Creating a Business plan with Business Plan Basics

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Creating a Business Plan: 4 Tips for creating a business plan

Back to the home page by Dee Power and Brian Hill copyright all rights reserved.

Management, Management, and More Management

The crux of the matter in writing a Business Plan is to prove to the reader that the people involved in the business have the skill and experience to create a successful enterprise.

Investors put money behind people, not simply behind cool products and interesting technologies. There are many wonderful, patented inventions that never see the fluorescent light of day at Wal-Mart because no one could figure out how to profitably manufacture and sell the product. You must tell the reader about what you have accomplished in your business career, not just tell about the positions you have held or what mighty corporations you have worked for. What have you done that can inspire confidence in your ability to execute the business strategy in the plan? Write in active terms: I increased revenues 100% in two years. I cut divisional costs by 45%. I supervised 100 people in 8 states.

One of the most striking, and succinct statements I have ever read in the Management Section was: "In our last venture, I earned the investors a 2,500% return." Most of us would take a chance on backing that guy.

Be Enthusiastic, But Don't Sound Like A Carnival Barker

Sell but don't over hype

The Business Plan is a selling document: it is supposed to attract people to the financial opportunity presented by your company. But a sophisticated investor can quickly spot exaggerated claims about management capability, or projections that are completely out of line with reality. You have to strike a delicate balance between not sounding like a dry technical manual and not sounding like a high-pressure salesman from some telemarketing boiler room. The more excited you sound about the prospects for your business, the more likely the reader will be too. The other extreme, however, is like someone who told us he uses the plan to get the investor's "greed glands" pumping. Making promises you cannot deliver on can later arouse the investor's "anger glands" and even his "litigation glands."

Know Your Audience (If you are a venture capitalist you can skip this tip)

When a client asks us to review their business plan and tell them if it is "ready to go," one of the things I often tell them is: The Venture Capitalist Is Not As Smart As You Think He Is.

How can this be, you say? The VC has three college degrees from great colleges, universities, and not one of them from community college. The VC often has Roman numerals behind his last name. And he is very difficult to get on the phone, a sure sign of an Important Smart Person.

Maybe. Maybe not.

Don't assume he will immediately understand why your product is clearly superior. Don't assume he will be able to grasp the way your technology works. He may or may not know how large your market or industry is.

Think about who will be reading the plan before you begin to write it, and tailor your message to the reader's level of understanding or experience. Many investors decline to pursue discussions with companies not because the business does not have merits, but because they simply "didn't get it" when they read the plan.

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Business Plan Basics