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Creating a Business Plan that Successfully Raises Capital

Written By: Gary 20 September 2010 Other Posts By: Gary

Establishing a business plan is essential for any new startup, but for some aspiring entrepreneurs, writing a solid business plan can be a challenge. Ryan Kim , who provides business consultation for small businesses and startup ventures, was kind enough to share his insight with Founders Block on how to create a successful business plan. This is Part 1 – an overview of key general parts of a business plan.

Have you ever wondered why some companies get funded and others don’t? In this six part series we discuss the dynamics of optimizing a current business plan to build a success-driven business, while amplifying your chances of locking in funding. We will focus on people, opportunity, framework, competition, and risk & reward. Each of these elements represents a pivotal point of your business plan, and knowing how to position your company for a successful raise of capital.

This series of blogs combines the writings of Harvard Business Review’s William A. Sahlman, as well as my own personal experience on creating winning business plans for companies around the globe. By the end of this series, the readers should have gained greater insight into what it takes to build a business plan that gets funded.

Entrepreneurs and established business owners must understand that the business plan is only a fraction of the overall tools they will need to sustain a successful business model; however, the right business plan will help a management team comprehend the business from a 360 degree perspective. The five topics that we will introduce in this series will educate owners and management teams in building more effective plans that lead to successful ventures that are funded.

People

The management team and key employees of a company make up the core of a successful firm. Knowing how to identify the right employees with established backgrounds, driven personalities, and defined accomplishments are important elements in choosing an executive team.

Opportunity

This represents a snapshot of the business describing the customer segment, target market, and projected pace of growth. Additionally, business owners must be able to focus on the internal economic structure and what it will take for the product or service they are selling to reach benchmark profit margins. Ideally, the business has an attractive, sustainable business model that will be able to successfully differentiate itself from competitive firms.

Framework

The structure of a business is the foundation which is composed of the regulatory environment, interest rates, demographic trends, and inflation. As the business grows, the entrepreneur must be able to best prepare themselves for the uncontrollable factors that can make or break a business.

Competition

Understanding what and who stands in your way to new levels of success are critical factors to the growth of any business. A strong management team should be able to analyze the barriers to entry, pricing strategy, and the likelihood of competitive substitution.

Risk & Reward

It’s imperative that entrepreneurs comprehend the full risk versus reward relationship, and how it will affect the business overall. The ability to complete a full assessment of every factor that could lead to a company’s success and downfall will enable a business to understand how market changes will affect its growth. Once the fundamentals are understood, the business plan must be able to properly pinpoint the reasons why the investor should invest in the venture, how the proceeds will be used, and the risks of investing in the particular venture, as well as the reward.

Ryan Kim is a New York raised entrepreneur based in San Diego. He is President and Founder of Black Vector Capital, a business consultation firm for small business and startup ventures. At the age of 28 he has successfully built up 12 profitable firms as their chief strategist and CFO within the Southern California region. Complimentary to this, he has also developed successful business plans and private placement memorandums that have raised over $8.2 million in under two years. Please visit Black Vector Capital for more information. Follow Ryan on Twitter @BlackVectorCFO

Related posts:

  1. A Peek Inside the NYC Venture Capital Ecosystem
  2. An Analysis on Seed Funding in 2010 (Part 1 of 2)
  3. Business Networking Groups, Entrepreneur Organizations, and Resources in Silicon Alley
  4. Destructive Entrepreneurship: How the Wrong Incentives Can Lead to Global Crises
  5. An Analysis on Seed Funding in 2010 (Part 2 of 2)
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  • Kkinning

    Great article!!

  • Andria_Arizmendi

    I think this a great article for business that are looking to raise money. The author does a good job of pointing out the key points of building a solid business

  • Andrea Hicks

    An excellently written article describing the importance of a well written business plan and the key components needed for a successful business venture. Looking forward to reading more in this series.

  • MzChristian

    This is an excellent article- especially for someone who in starting a new business and needs help understanding the importance of a business plans; more specifically, the key components to a successful business plan. I look forward to reading the sections to follow.

  • RyRavin

    So when do you plan to write something we dont know?

  • Ryan Lawrence Kim

    Keep following and you may learn something you don't know, i'm just getting started.

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