Writing Winning Business Plans. Garrett Sutton
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in order to narrow down the prospects to that hopeful few who will be called back for an interview, so do potential investors need to sift through piles and piles of business plans in order to find that hopeful few who will get a closer reading and even an interview. The timeline for potential investors is similarly short. Some investment decision-makers must go through as many as one hundred plans a week. Obviously they can’t do that without getting good at quickly separating the wheat from the chaff. You need to be able to summarize all the essentials in a way that will entice readers and back up that enticement with confidence. This, in a nutshell, is the job of your executive summary.
One way to compose the executive summary is to summarize each section of the plan in no more than a paragraph per section. If you find you can’t do that, your plan (or particular sections) may not be sufficiently focused or you may not thoroughly understand the components you have put into the plan.
Try to make your executive summary a concise selling tool. Leave out sections that do not show the company in its best light – such as the weakness portion of the Strengths and Weaknesses subsection. Your executive summary may be one section or you might want to break it down into briefer subsections. If tables or bullet lists will save you space without losing clarity, consider using them.
Timelines
Writing a business plan can take as little or as much time as you let it. There is no right amount of time other than exactly how long it takes you to get it done. Try to work with advisors and mentors to set goals for each section. Have them hold you accountable to get them done as an added incentive to stay on track. The reality, however, is that if you have to be held accountable by others to get the sections done you should ask if you have true entrepreneurial spirit.
If you need someone to push you along to write a plan, ask yourself who will be there to push you along when you’re in the midst of a crisis. Listen closely to your inner voice while you write your plan. Indicators like how well you commit to meeting deadlines for timelines can tell you just how willing you are to do what needs to be done to creating a winning business. The determination to write a plan needs to be amplified 100 times to succeed in business. The fuel for that amplification must come directly from your passion and no one else. That is how you join the ranks of the elusive 5% of businesses that succeed.
Strategy
Your business plan is a long-term planning document and it will cover a lot of ground. In this section you will paint a picture with words that brings to life how you will get your business started and how you will continuously grow and improve it for the next three to five years. Equally important, preparing your business plan will help you figure out how you define success and what steps you will need to take in order to reach that definition.
Build a strategy for tackling the process of writing a business plan. Here are some tips for business plan preparation:
* Start with the words. The words drive the numbers.
* Beware of technical jargon. Keep the tone conversational.
* Be concise and clear. Short, crisp sentences add authority. Bullet lists are friendly.
* Work on the sections you find hardest first.
* Include mentors, advisors, family and partners in goal setting.
* Don’t be afraid to hire professionals, but don’t delegate decision making.
* Always be realistic (but positive) about your business.
* Be honest, especially when it comes to shortcomings and risks.
* Use a spell-checker and grammar checker. Your plan will be judged not only by the ideas it presents, but also by its presentation and accuracy. Don’t let your business acumen come into question just because your grasp of language isn’t what it could be.
* Only include what’s relevant. Don’t do your thinking in your plan; do it before.
* Remember that the final goal is not a completed business plan, nor is it the acquisition of funding. Rather, the final goal is the realization of your business goals as set out in your plan.
* Embrace the fact that your business plan will never be finished. A business is an ever-changing entity and your plan is no different.
* Keep the key words – who, what, when, where, why, how – at the forefront of your thoughts as well as the forefront of your text. Answer each of the key questions in the first paragraph of each section. The rest of each section will be simple expansion.
* Intimately know the basics of your business strategy before you start writing.
* Start gathering information before you need it – market information, competition facts, etc.
* Only include relevant financial and operational details.
* Don’t make grandiose promises or representations to yourself or others (especially potential investors).
* Allow more room for detail on those sections particularly relevant to your business.
* Let your specific needs and goals dictate the structure of your plan.
* Use charts wherever you can to save space if doing so does not eliminate important detail.
* Work on making your document as visually pleasing as possible.
Looking Forward
When you project the future, you will need to take into consideration where you want your business to be. Be specific but recognize you are making an educated guess. This is where a team of experienced advisors and mentors can add great credibility to your plan. Ask yourself key questions. What will your workforce look like? What will your costs and income be? What expansions and new technologies will you have introduced? What will your loan balances be? Will you have investors? Who will be your customers? What will your market share be? What will your advertising and/or marketing look like and how will it be used? What will your role be in the business?
In addition, you will need to understand the industry, your market, the political climate, economic trends and every other aspect of an intricately woven web of relationships and challenges. You can help yourself and your business by staying abreast of world, national, state and local issues.
You don’t have to be a mind reader to forecast trends. Simply staying aware and doing some consistent study will put you ahead of the game.
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Rich Dad Tips
• Savvy investors know that every projection in a five year business plan is a guess. History is a great indicator of the future, so make sure you benchmark similar companies to ensure the investor or lender that you have a firm grasp on industry dynamics.
• Comparing your projected financials to others in the industry in the appendix of the plan is another useful tool.
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There is another large issue that arises when you provide forward looking projections. You shouldn’t be overly optimistic or overly certain of success, especially when seeking to raise money. Looking into the future is necessary, but you shouldn’t use a far off date to claim that certain profit levels and grand milestones will be reached. Those kind of positive representations, especially when written into your plan, become potential and problematic misrepresentations, especially when investor monies and attorneys are involved. There is no guarantee of success in any business. Forward looking statements as to profits and performance must be made cautiously and conditionally. The SEC (the Securities and Exchange Commission, the U.S. government agency which regulates the sale of stock) has an entire set of guidelines for forward-looking statements. They suggest using conditional language such as ‘we believe that…’ instead of ‘we guarantee that…’ and ‘it is our opinion that…’ instead of ‘it is certain that…’ While the less than 100% positive conditional language may sound wimpy, there are two important points to consider. First, sophisticated investors are used to reading this kind of wording. It is not going to dissuade them from investing. In fact, by failing to use conditional