Your start-up is off to the races. You’ve developed a product and won a handful of customers. But now you face the biggest challenge of your venture’s short life – you don’t have enough cash to pay your employees and suppliers. Should you shut down or can you convince investors to keep your venture afloat?

Raising that vital capital depends on how well you execute five steps to creating a winning business plan.

1. Pinpoint the core issue

There are so many things that are keeping you up at night. Can you deliver the product? Can you keep your partner from bolting? Is there a big enough market for your product? Should you raise prices? Can you make payroll?

With all those questions, you will never be able to raise capital unless you can figure out which is the most critical one for your venture’s future.

To that end, you have to start off your business plan by answering three questions:

• What is the situation? (e.g., what made you want to start the business?);
• What is the complication? (what is the biggest barrier to realising your venture’s mission)?; and
• What is the key question? (In other words, what yes/no question will determine whether your start-up crashes or prospers?)

2. Analyse the options

Let’s say you decide that your start-up’s future depends on whether you can sell your product to a new group of customers. If that’s your venture’s key issue, you have to think up different options for doing that and then decide which option is the best.

Here are some options: You might go after those new customers by designing a new product tailored to those customers’ needs; you could make a product that meets their basic needs and charge a much lower price; or you could sell your existing product using a social media strategy.

But how do you decide which is the best strategy? You should compare them on three dimensions:

• Is the industry attractive? For example, are industry sales, growth, and profit margins big enough to sustain a R1 billion valuation for your venture?
• Can your start-up win? For example, is your product creating such a compelling value to customers that your venture can gain at least 10% of the market?
• Will investors get a return? For this, you must specify how much capital you need and project future profits that will grow fast enough for investors to reap an attractive risk-adjusted return.

3. Define the strategy

Once you’ve analyzed your options on those three dimensions, you have to pick the one that comes out on top. But you can’t stop there.

If you want to convince a potential investor that you’ve really thought about what you will do with the money, you have to define your strategy. And a good way to do that is by specifying its five elements:

• Arenas. Here you have to explain which product(s) you plan to sell, which customer groups your venture will target, and which countries you plan to sell in;
• Vehicles. Let potential investors know whether your growth will come from partnerships, internally-developed products and services, or acquisitions. For each of the relevant categories, give specific examples;
• Value proposition. How are you going to convince potential customers that the benefit of buying your product far exceeds the price you charge, the risk of dealing with a start-up and the value propositions of all your venture’s competitors?
• Economic logic. How will your start-up earn a profit – charging a high price for a unique product or the lowest price in the industry – with even lower costs?
• Staging. Once you have the capital, what exactly will you do first, second, third and so on?

4. Make the case

Here is the hardest part – you have to think about how to make an irresistible case to potential investors. Doing that successfully depends on making them feel that not investing in your start-up will cause them to miss out on a big investment return that their peers who do invest will savor.

To do that, you should focus on your background as an industry thought leader, a great team builder and motivator, and a winner in everything you’ve done in the past.

And you also have to convince potential investors that you are offering them a chance to own a piece of a company that will be worth at least R1 billion in the next three to five years because it will grab a big piece of a fast growing market – yielding them many times their capital in profits.

5. Detail next steps

A final step in your business plan should be to demonstrate that you have your feet on the ground. To that end, you ought to make it clear the first five action steps you will take once investors’ checks have cleared.

Here are the key elements of an action step:

• Action step definition. For example, the first action step might be to build a prototype of your product;
• Accountable manager. Here you’d describe who will be responsible for getting the action step done;
• Deadline. This is the date by which you expect to complete the action step;
• Deliverable. What will the completed action step produce – e.g., a working prototype that customers can use;
• Benefit. How much revenue will the prototype generate? If not revenue, what learning will it yield your venture?
• Cost. How much cash will the action step consume?

Do these five things and your venture will boost its odds of raising the money it needs to survive.