… we have some history, and have done this …
What is Traction?
Traction simply refers to how well your business idea is being received by its target market place. The traction section of the business plan aims to show significant ‘historic’ milestones indicating evidence of success to date. The aim is to show the investor that your idea is working, that the business is being moved forward and ideally that customers are prepared to use and pay for the product.
It is normal top pick a few key metrics which are considered to be good indicators of success in your chosen industry. For example, key metrics might include, paying customers, revenue, users, or churn rates. In the absence of trading activity the traction section might list significant business plan developments e.g. the launch of the product, formation of an important supplier partnership, the launch of a website or the hiring of key staff.
There is no set style, but traction can be simply shown in a three column format with the columns headed Event, Comment, and Date. Each line then represents a significant success in the development of the business idea.
| Event | Comment | Date |
| Launch | Product launched and well received at industry trade fair | Dec 17 |
| 1,000 users | Reached 1,000 free users, growing at 20% per month | Mar 18 |
This is part of the financial projection and Contents of a Business Plan Guide a series of posts on what each section of a simple business plan should include. The next post in this series is about presenting key metrics in your business plan.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.