WRITING A WINNING BUSINESS PLAN
Constructing a viable business plan can be trickier than you imagine. Sheree R Curry takes you through the pitfalls to avoid.
Any how-to text on writing a business plan will tell you that there are five basic sections that must be included:
Executive Summary, Business Description, Marketing
Plan, Competitive Analysis and a Financial Overview, but there is more to having a winning business plan than filling in the blanks.
A smartly crafted business plan is an extension of you and the way you will operate your business. These are essential ingredients, as any investor will tell you they invest in people first, ideas second. So, know that your business plan says a lot about you as a person. For example, understating your market competition sends a message that you may be blindsided by future developments. While overstating financial projections says ethical issues may arise in your accounting practices.
Want to write a winning business plan that pops versus one that flops? Follow these five tips when constructing yours.
1. Know Your Audience
Just as you wouldn’t use the same sales tactic for selling popsicles in Iceland as you would for selling the frozen treats in Tahiti, you shouldn’t use the same business plan for prospective equity investors as you would for strategic partners. Your business plan is a sales tool that should be targeted to your audience. If it doesn’t, you’re sending a message that you do not understand your business market.
2. Don Your Thinking Caps
A successful business plan wears a myriad of hats in order to effectively communicate its message. On one level, it is your top salesman or chief financial officer, on another it is your director of corporate governance or human resources. It also embodies consultants such as motivational speakers and visionaries. "As you shape each section of your business plan, write from the perspective of all of your company’s divisions,” says Linda Pinson, author of Anatomy of a Business Plan. For example, if you expect to grow your workforce by 25% in the next five years, think as a division manager and specify what positions you expect to fill and why. Don your HR hat and say how you plan on recruiting that talent. Think as your CFO and outline why this is financially good for business (perhaps it frees up a $100-per-hour executive from the $8-an-hour duties that often bog down entrepreneurs). This approach reveals that you have a strong knowledge of how all divisions impact the company’s bottom line and that your ideas aren’t just pie-in-the-sky.
3. Look Beyond the Market Sector
When sizing up the competition, know that business is about servicing customer needs, not just selling a product. If you’re selling ballpoint pens, you will need to cast your competitive net farther than the writing utensil market. Your true competition may encompass the efficiencies of cell phones, PDAs, computers and voice recorders. So be sure to address the impact of marketplace mindshare.
4. Grasp Reality
If you drive only looking out of your vehicle’s rear window, you’re sure to crash. The best approach for safely arriving at your destination is to keep your eyes on the road out front. The same is true for writing a business plan. "Too many forward-looking documents are written while looking in the rearview mirror,” says Mike Berman, managing director of Rogen International, a communication consultancy. Demonstrate your grip on reality by emphasizing leading indicators, not lagging ones.
5. Bare Your Soul
In Enron’s wake, it is a good idea to "include a section that talks about the heart and soul of your business,” says executive coach Ted Sun, president of Creative Innovations Enterprises. Describe how you will treat everyone from employees to bankers with respect. Plus, when you consider that most business plans are dry and chock-full of Excel spreadsheets, this statement resembling a code of ethics is like drama in the middle of a textbook. It helps the reader make an emotional and spiritual connection with you, increasing your chances of standing out in a sea of charts.