What’s in your simple business plan?
Sigh….business plans…big sigh…
It’s not that I hate business plans. As a matter of fact, I quite like business plans.
I understand their purposes and I even respect the fact that most potential lenders, investors, donors, partners – will all declare “send me a business plan!”
I think they mean: “send me a SIMPLE business plan!”
My problem with business plans are that quite simply, they are often too complex for their intended purpose.
There are a myriad of reasons why you would want to write a business plan, but the main reasons are usually to:
- prove that you’re serious about your business
- assess the feasibility of your venture
- determine your financial needs and attract funding
Trust me, a simple business plan will do it for you…especially a simple start-up business plan.
Look…I do not make this claim lightly. I have judge business plans competitions, I have sat on panels to review them for possible financing and I have submitted some of my own for financing.
But very often, I feel like I need a Masters in Finance, an Enhanced Degree in Demographics and a Black Belt in Extracting Vague and Nebulous Concepts From Pounds of Paper – just to read some of these business plans.
Don’t get me wrong, there’s a place for large, complex start-up business plans. But these should be driven by the nature of the project, not be the standard for every business idea.
And while you can take my word for that, here’s the perspective of Casandra Visser, Digital Marketing & Content Strategist who writes for Entrepreneur Media SA.
With simpler, to-the-point methods becoming the norm, many entrepreneurs have turned to 1 page business plans in order to get their businesses off the ground faster instead of opting for a detailed and time consuming approach.
Benefits of having a simple business plan
While I don’t quite advocate a one-page business plan, there are good, practical reasons why you want to keep your business plan simple. Here are a few:
- Forces you to be clear and provide relevant information upfront
- Makes it easier to generate interest around your business concept
- Increases the willingness and speed of buy-in to your idea
- Will assist you with your preparing and presenting a pitch
- Helps you to respond to changes in your business environment quickly
- Helps you to bring clarity to you business model
And to summarise it all, here are the words of Pip Jamieson, one of the UK’s top disruptive entrepreneur
My first business plan was a whopping 54-page word document, which was a big mistake
So just for today, I want to place myself in the role of Business Plan Reviewer (BPR) for a major finance organisation. The plan I select will get US$1.5 million to start a new business.
Here is what I’m Looking for in your business plan:
1. Your purpose for starting this business
Is it to exploit some opportunity? Solve a problem? Fill a need?
Whatever it is, you need to let me know right up front in your simple business plan and it must be sound. I would really be impressed if you intend to be disruptive in your niche but sentimentality will not count.
2. A concise explanation of the Business
Start with a single sentence (well…I’ll accept two) of what your business is about. Believe it or not, I have reached page 24 of a 60-page business plan and still could not clearly understand what the business was about.
Clearly defining a business often requires you to be simple, but it seems that entrepreneurs hate simplicity.
For example, stating that your business is a “firm involved in the procurement and distribution of written materials across a wide geographic spectrum” will not impress me. But telling me that you will be an “online book seller” will.
Little known business plan fact: investors cannot invest in what they do not understand.
3. Demonstrate “unfair” competitive advantage
This is where you convince me that you have something that is insanely more capable of guaranteeing your success than what your competition has. It could be:
- a world-class management team
- exclusive rights to some technology
- key partnerships
- long-term contracts with major customers
- Your superb marketing skills
- a powerful business/personal story of successful
Whatever they are, your plan must list these and briefly discuss them.
4. Show me your strategy
Come on…you CAN’T have a competitive advantage and no strategy for exploiting it.
Just in case you didn’t know, strategy is how YOU (not anybody else) use your competitive advantage to connect your preferred buyers with the solutions you are offering them.
Little known business plan fact: When you are describing your strategy, you are really describing concepts so you can easily summarise your strategy in bullet points, use charts or even a series of images.
If you draw up a simple business plan, describe your strategy in this way, it would be a winner.
My litmus test for strategy: It must be specific enough to be implemented.
Your business model, quite simply, is how you plan to make money with your business idea.
In your ideal business plan, you want to list the key aspects of your business model. These are:
- How you will find your customers – the different routes to, and methods of, finding customers
- How you will sell to them – by subscription? via a payment plan? at a fixed price?
- At what price – How much will you charge for your product or service?
Even in the longer version of business plans, many of them do not clearly describe their business model. If your simple version does, you’re way ahead of the competition.
Just the highlights, please.
This is where most people become very insecure and share a boatload of data. This is not necessary for a small business.
The decision to fund your business or partner with you does not swing on a large amount of financial data. It swings on your capacity to show a rate of return on investment (ROI) that’s in keeping with market expectations.
Little known business plan fact: investors and lenders are very suspicious of rates of ROI that are “too good to be true” and might not be even interested in the data you provide to justify them.
7. Know the risk inherent in your business start-up
Please don’t be cute here and claim there are no risks.
There are risks inherent in every new business and you need to identify them and share them.
More importantly, you need to share what you plan to do to mitigate these risk.
In your simple business plan, listing these briefly would suffice.
8. Demonstrate that you know what your business plan really is
Perhaps you think that your simple business plan provides an overview of your business and yes, it does. But that’s only half of the story.
Your business plan is before me because you’re looking to raise money for your business, remember?
If you accept that, your business plan is also a marketing document so it has to show that you’ve figured out what I, the investor want and you’re giving it to me, right up front.
Yes, I will get around to your analysis eventually but right now, in order to get the money, you need to focus on what I’m interested in:
- that you have a viable business idea
- it can earn at least a market-level ROI
- and you are the person to make it happen
Little known business plan fact: When you can convincingly communicate the benefits of investing in your business to an investor – that’s your greatest “unfair” competitive advantage.
Your next step
So…are you in the money? Can I recommend you to my client as the #1 candidate for US$1.5 million in funding for your business?
If you answer “no” then you need to take these tips and begin a rewrite of your business plan so that it’s simple, flexible and above all, fundable.
If you need help, please contact us and we’ll be happy to help you with your next business plan.
To your Business Plan success…