10 Questions Your Business Plan Should Answer

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1. What is the market potential for your company's product or service? What is the revenue potential for the industry, and what is its growth rate?

 

While all firms have different investment criteria, most angel or venture capital investors target a minimum ROI of 25 percent, or often even higher than 50 percent. Investors prefer growing markets to stagnant ones.

 

2. How did you calculate market potential? How do you determine industry sales and growth rate?

 

It is all too common for entrepreneurs to overestimate market potential figures in their business plans

                  

3. What makes your business different or unique?

 

This question can be a double-edge sword, because a business can be both too common and too unique for a particular investor. If it's too common, the investor will be concerned with the competition and the lifecycle of the business. If it's too unique, the VC might be concerned with the time required to educate the marketplace, and that is an uncertain and lengthy undertaking.

 

4. Why would someone be "compelled" to purchase your product or service? What specific needs does it address?

 

Investors look for businesses that offer products or services that address a demonstrable market need. It is critical to demonstrate how your spa will service the demographic in your given location; and that there are enough clients out there that want what you have to offer to make it worthwhile.

 

5. How do you know that your business has high-growth potential?

 

Investors will want to know how you reached your revenue assumptions and market potential figures. Thes numbers should be verified by external sources if at all possible. Ideally, they want to see a large growth opportunity that scales quickly, thereby allowing them to realize the payoff on their investment as soon as possible.

 

6. What is it about your management team that makes them uniquely capable of executing on your business plan?

 

Investors are typically looking for a management team with experience in building a business, experience in the industry                   and strong character. Managers must demonstrate passion, resourcefulness, integrity, perseverance, and risk-taking ability 

 

7. What are the primary risks facing this opportunity?

 

Risks include competitive threats, shifts in technology, governmental and regulatory policies, labor market conditions (in the spa industry, especially the availability to find qualified labor at a reasonable cost), business climate changes, product liability, and financial risks.

                  

8. Who are your competitors?

 

 Investors are interested in learning about the extent of competition your business will encounter and how you will distinguish your company.  Hint, the answer "none" is almost always incorrect. If potential investors are aware of competitors that you have overlooked, they will lose faith in your ability.

                  

 9. What gives your company a competitive advantage?

                  

Investors want to know how you plan to outmaneuver the competition -- and that you've given thought to future market entrants and how you will stave them off. 

 

10. How do you plan to acquire clients?

 

A well-developed business plan includes marketing strategies that demonstrate an understanding of market realities and consumer behavior.  Your occupany assumptions should be conservative.