurs to entirely understand their markets, so show you know your way around. However, small niche markets are usually not attractive to external investors.

Your business model sets out the key elements of how you plan to make money with your product. Outline who pays who and in what role in the process. Pay attention to credit terms as these effect your cashflow, different currencies as these can cut in your margins. The simplified value chain for an import – retail model is shown on the right.

Explain your cost structure and show how different production or sales volumes change your costs as economies of scale begin to have their impact.

Many business plans assume that sales happen by themselves once you launch your product. The reality is very different and you’ll want to make and describe a detailed go2market strategy. Like the big strategic picture, your go2market is a continuum, where you take your product to the market, review customer reactions, revise both product and strategy, go back to the market and so on.


Design your go2market with the well known 4P’s (now 7P’s) of the marketing mix in mind and take your time for each P as shown on the right.
Once you’ve identified how you will approach the market, design metrics to determine how you will track the effectiveness of the methods you selected.

All these good plans will not go far without a strong team of people to make them work. Investors know this all too well and it is not surprising that they will pay lots of attention to you and your partners. You will want to show how you have built a qualified team with your co-founders, employees, advisers and professional consultants, covering not just technical product development and manufacturing, but sales and marketing, finance and accounting, IP protection, an international dimension and so on. Do not simply attach a stack of resumes, but write a brief summary for each individual, outlining how they contribute to the team and the business.

But just bringing people together does not make a team, you should also invest time in building coherence and collaboration. You can be sure that investors will want to see clear indications that they are investing in a team where the right people talk together effectively to generate high performance outcomes; loners are bad investment risks!

Make a detailed timeline with deadlines and goals. Show how you intend to progress from the initial business idea to a product and from there to a market rollout. Indicate how key events join in a critical path that determines the overall duration of the project. A detailed timeplan (a Gantt chart is a very effective way to visualise the plan) helps identify dependencies; where one event is a condition for another event, and is also a good starting point for your financial projections.

Financial projections make an important part of the business plan, but do not confuse plans with reality. Similarly, an over-detailed approach gives you numbers that are probably precisely wrong, while vaguely right will do. Financial projections are an exercise in crystal ball gazing.
What is important is to differentiate between margins and cashflows and to make a realistic estimate of your working capital needs and cash burn (the amount of cash you need till revenues have grown to a level where they can sustain your regular overheads).

If yours is a new business, with no history, projecting 3 years ahead is about the best you can do. Be very conservative in your revenue expectations and consult your go2market plan; very few businesses grow from nil to hundreds of millions in just a few years.
Be honest and realistic with your financial projections. Investors and lenders are looking for realistic projections. Don’t underestimate their knowledge of your business or industry. You can lose credibility quickly by presenting unrealistic financial projections. Use layman’s terms when explaining your product or service. If the reader doesn’t understand what you are saying, there is little chance they will get involved with your business.

Analyse all the risks your venture may be subject to, likely and unlikely, and explain their potential impact and how you intend to avoid or mitigate these risks. I don’t know what investors like less; “oh, that won’t happen to us” or “we really don’t have any competition”. In a new venture, nothing is guaranteed, your technology, market acceptance, the quality of your team. As the saying goes; “stuff happens”. Better be safe than sorry.

The final and most important part of your business plan is execution. Showing that you are capable of taking the plan from the drawing board to the street and start making money. This is where the disciplined planning of a detailed business plan will pay off. Focused with a real product on on a real market, resources and facilities in place; all you need to do is push the “go” button.

To help you get going with a professional business plan, download the attached template; “Crafting your Business Plan- Guideline“.