How to Write a Great Business Plan

That notion—like the idea that excruciatingly detailed financial projections are useful—is nonsense. From whom you raise capital is often more important than the terms.

Once it examines the new venture’s industry, a business plan must describe in detail how the company will build and launch its product or service into the marketplace.

business plan should candidly describe each team member’s knowledge of the new venture’s type of product or service; its production processes; and the market itself, from competitors to customers.

I read the résumés of the venture’s team with a list of questions in mind. (See “Who Are These People, Anyway?” at the end of this article.) All these questions get at the same three issues about the venture’s team members: What do they know? Whom do they know? and How well are they known?

Value can be extracted from the business in a number of ways either through a positive harvest event—a sale—or by scaling down or liquidating.

And even more important, When does cash flow turn positive

The model should also address the break-even issue: At what level of sales does the business begin to make a profit?

What’s wrong with most business plans? The answer is relatively straightforward. Most waste too much ink on numbers and devote too little to the information that really matters to intelligent investors. As every seasoned investor knows, financial projections for a new company—especially detailed, month-by-month projections that stretch out for more than a year—are an act of imagination

Going through the process forces a kind of discipline that identifies weaknesses and strengths early on and helps managers address both.

Do those new ventures require business plans? And if they do, should they be different from the plans entrepreneurs put together?