How to Prepare a Business Plan

Business plans vary based on the audience and intent of the proposal. Of 250 business plans I've written, few are of the "operational guide" variety. Most business plans are for attracting investors, lenders, grants or partners. For instance, one of the proposals I wrote for a real estate developer was successfully used to acquire a $50+ million loan in 2007.

My favorite client is the one without a pre-determined business, because the entrepreneur is wide open to market demand. Those that come to me with significant IP or management experience in a field are appealing, but the worst are those who want to start a business based on emotions.

Record labels, restaurants, bars and cafes are cool to own, but tend to have low margins and be very competitive. It is compelling to follow one's dream of owning such a business, so I offer the following compromise. Start a business with high demand, and use the profits to throw away on your dream night club. Hopefully, you'll have so much wealth from your initial venture that you can support years of loses and not rely on others to support your low margin ambitions. I hope to someday open a replica of the late Gold Bar, once in East Village Manhattan.

Access to capital is almost as important as chosing the right business. For instance, if you have experience and connections in an industry, it is usually worth leveraging this background. Note, however, that capital is easier to acquire for a real estate business than a startup dot com, although I favor the latter. You might also search grants.gov to see what the government is funding.

While few competitors can make it easier to capture market share, having at least a few can substantiate the market. Be very careful about saying, "there is no competition." It is a cliche used by many entrepreneurs, and usually an untrue statement made from ignorance.

Discovering competitors for an idea you previously thought was unique can be disheartening. However, you cannot shy away from your competition. Start with a feature comparison matrix showing how are you similar and how you are different. Find public companies that are most similar to your business, and collect their operational data.

An entrepreneur can make more money than a doctor, lawyer or stock broker, but the odds are lower. We all like to think our chances of success are better than most, and that positive enthusiasm can be infectious, but don't completely engage yourself before investigating the competitive landscape.