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Other Articles
Thinking Strategically of E-Commerce
The new business model
Musings of a Realist
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A quick and dirty health check for your business plan
Your business plan is usually the first and often the only
impression you can make on a potential investor. Most investors have hundreds of
plans coming their way on a regular basis. Hence, it is vital that you are get your pitch for funds
on the right note by ensuring that your business
plan is given the opportunity for a second and often more detailed review. This
means you need to find reasons to continue to read rather than the other way
round!
Based on our experience (and those of our colleagues) here
is a quick checklist for you to go through in ensuring that your plan is as
powerful as your idea.
Questions that need to be answered positively in the quick
review:
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Is the investment scenario reasonable?
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Does the overall business model make sense?
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Is the market segment one that is relatively easy to make
money in? What is the scale of the target market? Plans that show 50% market share with
$1 million in sales can not provide a worthwhile return on investment.
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Does the plan show a detailed understanding of the
potential customer?
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What are the barriers to entry and what makes the team
think that somebody else won’t do the same thing quickly and better?
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If there are strong competitors, there must be some incredibly novel plan to displace the competitors.
In any case, there must be a great plan to keep the customers loyal especially
if the industry is very open to copy-cats.
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Simple analysis of numbers – are the capital requirements,
growth, and profitability reasonable? (i.e. if a plan indicates $5 million
in
sales with 40% profit in 3 years with $1million invested, its likely not reasonable)
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Who are these people on the team? Does the team have specific knowledge and experience that
make them appropriate for this venture?
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Attention to detail and form. If the plan has typos,
misspellings, bad grammar, etc (especially with current technology), it is immediately
discarded - if you have not taken the time to make a clean pitch, no investor
would be interested.
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