We all know we need to write a business plan if we are going to start a business or get investment money, but we also know it isn’t as simple as it sounds. Sometimes the difference between life and death for a business can be a good business plan. What makes a good business plan though is the question we all want to know. There are literally thousands of sites that tell you how to make a business plan or offer business plan templates for sale, but we’re going to approach it a little differently today. What is the core of a real business plan, what is it really? It’s often not what you think. There are some things to ponder.
What is the purpose of your plan? Is it for yourself? Or for an investor. Odds are it’s for an investor, as most people that aren’t’ looking for an investor don’t bother with a business plan, but they should. A business plan is just that, it is a plan for your business. A real business plan is something that you should be able to hand to someone else and they can run the business even if you are not there. Think of it like babysitter instructions from an overprotective mother. It is your instructions from an overly protective you. If you think of it that way, that you are handing your business to someone else and this is how they will run it, you will find that you will write a plan very different from what you are used to seeing.
Know your subject
You can’t write a business plan until you know your business backward, forwards and sideways. If you don’t know your business or it’s a new business, then it’s a proposal not a plan. Watch the TV show Shark Tank for a few episodes, and answer their questions for your own business, if you can’t? then you aren’t’ ready. You can hire someone to write a business plan, but it is like someone hiring a writer to tell their life story. You can’t pass it off, you still have to do it yourself. After you create the plan, you can pass it to someone to clean it up, but you, and only you, are the one that has to write it.
Who is reading it
Know who is reading the plan and why, if they are an investor, what area they are most interested in and why. Just like a sales pitch you can focus on what they, the investor, is looking for, on what excites them. Just like selling anything, they are a customer, just a different kind. They are also going to be interested in seeing that you know what you are doing, and have a solid grasp on your business and proposal, so again, you can’t write it until you know everything there is to know about your business.
It’s not a college paper
This is one of the biggest mistakes people make with a business plan. They write it in college jargon as if it’s a college paper. They write it as if the amount of pages matter. A business plan should not be hundreds of pages, unless it needs to be. It should be concise. Again, you are the overprotective mom leaving instructions for someone to run your business. Keep it simple. Using complex sentences and corporate speak, will not help you, in fact, people won’t even read it. Keep it clear and simple.
This is the most important thing for investors. It can also be important to you for running your own business, as it is a compact readers digest version of the whole business plan. Most investors want to see you have a plan, but the majority of the time, they don’t read it as its again, written like a college paper and so boring it will make your eyes bleed. Give all the pertinent information on the executive summary. If they want to know anything specific, they can go to the plan.
Something we have had great success with, though not typically in a business plan is a set of FAQs. Frequently asked questions. So, sue us, we came from a computer background, it just made sense. We make an appendix, an extra section, with a list of FAQs of anything that an investor will ask. If an investor asks a question not on your list of frequently asked questions, then add it. At some point, that appendix will cover anything they are going to ask. They will be happy you did it, as it cuts to the chase and doesn’t waste their time. The majority of this information should be in the executive summary, but, this allows you to format it in a different way and not limit yourself.
Change the way you think of a business plan if you want to do write one properly. It is not a dead document that you write and throw away. It is a live embodiment of your business. As we said before, you should be able to hand it to someone and they can recreate and do everything you know to make that business successful, even if they don’t know why, as long as they follow the instructions they are golden. Write the business plan that way for an investor as well, as all they want to know is that you know what you are doing and will make them money. Every month you should go over your business plan and adjust it. Make changes for marketing, employees, advertising, products, sales, everything. This is your instruction manual, and you are the only one that a write it. Now get to it