In the past 5 years, I have written or co-written at least 10 business plans. With each one it got a bit easier, and each one got a bit better as I practiced writing in “biz plan” style and learned what information was important to include and what information was extraneous. My first experience with co-writing a business plan was the one Ross and I wrote for crowdSPRING (Note: Ross discussed our process in his post on raising capital from Angel investors last year). I found that this was a great way to write – to bounce ideas, to edit one another, and (mostly) to have another set of eyes looking for mistakes. Here are 10 tips on writing a great business plan:
1. Learn from your ancestors. Or at least use their plan as a template. Read as many business plans as you can get your hands on. Search the tables of contents and see which parts are applicable to your venture. Flip to the index and see how well organized and granular it is. Check out any exhibits or charts the author included and consider how your business plan could benefit from these. Remember, you’re not re-inventing the wheel here. There have been many who did this before you and you can benefit from their experience and expertise. (photo credit: guilhembertholet)
2. Do your homework. Don’t mess around – research ’til you drop. For instance, Ross and I did research on the market, the industry, and potential competitors for over 3 months before we even drafted a rough table of contents. This homework paid off in many ways: first, it made drafting the biz plan that much faster, as we had so many facts already gathered; second, it gave us a facility with our business which served us well when we met with advisors and potential investors; and finally, it allowed us to imagine innovations and brainstorm ideas, many of which are reflected in the product today.
3. Know your market, understand your competition. There are so many resources available to you, that there is no excuse for not knowing EVERY pertinent fact and detail. Ask the people in your network for their ideas. Use the CIA website (yes, that CIA) for information on populations and demographics; use the Census Bureau website for information on different industries; use the Bureau of Labor Statistics for information on..um.. labor statistics. We love the Wayback machine for looking at old versions of competitors websites and to mine historical data. And we often use Quantcast to look at current traffic and statistics on other websites. (Note: we footnote everything – readers will want to know where your data comes from and having a reliable source listed is a huge help for the credibility of your plan).
4. The Table of Contents is your friend. The TOC is effectively your outline for the plan. Take your time with it; make sure you are including all of the relevant topics. At a minimum, your plan should include sections on the company you are forming,your marketing plan, financial information, and your growth strategy. This screen shot is the TOC from the original crowdSPRING business plan – you can see that we kept i straightforward with only five main areas of discussion.
5. Don’t give away your secrets. Require confidentiality and write a disclaimer (or get a lawyer to help you do so). Be careful. There – I warned you. You should take care to protect your proprietary information and your intellectual property. Be sure to ask for a non-disclosure agreement before sharing your business plan (and even then, don’t just hand it out to anyone and everyone). And make sure you cover yourself with a strong disclaimer – the last thing you want is for someone to claim that you misrepresented yourself or your business.
6. Write a great Executive Summary. Many of the people you hope will read your business plan are ridiculously busy. Go figure. In any case lots of folks will read only the summary and flip through the rest of the plan. This makes for both a challenge and an opportunity; the stronger and better-written your summary, the better chance you have of a follow-on meeting to make your pitch in person.
7. Know your audience. Who will be reading your plan? Investors? Potential partners or board members? Industry advisors? Understand their capacity for detail and their reason for reading your plan as you draft it. Anticipate the kinds of questions these readers will want answered and answer those for them.
8. Make it readable. A great business plan should be compelling, interesting, informative, and (yes) exciting. Remember, you want people to READ your plan, not skim it, and certainly not just toss it on their nightstand to gather dust. Make sure that you include detail, but not so much that they are overwhelmed. Use appendices for the nitty-gritty, wonky stuff that would bog down the body of the plan. Do a careful edit for spelling, grammar, punctuation, and voice. Get a second (or third) set of eyes on it to give you feedback and have them take a red pen to the whole thing to show you where it could be improved. Do not be stingy with charts, graphics, illustrations, and tables – these are great ways to present detailed information in digestible form. (photo credit: thepartycow)
9. Use Pro Formas wisely. Your readers will certainly want to see projections of your performance, your costs, and your growth. But they are also sophisticated enough to recognize when those numbers have been arrived at based on data and when they have simply been plugged or backed into. We always prepare pro-forma balance sheets and income statements. We also prepare pro-forma budgets which reflect projected sales and expenses. One approach we us is the BWML. Show your readers the best, worst, and most likely scenarios for sales and growth. If your projections are strong enough to illustrate, even in the worst-case scenario, how your company can thrive, you have done your plan a great service and strengthened it immeasurably.
10. Keep it simple stupid. Believe in what you’re writing and let that passion show. Keep your language straightforward and clean. Use readable fonts and a pleasing layout. and let your own personality show through. Remember, they aren’t investing in a business plan, they’re investing in you. (photo credit: trbpix)
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