I volunteered to speak at BizCamp Galway tomorrow (Saturday 10th September) on the topic of ‘Ten challenges to help your business plan succeed’. We have been allocated a 30 minute slot to include Q&A. My talk and this blogpost focuses on my experience of working with hundreds of startups to present the key issues that will make your business plan do what it is supposed to – get you invited back for a second meeting, and, if all goes well, raise some capital and/or attract some initial customers.
Preparing and reviewing business plans is a service that I offer to entrepreneurs, enterprise agencies and investors.
Challenges for your Business Plan
So you have done all the hard work. You have spent time planning your business. You know your product, your people and your market. You have written a business plan but are unsure if it hits the mark. The following are ten key challenges for your business plan:
1. Have you presented and structured your document correctly?
The advice is to use a template so that you have a logical structure, standard headings, page numbers, contents, special reference numbers if required, publication date and version plus details of the business to include address, directors, bankers, advisors and Company Number.
2. Does the business plan briefly outline the origins and progress to date of the business?
It is important to set the scene and to answer any questions which the reader may have in relation to the history of the business. A bulleted list of achieved and projected milestones can be very powerful.
3. Does the BP outline the ‘burning problem’ experienced by your target customer?
The purpose of the business plan is to convince ‘your investor’ that sufficient customers will buy your solution such that you can create a profitable business. The first step is outlining the real problems that your customers experience. The business plan will need to convincingly explain why they will be motivated to buy. It is often said that the biggest obstacle to winning a sale in a B2B situation is not your direct competitor but the company deciding not to proceed with the project because the business case has not been established. Consumers equally like the status quo. The key to convincing readers that customers will buy is Reference customers. Testimonials from happy paying customers are priceless. References from happy paying customers based internationally are even more priceless.
4. Is your solution clearly detailed –encapsulating the Unique Value Proposition (UVP) for the customer?
Outlining the brilliance of the product solution is probably the part that most promoters write first. The danger is that you can get too detailed or include too much jargon. The solution needs to be outlined from the perspective of the customer. I am reminded of the answer to the question, ‘how does a Television work? Before the engineer in you start thinking about HD technology, my answer is that the person sits comfortably on the sofa and flicks a button on the remote to select a channel to watch a programme that they like. The second point to emerge from this section of the business plan is the scalability and international potential of your product solution.
5. Does the plan encapsulate your key sustainable competitive advantage?
Every business has competition. You need to know as much about the competition’s business and you know about your own business. The role of a business plan is to succinctly present this information. Graphs and tables can be very powerful. This demonstrates market knowledge. The collection of market intelligence allows you to develop your business strategy. The business plan must highlight your sustainable competitive advantage – how is the business going to maintain a superior competitive position over the longer term.
6. Does your plan articulate and support your vision and growth plans?
I read recently that your mission is what you best every day, and your vision is what the future looks like because you do that mission so exceedingly well. A business plan must tell a story. The story must include your vision of the future. Every section must add credibility to your plan for the future. It must provide evidence that points to future success for your business, for example, customer testimonials highlighting market acceptance of your pricing strategy.
7. Has a credible and proven ‘Business Model’ been presented?
The business plan must detail how your business creates value. The business model – how your business will make money – goes hand in hand with defining the route to market. Endorsement by or agreement with strategic partners can be convincing evidence of the likely future success of the business.
8. Does the ‘Management Team’ inspire confidence?
Ideally, the experience of the management team should be directly related to the business proposal with in-depth experience at strategic and operational level. An action plan to fill any gaps in the management team should be included.
9. Do your assumptions and detailed financial projections stand up to serious scrutiny?
My view is that financial projections are the most critical element of a business plan. They deserve serious attention. Investors will intensely scrutinise financial projections. They will evaluate the underlying assumptions. Projections are indeed a subjective view of the future. However, they form a critical part of the story being told by the business plan – to continue the analogy they are the punchline. In reality, every decision that you will make for your business is determined (or constrained) by your finances. If a business plan is to be a working document, the performance of the business should be reviewed against the financial projections.
10. Have you written a compelling Executive Summary?
I am often asked if different business plans should be prepared depending on your audience. My broad response is ‘No’ on the basis that a compelling Executive Summary or One Page Business Plan Summary should target every reader. This One Pager should be given in the first instance to interested parties. A full business plan can then be forwarded followed by the appendices. You may end up tweaking your plan but then it becomes difficult to know exactly what is in the plan and appear convincing in your delivery.
A succinct but comprehensive Executive Summary should contain 5 elements:
– What is the burning problem experienced by customers. What will inspire sufficient customers to take money from their wallet and give it to you.
– A clear description of the customer and an overview of the target market. Strong customer testimonials are essential to demonstrate market traction.
– The skills and track record of the management team to inspire confidence in the future
– Summary of the financials. This will include details of investment sought, how funding will be allocated and the exit strategy.
– One other detail of particular significance to your business (to telling your story). This will probably relate directly to your Unique Value Proposition or source of Sustainable Competitive Advantage.
Update: For more see my blogpost providing a format for an Executive Summary of your business plan
Business Plan Evaluation and Improvement
I have a huge interest in business plans and business planning. I do not want to give the Business Plan undue importance in determining the long term value of a business and its subsequent success but it does represent the business at a given moment in time.
My biased view is that your business plan should be shared confidentially with an independent and experienced business advisor(s) in advance of submitting for funding so that it can be reviewed to see if it meets its stated objectives.
UPDATE 2 – I have published an online training course entitled, ‘Writing Your Business Plan‘ click on the button below to check it out
Thanks for reading……comments welcome.
Donncha Hughes @donnchadhh