If you rely on outside investors to take advantage of your startup ideas, the details are important. Whether you are looking for SBA loans, talking with capitalist ventures, borrowing from friends or family, or entering yourself to the shark tank, you really have to know what you are talking about before you go to the capital.
Just fill the business plan template room doesn’t cut it. It’s important to really plan a business. That means applying the basics of business for every aspect of your business ideas. You have to do homework to ensure the idea is decent, the market has space for other competitors, and that your business model will truly generate profits. There is no allegation that is permitted, and whatever assumptions must be explained and justified. The details are important – they are what separates good ideas thrown for years and increased and profitable effort.
If you are going to talk to potential investors, you should know the numbers inside and outside. Estimated back-of-the-napkins of sales and not enough costs. You need to know the standard ratio for your industry and how you compare projections. You need to know the break-even point under various conditions and how variable costs will be affected in these conditions. You must have a reasonable target for how much it costs to get new customers … and your explanation must be reasonable. Throwing ballpark numbers is usually unacceptable. You must be able to discuss and explain the details of your financial projection.
Know the competition
You also need to do your homework in competition and market. Know the details of who they are, what they do, and how you will compete. If you cannot produce one direct or indirect competitor, you do not do your homework or there is no market for your product. If you enter the crowded industry, look for a niche that is not exploited to fill and work through detail how and why it will work. Learn the target market to find out what they are doing, where they go, and what else they spend to get their money.
You will need a well-developed marketing plan for how you will make your customers buy. Simply putting ads in the most comfortable place usually not functioning. Conversely, consumers are very flooded with advertising you need to find targeted marketing opportunities for the right people. You need details about the range, expected responses, and the cost of sale of marketing activities that you planned. You must have a plan for the initial wave of marketing and how it will be evaluated as well as some backup ideas if the results are less than a star.
The details are important
If you plan to approach outsiders to help fund your startup, know the details before you ask. In fact, even those who use their own resources to fund startup will benefit from digging into details before they launch … the failure rate will drop quickly. But going in front of potential investors raised the stakes. Smart investors will expect you to know your ideas down, inside and outside. Enter details – you will have a better chance to secure financing and better opportunities to succeed.