Business plans have three main purposes: to guide the operation, to secure loans from the bank, and to secure new investments. Regardless of the application or use, the plan must sell the reader on why this business concept works.
The most basic use of the plan is for the internal use at the company. In this case, business plans are best written in a collaborative fashion by the team rather than by one individual or visionary. By writing in a collaborative approach, the plan receives the benefit of the diversity of the authors while securing the buy off of the team itself. By writing the plan, the individual authors take ownership in the vision of the firm and take responsibility for its implementation. Plans should be reviewed quarterly because plans will change and are subject to outside influences that are hard to forecast or even anticipate.
A business plan that is part of a loan package has a different mission. The reader, which in this case is the banker, wants know if the business creates sufficient “cash flow” to cover the debt and basic expenses of the operation. Beyond that, the banker wants to know if the business will be self-sustaining. For the lender to offer funding, the bank needs to feel comfortable that the business will survive and be financially viable.
The investor has different motivations. Investors want to own the company and be a part of a successful enterprise. Admittedly, that ownership may not be long term since the investor ultimately wants to exit with a strong return on investment (ROI). Thus, the investor needs a plan that describes a firm that has a sustainable competitive advantage over the competition. The investor is looking for a solid management team, a winning marketing strategy, and an aggressive growth path.
Regardless of the type of plan being written, the plan should be written in a business voice with a deliberate style. The plan’s messaging should be positive but reasonable; blue sky plans with unrealistic expectations will be tossed aside.
You should always write in the third person. Avoid the use of “I” or “we”; instead refer the firm or the company. Support key points with expert opinion or outside sources. Photos can help communicate products and graphics help the reader understand key concepts. With that said, avoid overly artistic or overly clever graphics and images which make the plan look comical or simple.
Pay special attention to time-lines and milestones. Far too many business plans preach vision and goals, but lack the nuts and bolts of how things will get done. Keep exhibits to a half a page. If more detail is needed, put it the appendix. The appendices are found in a second volume which should be made available upon request.
Write your business plan for your reader. Help them understand your plan so that they can help you achieve your objectives.
Author: John Bradley Jackson
John Bradley Jackson brings street-savvy sales and marketing experience from Silicon Valley and Wall Street. His resume also includes entrepreneur, angel investor, corporate trainer, philanthropist, and consultant. His book is called “First, Best, or Different: What Every Entrepreneur Needs to Know About Niche Marketing”.
Copyright © Richard Murphy, all rights reserved. You are not allowed to copy or use the contents of this page without permission from its author.
Writing Business Plans That SellRichard Murphy2010-12-06 14:00:38Business plans have three main purposes: to guide the operation, to secure loans from the bank, and to secure new investments. Regardless of the appli…
Writing Business Plans That SellBusiness plans have three main purposes: to guide the operation, to secure loans from the bank, and to secure new investments. Regardless of the appli…