Seasoned Advice about Writing a Business Plan

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!