Do you need investors? Are you looking for a loan? Do you want to apply for a grant? Or is it just time to do a self-analysis of your business? Are you expanding your business? Looking for new markets? Are you looking for the next level in your business? Are these all times when you need a business plan? What are the basics of a business plan?
All business plans have more or less the same sections, some even have the same content.
However, when they arrive at the investor’s or lender’s desk, some stay where they are and others go into the “I’ll read them later” pile or, even worse, into the trash can! So how do you make your business plan readable and memorable for the best reasons?
Let’s look at what really is at the heart of a business plan. A business plan is a methodology that defines and integrates the activities necessary for a business idea to become a company and provides expectations that demonstrate that it will be profitable. In other words, it is the bait to get an investor and tell them that your idea is innovative and will be very profitable. Keep those two important words in mind: innovative and profitable. No investor will be interested in a company that is not going to be profitable enough to return their investment plus a very healthy profit. Now for what might be an interesting word: innovative. For a company to be successful, it must have something that is different from all the other companies working in the same market. After all, if your business is going to be the same as all the others, they’re hardly going to budge and let you take their customers. No, your business needs to have something different that will draw these customers away from what they buy all the time. So innovative in some way, be it in products, business model or service.
Let’s add another word you need to prove within your business plan: viable. Your investor or lender wants to see that your business is viable. If you do a Google search on the “Internet bubble” from around 1995, you’ll see that thousands of investors invested and lent to Internet startups that promised to bring them millions of dollars in easy profits. Memories are long and now investors are looking to see that startups will be viable in the foreseeable future so that they continue to receive an income stream and have a good chance of recouping their loan or investment.
Your business plan should be a communication tool that sells an original idea that serves to attract and convince people that you have the ability to implement the plan in establishing and running the business.
At the beginning we highlighted other reasons for business planning. In addition to raising funds, your business plan is also the best tool to assess the viability of your business.
Those are the NUTS of a business plan, let’s look at the SCREWS that hold it together:
Professional: Internally it should be well structured with a table of contents, page numbers, headings and bulleted paragraphs explaining complex issues. Lots of graphics break the boredom of too many words. Externally it should be expertly bound and have a colorful and attractive cover. It stands to reason that full company details and contact information would also be on the front page.
Tempting. Written in a way that encourages the reader to evaluate the possibilities of entering the business. Take care of the writing style, be concise but not brief and certainly not so long that you become tired. Stay to the point, zwoding superfluous information that doesn’t support your business plan or business model. Avoid jargon, and if you must use initials, make sure the first example is spelled out in full with the initials in parentheses afterward.
Dynamic. You have to be creative, but in some moderation. It’s best if you tell a story but not one that’s found in the fiction section of a library. If the business you propose does not invite great flourishes, save them. It can be counterproductive to distract the reader. Creativity is important as long as it highlights something about the business and is there to hold the reader’s attention. Creativity should only be used to paint a picture of how the business will work in the future.
Accurate. Clarity is essential, but so is precision and veracity about the current state of your company and its future goals. The reader offers a bit of license, but they expect you to be candid about your figures, customer numbers, and the production status of your products.
Tidy. Walk your reader through your business plan and place supporting documentation in the appendix to the report. While key information should be in the main sections of the report, attachments can include secondary data, market research results, professional summaries, and any letters of recommendation or favorable reports.
The last BIG BOLT that will hold your business plan together is CARE. Your business plan isn’t just something you have to rush through to get your funding. It is the description of what your business looks like now and what you want it to look like in the future. Most business plans start with about 20 pages for a small business establishing itself in the world to a maximum of 50 pages for a company seeking major funding. Whatever the size of your business plan, and practice writing complex ideas succinctly, it must be written carefully; after all, a good business plan is a roadmap to company success!