The Blog For Entrepreneurs

Write the plan yourself,at least initially.

There is no one who knows your business like you do and so asking someone else to write a plan from scratch will not only be a painful experience but it will be an expensive one. It is often the structure of the document that people get stuck on so I give out a template to business owners and ask them to complete the first draft as much as possible.

There are two resources that I have been using for years. The first one is Business Plan Pro. It has step-by-step instructions and has 500 business plan samples for business in various sectors.

If I am stuck on how to structure a plan or what is the best format for a sector, I browse through Business Plan Pro for the right document to use. It is a huge time saver for business people and it helps produce excellent documents.

The second one I use (and I am giving away a secret of mine here) is ‘Business-in-a-box’. I literally could not produce the work I do without this. I often get comments on how quick I can produce a document.. well… I cheat… just a little.

Business-in-a-box is a fabulous business tool. It includes over 1,450 templates of essential business contracts, legal agreements, letters, board resolutions, financial spreadsheets, plans, proposals, press releases, policies and checklists and much more. It simplifies the business process, in other words.

Within the documents there are two business plan templates which I use a lot. One is the shortened business plan, one is the long form business plan. It is excellent in that each section has a description of what you should write, what should be included and how long it should be. If you are new to business planning this one is a great tool, with the added bonus of having thousands of other business documents that come in handy surprisingly often.

OK, Back to the business plan.

If you get either of the above it will give you a format to play with that will make the process easier, but assuming you are going to write the initial plan yourself look at these areas carefully.

Executive Summary

At the front of the document (the first 4 – 8 pages) there will be the Executive Summary. Many business owners skirt over this with scant detail because they want to get into the meat of the document, this is a mistake. If you are submitting your plan to a venture capital firm, or business angel network, these people will get hundreds of plans and they just don’t have time to read them all. Even individual investors really don’t look through the whole plan, not initially anyway.

Think of the Exec Summary as the pitch you would make if you were in front of an investor, face to face and you had ten minutes. In that time you want to get them interested in meeting you again or reading your whole plan. That is the job of the Executive Summary.

Generally, if the ES is good you will get a meeting to talk through the rest of your plan, and that is what you want.. face time.

Write the Plan in the third person

This is personal preference, but I always write a plan in the third person. What I mean is “XYZ Inc is a company that makes the world’s finest widgets. The Company is expanding into Asia at a rapid rate and funding is required to support this expansion”… Not…. “We make the world’s finest widgets and we are expanding into Asia at a rapid pace. The funding we need is required to support our expansion”.

The document is far easier to follow if written in the third person, not the first person with lots of ‘our’ ‘we’ and ‘us’. It can get laborious as a reader if you are trying to figure out who ‘our’ ‘we’ and ‘us’ is when mentioning partner companies, JV’s etc.

Don’t go overboard on information

The document needs to be complete, but let’s face it. If I am looking at a document I want to know these things:

* Who are the people involved and do they have experience?
* What is the business’s unique selling point?
* Is it scalable?
* How much money do they need?
* What are they valuing their business at for the investment?
* How much money do they have now?
* What is the burn rate? (How much cash are they going through?)
* How much revenue, if any, are they making now?
* When will the business be profitable?

If all those questions are answered succinctly and they are easily accessible in the document (i.e through the Executive Summary) then there is enough information to peak the interest and call a meeting or look further into the plan. If information like this is buried under technical jargon about your product, software, website or whatever then you will find that investors get turned off quickly.

Like I said, the plan needs to be complete but make sure you get the information that an investor wants as easily accessible as possible.

Disclosure, Disclosure, Disclosure

A business plan is not just a shop window that puts your business or idea forward as a great opportunity for investors, it is also a measure of your integrity and professionalism. The last thing you need when you get into the office of a potential investor is to be explaining how you left out a major competitor, or you didn’t disclose something about yourself or directors that was relevant. Better to be up front with everything material. If the investor invites you in, you know that there will be no surprises.

Presentation

One of the advantages of using a business plan template is that it comes with pre-prepared self-updating Table of Contents page, pre-formatted borders etc. It might sound a little over the top and insignificant, but a well presented document says something about you.

Extra Information Online

Something I am recommending now is providing extra information online. Of course, if you have a web site (which you should for whatever your business is), then you will reference this however there is another trick that can get you noticed. If you are good presenter you could have video of yourself pitching your idea, or maybe an audio of yourself ‘presenting’ your business plan. How many investors are sat in traffic or on the subway listening to their iPod? What if they had a chance to listen to you and do some work instead?

There is one thing to remember, people don’t really invest in ideas or businesses, they invest in people. If you can come across as passionate on your video or audio, and your idea is sound, you will have a great chance of standing out and getting that investment. Here are a couple of free resources that might help:

*Camtasia (This allows you to video online presentations.
*Audacity (I use this to record and edit all the podcasts on this site)

Be prepared to change your business plan

Let’s face it, you are going to hear ‘no’ a lot. Take a look at some great businesses that got turned down for funding. Instead of storming out and muttering about how the investor is clueless (believe me, it happens), use the opportunity to question. Tell the investor you appreciate their feedback, and want to improve your ideas with their input. Ask what about the plan they don’t like, what about your idea or business they don’t like, where your presentation went wrong.. and write this all down furiously. Then go back to your desk and do more research in those areas and re-write that part of the plan. Update your presentation taking in the feedback your received.

If you do these things every rejection you get will give you a better idea of how to improve your presentation.

Tailor your plan to the investor

A word of warning: Never ever mass send your plan… it is the worst thing you can do. Many times I have received the same plan from for or five different sources…. it is an immediate pass. The reason? 1) I am not interested in competing with a hundred other investors unless your idea is totally and utterly awesome. 2) If five other people have sent it to me all five are going to believe they should get a cut for an ‘introduction’… it is too complicated.. pass. 3) If five other people have sent it to me, five other people may have read it and not been interested enough to do something themselves… pass..

The best thing to do is tailor each plan to each investor. There is no point sending your plan for a coal mine in the middle of the rain forest to a company that specialises in ‘green’ investments. Find out who invests in what. Many sites of venture capital firms will tell you their criteria. It will say what stage (seed, pre-revenue, first round, second round etc) and it will say what industries. You will just annoy people by sending something that is not in their criteria.

Present your plan as relevant to the investor e.g “I read on your site that one of your investments is in XYZ Inc, who are developing niche social networking software. Our product could compliment this investment very well as the thrust of software is in marketing social network sites”… Something like this would peek my interest immediately, because if I can bring on an investment that helps my other investments I will be very happy.

These are some of the things that you should be aware of when writing your plan. The bottom line is that you should spend time on the plan, be prepared to change it by making it a ‘living document’.

If you have any questions or feedback, use the tweetboard application for Twitter users or leave a comment and I will be happy to respond.

Regards
David
@OneLifeNoFear