I am hardly an expert on writing business plans, but I have
spent a considerable amount of time and effort researching those who are. For instance, John Meyer, Julie Brander, and
Steve Bloom recently discussed how to start a small business and the importance
of a creating a solid business plan, during a webinar I attended that
was hosted by SCORE. A brief background
of each of these speakers, as well as a synopsis of what they had to say can be
found in my last posting, titled The
Components of a Successful Business Plan.
While researching business plans, I have since collected
more information about:
·
how to write them,
·
what to include,
·
what investors look for, and
·
what sections are most important.
The
advice I gathered from countless sources, in addition to the guidance from my
current Business Plan Development professors at Full Sail University, Mike Koch
and Steve Burhoe, have helped me construct and modify a business plan I am in
the process of completing. I thought I’d
share some of the highlights of this advice with you.
MANAGEMENT
SECTION
What
struck me as the most surprising, is that investors are many times most extremely concerned
with the Management section of a business plan.
In fact Planigent,
a company that writes and modifies business plans for its clients, says:
many
Venture Capitalists will admit “they would sooner back a good idea with great
management, than a great idea with only so-so management.”
In
fact, it was the realization that my management
better be experienced, have proven results, and be knowledgeable about the
industry of my future business, that forced me to completely change the
structure of my company so that I could include notable and established people
in business and in the industry.
It’s
important to note that entrepreneurs with a great idea but no experience
shouldn’t be completely discouraged.
Find ways to include key personnel, even if they aren’t going to be
full-time or on your payroll at all. Recruit mentors, volunteers, and
professionals who have excellent credentials. Make sure you mention anyone noteworthy who will be involved in any way- even just as
a member of your Board of Directors or as an informal advisor. Assuring investors that you have key people
around you who will guide you to success is key.
EXECUTIVE
SUMMARY
I
don’t believe there was anything I read or anyone I found who said anything
other than that the Executive Summary is
THE most important part of a business plan, by far. The Executive Summary is like a business plan within a business plan. What I’ve learned, is that investors are busy
people. They are inundated with hundreds
of business plans. They don’t have time
to sit down and read hundreds of pages of hundreds of plans. The Executive Summary is a summation of all of the absolutely critical
points in the entire proposal. It
has to function as a way to pull
investors in. If you are able to
spark an interest from your Executive Summary, you’ll have a much better chance
at enticing an investor to read more.
What
I have also learned, is that although the Executive Summary is the first
section of a business plan, it should be the last section to write. MasterPlans,
another business plan writing company, explains that the Executive Summary
cannot be properly developed until you develop the remainder of your business
plan. This section should ideally only
be 1-2 pages, and should highlight all of the key pieces of
information from every other section that you want an investor to know. Writing concisely is crucial. It is much more difficult to write something
brief, than it is to be verbose.
COMPETITION and RISKS
Although you would think that an investor wants to hear that
your business has no competition- there’s nothing like it- and also that there
are no potential obstacles your company may face, you are dead wrong. Investors want to know that you have done
your homework. Understanding who your competition is, shows
that you know who your target market and customers will be. And analyzing
setbacks you may encounter, proves you have thought about what could happen and
how you will address it if it does.
Trying to pretend that you face no future problems makes it seem as if
you are extremely naïve and not prepared to run a business, or that you are not
being straightforward and truthful with the investors. If they don’t trust what you have to say in
the business plan, they are never going to trust that you’ll return them their money.
OTHER THINGS TO CONSIDER:
·
Constantly
tweak your business plan. It is
NEVER completed! Things change every day
and you have to account for that in your plan.
·
Proofread! If your plan has mistakes, it’s a bad
reflection on you. In the eyes of
investors, if you are careless with your plan, you will be careless with your
company.
·
Make your
plan stand out. Because you are
competing for the attention of these investors, do something above and beyond
to set your plan apart from the rest.
·
Prove to
investors that they will get their money back. Focus on the financials- how much money will
be made and how will money be spent- as well as on industry trends. Make sure there’s a current and future need
for your business.
If you would like additional information on business startups and writing a business plan, here are some free resources to utilize:
·
Free
courses offered by the U.S. Small Business Administration about how to
start a business.
·
Links to valuable
business plan research.
·
Weekly newsletter of
Venture Capital News Digest.
·
Business planning
resources by BPlans.
In addition, there is a substantial amount of information on
the Internet, including business plan templates and advice, by simply
performing a search for “Business Plans”.
Good luck!
