Apr 9, 2011

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Posted Under: Tips & Tricks!

One of the biggest challenges for every entrepreneur is the daunting task of writing a Business Plan! Now, let me start with telling you that a business plan is a very personal (to the business) and unique document… So, the last thing you want to do is to copy a plan off of the internet or buy a software for business planning purposes unless you need this business plan simply for the sake of having a business plan on your office shelf .

Last week while helping one of my clients put together a business plan, our discussion of course turned to what makes a good business plan, what makes it bad and what ugly mistakes do the entrepreneurs commonly make. Here’s what I came up with:

What makes a good business plan…

• A good business plan is a revolving document, a guide, an objective plan that charts out the what(s), why(s), how(s), when(s),  who(s) of the each aspect of the business concept (idea, model, sales, revenue, strategy etc etc), for example: what’s the problem, what’s the solution, how will it make money, when will it make money, who will do what, when to exit, how to launch, how to market, how to break-even, what’s the exit strategy just to list a few… versus a 100 page fancy theoretical plan that will eat dust on your shelf and not help you guide your business.
• Preciseness, Objectivity, Uniform Formatting with minor or no grammatical mistakes make a good business plan!
• A solid Executive Summary detailing the opportunity/ problem, solution, and the big picture along with the well researched and realistic financials make a good business plan!

What makes a business plan bad…

• Baseless fancy assumptions on industry growth, revenue potential, and other projections.
• Typos, bad formatting (too colorful, too small/big fonts) and grammatical mistakes.
• A cookie cutter business plan downloaded or copied from somewhere.

What ugly mistakes the business owners commonly make…

• Not including an Executive Summary is the most common mistake, I’ve noticed.
• Not doing enough research and using baseless assumptions to do financials.
• Leaving important elements of the business unaddressed – exit strategy, break-even analysis, intellectual property  or other legal issues etc.
• Slapping their name and logo on top of a cookie cutter business plan from a software.

If you look at the above lists carefully, you’d notice that it’s pretty much the same things that if done right, can make the business plan good and if done wrong or omitted, make that same business plan useless. The reason behind this is the entrepreneur’s psychology, too few entrepreneurs look at their business plan as a critical piece in their success, and most of them look at it as “a formality I need to fulfill for the bank or investors”. Not only this is wrong but it’s useless and waste of time, simply because the investors and banks who you’re doing this exercise for, see dozens of such “me-too” business plans everyday and your chances of raising or borrowing any money are not just slim, but non-existent.

So, if you’re an aspiring entrepreneur, don’t let me, any book, or a software force you into writing more than what your business needs as a business plan. And, I’d strongly suggest you writing one by yourself. For a very simple reason that your business is your baby and no one knows it better than you do… If you need help, start with Govt. and Non Govt. resources for small businesses and entrepreneurs, like local chamber of commerce, and chapters of SBDC &/or SCORE. Try Linkedin and similar networks to find a business consultant who could help you put together a business plan. In any case, do your research, write original, try to avoid the ugly mistakes listed above and while you’re at it, write a winning business plan that your idea deserves.

Have you written a business plan? What mistakes did you make? What do you wish to re-do, if given a chance? Please share your thoughts via comments below.

Success to all!

In my next post, I’ll talk about – “Does your idea deserve a business plan & how to write one?” Stay tuned!