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:
- 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:
- 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.
- 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.
- Keep it short and simple: bullets are your friends; if you can, say it with pictures; and appendices are great for more detailed information.
- Forget the grandiose statements; leave that for the vision statement; your plan needs to be a practical document.
- 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.