Start-ups always struggle with this question. Here are some scenarios to think about.
You need the “Traditional 24 page business plan with 3 years of pro forma financials” when:
• Seeking funding from a commercial lender (bank) – YES
They almost always require a traditional business plan.
• Seeking equity funding from Venture Capitalist or Angel Investor – MAYBE
They require some sort of document that describes you and your business venture and your business model. Do research on potential investors and see what they require. All are different. Most want to have a crystal clear business description (Executive Summary) and lots of information about YOU.
• Self-funding your start-up – MAYBE NOT
Working through the components of a traditional business plan will help you recognize what you know and what you don’t know about your business venture. Putting information on paper helps codify your thoughts and makes the information “real”.
Still don’t think you need a business plan? At a minimum, answer these 5 questions:
1. What problem are you solving/what need are you filling?
2. Who has the problem/need?
3. How will you reach them?
4. Who else is solving the problem?
5. Can you make money at it?
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