Business Plans 101 (Part 2)

Posted by lorrie.macy | December 18, 2012

Conventional Business Plan Problems

There is a reason why people hate reading business plans as much as people hate writing them:

  • Business plans are:
    • Longwinded
    • All encompassing
    • Time consuming to read/write
    • Too much work for too little benefit
  •  There is no true standard for what a business plan needs to look like and what it should contain
  •  Every business needs one; nobody likes to write them and generally lack the experience to write a good one
  •  Writers typically don’t understand the audience they are targeting with the plan
    •  A plan for venture capital looks very different than one for a traditional business
    • An informational plan looks different than an action plan

Accordingly, the writers of business plans make many mistakes in their business plan efforts:

  •  The Executive Summary becomes not just a recap of the plan but a document in itself
    • Remember, Keep It Simple Stupid
  •  The writer has delusions of grandeur
    • Let the reader figure out that your business is the greatest/premiere/leading, etc; readers get turned off by grand statements
  •  They believe in the concept of length for the sake of length and write novels rather plans.
  •  The Company’s mission/vision/values are not properly communicated
    • Don’t try to be Shakespeare; the best mission and vision statements are those that are clear, concise and easy to communicate
  •  They second guess the customer and the marketplace
    • Make sure customer and marketplace research is documented and is consistent with the findings; don’t go against the immovable force.
  • They underestimate the competition and the industry structure
    • There is a reason why the competition is in business and there is a reason why business is done the way it is; recognize it
  • They forget to provide notes to the financial projections
    • Notes explain the logic and methodology the writer utilized to create the projections; you can’t believe the results if you don’t know how they got there
  •  They don’t use realistic schedules and time frames
    • Reality never goes according to plan; whatever the conservative estimate of time to achieve X is, double it.

Key Points to Writing a Business Plan

With the understanding of what a Business Plan is, why it’s used and the mistakes people make in writing a plan identified, its time to write your own.  Just remember the following:

  1.  Keep your Executive Summary simple; in all likelihood it’s the only part of the plan many people may read, so make sure it hits the five W’s (who, what, when, why and where) and the How.
  1. Know the target audience and craft your plan accordingly.  Bankers, investors, employees and customers are all reading your plan with a different perspective; keep that in mind when you write your plan.
  1. Keep it short and simple: bullets are your friends; if you can, say it with pictures; and appendices are great for more detailed information.
  1. Forget the grandiose statements; leave that for the vision statement; your plan needs to be a practical document.
  1. Build a Frequently Asked Questions (FAQ) section; it allows you to make sure you’ve answered everything and it allows the reader to find answers quickly.

 

Click here to download Parts 1 and 2 of Business Plans 101