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Business Plan Writing Tips

General tips

Bankers, private 'angel' investors and venture capitalists see a lot of business plans - in some cases, scores per week.

Most are immediately filed under “f” for “forget it” and in many cases this is due to the poor quality of the plan rather than the inadequacy of the idea. To get yours past the initial cursory glance, follow these points:

Remember that the three most important parts of your business plan are (1) the executive summary, (2) details about you and your management team, and (3) the financial forecasts. These are the bits that the reader will look at first.

You're writing for someone else to read. Use facts not hyperbole; avoid long-winded, boring prose and break up the text with diagrams and charts (in moderation).

If you are writing a plan for yourself then by all means make it long, detailed and comprehensive. The more detailed the plan, the better as a working template for your business.

But (and it‟s a big but) the version of the plan which you give to third parties must be much more concise (less than 30 pages including the financial plan, although we believe that you can write a compelling plan in 12 pages). Most business plans for investors are far too long and people simply do not have the time or inclination to read them. Use appendices for detailed information about competitors, customer demographics and so on to avoid cluttering up the main text.

Use the spell-checker, proof read the plan carefully and even consider having the plan professionally proof-read (not as expensive as it might sound). Misspelled and ungrammatical writing will make you look slapdash and unprofessional.

Keep re-writing and refining the Executive Summary until it is clear, concise and comprehensive.

Avoid technical jargon and unexplained TLAs (Three Letter Acronyms).

Don't skimp on financial information: this is what they’re interested in!

Obviously, presentation isn't everything: a business plan that looks great but is thin on real information is pointless. But a well-presented, professional document does make an impression.

The Executive Summary – saying it all in one page

The executive summary is the business plan. Horrifying as it may seem, this is the only part of the plan that investors have time to read and it forms the basis (along with the strength of the management team) for their initial acceptance or rejection.

You should be able to present all the essential information about your business in two pages or – at most – three.

Write the executive summary last, after you have finished the business plan – that way you can include a brief outline of all the key issues covered in detail in the plan such as marketing, finance and so on. Get straight to the point: you don't need a rambling introduction – this is the introduction!

Sometimes people want to hear about your idea in less than a page: this is the “elevator pitch”, a half-page (or less) outline of your whole proposal. It represents the time you have to explain to someone the merits of your idea in an elevator ride – that is, less than 30 seconds. Try it – it's a good discipline and on some occasions it's essential, such as explaining it over the phone.

And if you think that's tough, spare a thought for TV producers: they're expected to pitch their ideas for programmes in one sentence!

The management team

High on the list of what banks and investors look at first when they're reviewing a business plan is the management team and the key employees. What are your credentials to manage the business? Will you look after their money, or will you spend it on all on office parties? (Investors, particularly those in internet start-ups, stopped asking this question for a while, but, sadly, they've started again).

You should also say who will be helping you to run the business. If you need to hire people with specific skills, you need to think about where and how you will recruit them. A plan with named individuals occupying key positions is much more compelling than one without.

If you're intending to hire more than five people, you'll find it helpful to have an organisational chart which shows who is responsible for what and whom they report to.

Market research that matters

Market research is an incredibly important, but often neglected, feature of a business plan.

If you have an existing business and you are writing a business plan for a proposed expansion, then you should undertake some research with your existing customers. You can include a questionnaire with purchases, do a mail-shot or simply ask customers when you meet them.

Surprisingly, very few small businesses do this, preferring to plough on with expansion only to discover when it's too late that customer demand has been overestimated.

Market research is harder for a start-up. However, you should still undertake as much desk research and field research as you can.

Desk research, as its name suggests, is done from your desk, kitchen table, whatever, and involves wading through as much information as you can find. This can come from trade magazines, directories, exhibition programmes, newspapers, statistical research such as Mintel, plus all of the countless sources of knowledge on the internet.

Field research means getting out into the “field” and speaking to people. You might be researching a suitable location for a new shop, say, or conducting a questionnaire with potential clients.

Market research has two major benefits: as well as helping you to assess how your business will operate, it provides banks or investors with reassurance that you have researched your business intelligently.

Marketing Strategy

The great warriors of history have always valued strategy at least as highly as strength. When it comes to winning the business battle, you have four main strategies.

Customers. Who are they? Marketing pros talk about “customer segmentation”, which effectively means pigeon-holing all your clients in order to work out the best way of targeting the different groups. For example, you might need to distinguish between users and buyers: women buy more aftershave than men; likewise the users and buyers of babies‟ toys are not the same. In each case you need to focus your attention on whoever's parting with their cash – that is, the buyers.

Competitors. A careful analysis of all your direct and indirect competitors will reveal their strengths and weaknesses. It‟s often useful to prepare a grid, or chart, of each competitor on which you list their performance in terms of price, reputation, location and so on.

USP. This is your Unique Selling Proposition and is the thing (or things) that makes your product or service so wonderful, and which makes a customer buy from you rather than from the competition.

Market Review. Your overall marketing strategy will require you to do three things.

1. Identify a gap in the market (or, at any rate, show why you think people will buy your product);

2. Assess the size of the market, that is, the total number of people who could be interested in buying your product or using your service; and

3. Estimate the percentage market share you believe you can win of the total market identified in 2.

These figures will form the basis of your financial plan (see below).

More pages

Page 1: General tips
Page 2: Promotional Strategy

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