5 Key Tips to Writing a Business Plan
Dan Levenson June 08, 2020
Business plans are essential for many reasons. Not only is it important for you to know where you want to go with your business, but a solid business plan is also a necessary step for securing investment in your company. A good business plan looks at short-term and long-term goals and outlines a blueprint for the success of the company. If you aren’t able to articulate in writing how your business will work, the likelihood of securing capital from investors is low. But just putting something in writing isn’t enough. There is a method for developing a great business plan. Here are five key tips that will help you write your business plan.
When you are setting goals and making projections, one of the best rules of thumb is to estimate conservatively. It’s far better to outperform than to underperform. Investors get an idea of what kind of return on investment they can expect based upon your business plan, so a conservative estimation is a better number to put in their minds. This type of conservative planning also translates to your timeline. Kaye Vivian wrote for Entrepreneur that a good idea is to add an extra 15% to any timeline you establish. When you are more conservative with your planning in all areas (market share, revenue forecasts, timelines, etc.) you are showing a level of seriousness and realism to potential investors.
Explain the “Why”
When you are discussing your business concept and model, you need to identify the “why” in every statement you make. When you talk about other companies that do the same thing, explain why you are different. This isn’t the time to put forth an emotional plea, but instead, use data and factual statements. You also need to speak specifically about why your concept will be successful. You need to explain the process you’ve gone through to arrive at this point in time. If there are obstacles, talk about why they exist and how you have planned to overcome them.
Address Your Plan for Growth
Investors don’t like things that are stagnant. Brian Hill writes for the Houston Chronicle, “The objective of business planning is to develop a logical series of steps to help your business grow…” In your business plan, you need to discuss the future of your company. Everything from the necessary facilities to personnel needs to be forecast over a period of up to five years. You need to address the management of the company and how this will grow with the company. This may not be overly complex if you are building a small business, but the notion of “growth” is still an important talking point.
Talk About Return on Investment
It’s important to discuss the options for investors to reap the financial rewards of their investments. While they may share your passion (and you hope they do) for the business, ultimately they are expecting a financial reward. Discussing their role in the company, including seats on the board of directors should be addressed. If you are open to multiple options, identify that in the plan. Establishing a plan for how you intend to repay and financially reward the investor is a critical piece of the puzzle for a business plan and should be given your time and attention.
Just the Facts
While you want your business plan to portray confidence and a clear belief in the concept, emotional pleas are best left out of the business plan. Real data and factual statements are what will resonate with investors. You also don’t want to allow the business plan to get too lengthy. Many people assume that a business plan should be a novel, but most of the time, less is more. Use a critical eye, and think as much like an investor as possible. What would you want to know if you were going to invest in a company? Those are the key questions to address when presenting your plan. Contact us to help fill in the gaps for your business and get you set up for success.