With the holidays now solidly behind us, it’s time to get serious and establish new business goals for 2022. We’re reminded of a quote from Fletcher Byron, who noted; “To the proverb which says ‘A journey of a thousand miles begins with a single step’ I would add ‘and a road map.’” Your organizational goals […]Continue reading
10 Steps to crafting a strong business plan
Ever notice how the businesses that most need a business plan typically don’t have one? Recognizing this, we offer these 10 thoughts to help you examine what’s most appropriate for your venture, and what it takes to improve your chances of success.
1. Know your objective. This is the ball you always need to keep your eye on, and asks a simple question: What are you trying to achieve, and how? Determining your goals at the outset is the first step to articulating your strategies. Are you building a blueprint for a startup, or are you seeking investors for an existing operation?
Is the plan supposed to help organize your thinking or raise outside funding? The guts of the plan will change dramatically depending on what you want it to do. Not only that, but your employees will more avidly support you and your company when your goals are clearly outlined.
2. Who’s your audience? Before digging into this too far, it’s important to understand who will be reading it. No matter what, key facts and figures will remain the same, of course, but the tone and ancillary contents will change. For example, if this plan is for strictly internal use, items like company history aren’t needed and greater informality of language is allowed. If you’re seeking funding, though, you’ll want to write more logically and formally to appeal to the bankers in the crowd.
You may even want to consider having one version of your plan for bankers or venture capitalists; one for individual investors; and one for companies that may want to do a joint venture with you (rather than funding you). Regardless of who you’re appealing to, though, remember to show them how they’ll get their money back with a good return on their investment. Regardless of who’s reading it, though, recognize up-front that there is always a risk when sharing the details of your business. Someone may try to steal your intellectual property or your customers, implementing your business model without your involvement.
To help mitigate this scenario, we STRONGLY recommend having all parties sign a non-disclosure or confidentiality agreement in advance. While such a document may not fully protect your interests, it will simplify the process if you need to pursue legal solutions.
3. Know your customer. You’ll be more likely to persuade potential investors if they see you’ve done your homework about the marketplace. You should have in-depth knowledge of the customer profile and geography; why these people will want to buy from you; and how you’re going to successfully reach them.
4. Know your business, your industry, and your competition. It’s no surprise that every industry is different, and a section of your plan should examine the peculiarities of your industry and how it fits into the larger economic picture. What are the trends, who are the major competitors, and are there potentially outside businesses who might enter the industry, either as your competition or your ally?
To fully understand each of the players in the industry (present or future), plan to examine their strengths, weaknesses, product/service offerings, sales efforts, and results. Such insight will help you find niches into which you’ll fit, and ways to differentiate your company from the others.
Next, you’ll want to layer atop this information an honest assessment of your own organization’s strengths, weaknesses, opportunities and challenges (or threats). Describe your facilities and location for performing the work, why it does (or doesn’t) work for you, and how you’ll be able to expand in the future.
Make sure your management team is strong, with good credentials and expertise. Be sure to take into account the reality that things always take longer than anticipated…especially for a small business. Potential investors and partners want to know you’re realistic about the business, and that you appreciate what the questions are…even if you don’t have all the answers. Finally, if there are too many gaps within your organization or knowledge base, be prepared to show an advisory board with credentials that supplement your team and help plug some of those holes.
Be prepared to name them and appreciate their strengths and weaknesses. Know what makes you different from (and better than) each of them.
5. Invest in people, not only in ideas. There’s an old saying in the advertising industry that your inventory goes down the elevator shaft every night. As the world has increasingly shifted towards knowledge as currency, your people have become every company´s most valuable asset. They bring your ideas to life, turning concept into reality. Be sure to include them in your plan, outlining their skills, their experience, and their accomplishments. Including their CVs or resumes in a separate appendix might not be a bad idea either.
6. WIIFM? It’s the key question that every customer asks; “What’s In It For Me?” Assuming you’re seeking an investment, clearly describe the opportunity and the payoff. Remember that your investor may be hearing about dozens of opportunities every day, so you’d better have a unique selling proposition that makes you special. The question of what makes you special is also a key matter to keep in mind when you’re actually selling in the marketplace.
7. About those financials… If you’re thinking you can just announce a great idea and expect people to give you a bag of money, you’re in for a rude surprise. Have your assumptions, cash flow, predictions, and assumptions fully documented. Predicted costs and sales should be laid out in formats that financial professionals expect…not just the way you want to do it. Be conservative in your estimates, and consider getting help from a financial professional to make sure you’re not over-promising.
8. Build an engaging executive summary. Because many investors see multiple opportunities each day, you have just seconds to catch their attention. Do this with a one-page summary that provides a flavor of the overall plan and leads the reader to say “Holy socks…I have GOT to be part of this!”
Key to this goal is to be impressive and engaging, delivering a convincing executive summary to quickly point out key facts and figures. Discuss earlier successes in the field that you can build upon, or prototypes or patents you’re working with that help your cause.
To maximize your executive summary’s effectiveness, plan to:
- Use an easy to read typeface
- Write clearly
- Incorporate your personality
- Just use the facts (there is no place for emotion in a business plan)
PROFESSIONAL TIP: The Executive Summary is the first page…but you should write it last.
9. Avoid paralysis. Too many businesses write a business plan, then leave it in a binder on the shelf. Or they spend SO much time analyzing and planning that they never get anything done.
Obviously, neither of these results is desirable. Your business plan should be referred to regularly to gauge performance and guide your strategy and development. You’re going to build into your plan specific budgets and milestones, and with them specific responsibilities noting who will get each thing done. If it’s to have any value to your organization and your people, this document needs to take on a life of its own, growing and evolving over time.
10. Details & Presentation are REALLY important. Your plan will obviously describe your products, services, customers, competitors, management team, operations, financials, development goals and strategies for getting from Point A to Point B within a given period of time. Include enough detail to give readers needed information to understand your business.
Done right, you’ll persuade people you are capable and professional. Check and double-check for spelling mistakes, grammatical errors, unrealistic assumptions, or fantasy figures. Be able to back up with facts the claims you’re making. Then have someone else read through your plan to make sure you didn’t miss anything (SCORE or the local Chamber of Commerce are good resources for this sort of thing).
The old saying “The devil’s in the details” really applies when it comes to your business plan. Here everything matters, from the font and a well-designed cover to your assumptions, research and strategy. However, if done right, a business plan can build a dream, a business, and a VERY lucrative future.
Finally, keep your plan short and put the details into appendices. Trust us; if someone wants to know more about your business…they’ll ask!