A concise and compelling business plan gets read past the first page.
Vigorous writing is concise. A sentence should contain no unnecessary words, a paragraph no unnecessary sentences, for the same reason that a drawing should have no unnecessary lines and a machine no unnecessary parts. – William Strunk, Jr.
Don’t Believe the Hype – You Still Need a Business Plan
I really am about to sound like a broken record. But if that annoying fact is going to help you, then I’m fine with that. OK, here goes:
Never write a business plan purely for funding. That’s simple business plan basics. Ironically, it’s the basics many people overlook.
It pains me to see people debating whether a business plan is even necessary today. And some smartass will always come in and comment with absolute certainty that most venture capitalists don’t care to read a business plan (and so don’t bother writing one).
Maybe there’s some truth to that. Let’s assume for argument’s sake that most VCs just won’t bother looking at your plan. Well, that would be a real treat for every wannabe entrepreneur now, wouldn’t it?
But let’s suppose that these entrepreneurs were even able to get their business ideas in front of VCs and that through some stroke of luck – and a bang-on PowerPoint presentation – they were awarded funding…
How the heck does that help the entrepreneur get past the funding stage? No matter what anyone says about the need to write a business plan, you need one – for you and your business. And it certainly doesn’t hurt to do thorough job with your plan too. That way, you’ve got a bang-on presentation for your pitch and a bang-on plan to back it up.
How to Write a Business Plan: The 5 Cs
We’re going to focus on the fundamentals of business planning rather than go through each part of the plan. If you feel you want to skip this, I do go through each of the business plan components in detail.
To write a strong plan, it must meet the following criteria. I call them the ‘5 Cs of a Winning Business Plan’.
The First C: Cut to the chase, please.
If an investor or lender insists on seeing a business plan before deciding whether to fund your business, you can bet your bottom dollar that they will invest very little time past the first few pages – unless you give them good reason to. Your first (and most important) goal is to get their interest piqued beyond the first few minutes.
Now, those of you who want to have a plan as a roadmap for your business, I applaud you. I hope that’s most of you. But guess what?
You still need to know how to write a compelling business plan that gets the most important info in the reader’s face early. Why? How many times have you heard of business owners who wrote (or paid for) a business plan that ended up on a shelf or tucked away in some office filing cabinet? Aside from the high possibility that the business owner never really believed in that plan, the plan probably didn’t sell itself in those first critical minutes.
If anyone should get excited about your business, it should be YOU. You need to get and stay pumped up about your reviewing your plan over and over again, and so do the people on your team who will be a part of implementing it.
It should state upfront clear and believable facts, goals and results for your business. It should be easy to understand from the get-go. It should be easy to follow, with precise and achievable milestones and tasks that need to be accomplished. After all, a business plan is an action plan – not just a document – for your business venture.
What does this all mean? Investing quality time into identifying and selecting what information (stats, charts, graphs, images, prototypes, etc.) your plan readers will expect will get you off to a great start.
Listen – if you can’t get your team motivated by your business concept, how do you expect investors to get excited about it? And if investors aren’t biting, how on earth do you intend to get buy-in from customers? Your plan either kicks ass in the first few minutes or it doesn’t at all.
The Second C: Focus on the most important concerns.
Every experiment, by multitudes or by individuals, that has a sensual and selfish aim, will fail. – Ralph Waldo Emerson
Back in my college days, I got pretty good at studying for exams. I mean real good at it. It’s not that I was any smarter or better than my classmates. In fact, throughout my early schooling years, I was just the opposite. I got poor grades and was constantly falling behind.
See – how I went from poor to good by the time I hit college was simple. I started paying attention to what my instructors expected in assignments and exams. I spent more time and effort studying the personalities and mindset of my professors, and went about my assignments and exams in that context.
The main question I asked myself was this:
What does the instructor ultimately expect me to give him/her?
Now, I’m not saying all my grades were perfect and that college was a breeze all the way to the bank for me. And I am certainly not suggesting that I cheated my way through it (or that anyone else should).
The reality is that when you do any assignment with your reader(s) in mind, your chances of success with them are much higher. The formula is simple – focus on the reader’s concerns, and you’ll do well.
A business plan is no different. It’s an assignment similar to those you had to do in college. You put forward your best effort in college to get a good grade. And that was probably for free – as in no pay! So, why not do the same or better for your business?
What concerns business plan readers most?
The answer to that question is another question…
What’s in it for me?
The more seasoned the reader, the better they are at asking that question. Here’s a scenario of what they’ll do (assuming they get past step 1):
Notice how your readers – and particularly those who you seek funding from – are interested mainly in those elements of a business plan that deal with their particular concerns?
- The Executive Summary highlights the straight-up facts, goals and outcomes of your business, and establishes a definite market need for your solution
- The Financial Plan shows them how the business will achieve those goals and outcomes in dollars and cents
- The Management Plan details the collective talents and experience of those who will lead the business to its intended destination
- The Terms of the Deal/Exit Plan tells them how they will get paid
Naturally, the more you know about your reader’s concerns, the better you can tailor these key sections of a business plan to awaken their interest.
The Third C: Be concise
Do not say a little in many words but a great deal in a few. – Pythagoras
This really doesn’t need much explanation. Your aim is to keep your plan as brief and concise as possible. Let’s face it – most people aren’t going to read a 50-page document. So keep your plan between 15-30 pages. This should be adequate in most cases.
Your appendices should be the same in length or less.
That’s good news for most of you, knowing how much people dread writing a business plan altogether.
Remember – aim to get the reader to continue past those first few minutes, and don’t plan many more minutes after that.
The Fourth C: Be creative.
This is a ‘bigger’ C than the previous one. And everything about it is going to make your plan all the more engaging for your reader.
Being creative is not merely about using fancy words, fonts and colors. Yes, you do want to use the right language, choose a good font that’s easy for the reader and colors to make your plan more vivid.
Perhaps the most important thing about being creative is how you present the key details of the business plan.
Know your Market. Know your Product (or Service).
First of all, portray yourself as someone who knows the business, the market and the industry. Beyond the facts and statistics you’ll provide, demonstrate your knowledge of language used in the industry.
Temper your language in a neutral-positive tone, and be specific and descriptive. When discussing your solution, avoid being vague and general. How many times have you heard entrepreneurs say they’ve got the best product? ‘Best’ doesn’t cut it, unfortunately, because it just doesn’t tell the reader what’s ‘best’ about it.
Tell the reader what it does, how it does it, and how it will specifically and uniquely or superiorly meet a specific need.
Create belief.
Your market research efforts should yield responses that prove a need for your solution. Buyers you interview will tell you what they need and expect, or what could be improved. Use their words in your plan to establish the need for your solution.
Similarly, use testimonials from people who have tried your product or service. Even better – obtain reviews from impactful sources like magazines or other media channels, and from well-known clients.
Use Numbers and Bullets for Emphasis.
Not much to say here, except to use fewer words and sentences and more bullets and numbers to highlight your points.
Using numbers and bullets:
- Helps you say what you want to say quickly
- Helps the reader find important info quickly and easily
- Attracts focus to key points and data
There. I just showed you how!
The Fifth C: Make your plan colorful.
Colors, like features, follow the changes of the emotions. – Pablo Picasso
This might seem like a basic point. It is. Colors add more feeling and detail to your plan. If you’re expecting to gain the reader’s attraction, at least be sure the plan you place in their hands is in color.
All of your graphs, images, sketches, and diagrams should be colorful. Use primary colors and avoid using too many colors in your graphs and charts.
In your management plan, include an organization chart to illustrate your business organization structure. You can add names and even photos of people in the chart to give it more personality.
Preparing charts and graphs are pretty easy to do with software like Excel or PowerPoint.
Software like Business Plan Pro (Windows) or LivePlan (Web-based, great for both Windows and Mac users) automatically chart and graph your numbers.