Business Plan Tips

I had a good friend ask me about doing up a business plan for a new business idea he has. He had gotten all sorts of answers and templates from the bank and friends. I thought, they really don't know what people often look for so based on my experience of launching 11 companies, I'd throw in my two sense ...

Here are some things that I think are critical to a good plan:

1) A summary that makes simple sense. It amazes me after reading people's summary of their idea and business that I still don't get it. Because they drink their own kool-aid, they think its clear but to most outsiders it is clear as mud. So be able to explain the idea in 1-2 sentences. Like I say for Evolve - we are like personal trainers for your business - working business parts to make them stronger, leaner and more profitable. People see to register with that better than some long winded explanation with big words.
If you have a story then tell it too. You survived a fire and in that moment you knew that making people's skin clear was your life's work and calling ... (well, something like that).

2) If you are looking for investment have a summary of what you want, how you are going to spend it, how I get my money back and also what return I get. This should be a one pager. It is a page that most people don't include and then investors get frustrated trying to figure it out on their own. Most money people are impatient and will not read pages to figure out their role - they'll just decline.

3) If there is a business you are modelling anywhere in the world then get stats, pictures and stories of it. This tells people that you aren't a pioneer and that the idea works (even if its in Europe). Include photos just because people seem to love photos - seriously, I have had people look at photos for long periods of time of just concepts. Way more effective to get the ideas across.

4) Include a section on operations (how its going to run), marketing (how we are going to promote it), opportunity (why it is different and why you believe it will work), bios on the key players (people buy people), Threats and how you have already addressed them.

5) Finances is a key section. People want to see you have done your homework so include substantial projections and numbers. Most people show they are going to make $500K the first year or sell 1000 memberships the first month. It never happens. Bankers and investors presume that you are overstating your projections unless you can explain your assumptions (a key separate sheet with the numbers for reference). I would expect to be able to show a small loss or breakeven in the first year and then some good growth in year two. That's the typical business path. It takes 6 months before things start to roll. I would include cash projections, sales projections and even a balance sheet (although it will be really simple). It shows you understand the numbers which is a key.

6) The projections and numbers have to demonstrate that a payback of the loans or investors is possible. Sometimes I have seen plans where the business makes $60K a year profit and somehow the business is paying back investors 100K on some other page. Seems obvious but its not.

7) If things go sideways, can you outline the worst case scenario. For example, at the restaurant we say we would liquidate the equipment as the worst case (.20 cents on the dollar) but would list the restaurant for sales before that because as an on-going concern we can get approximately .70 on the dollar. This is the reasonable downside. People like to know the worst case.

8) Make it pretty. Glossy, professional, photos, logos and brand, all of that gets people emotionally and has an impact.

I think those are some of the key items that most business plan templates miss. Often your answers verbally when people sit down with you are the most important. If I can talk with you and you seem to know every figure, detail and component then I think, wow, this guy knows and that has more impact than anything on paper. I have had people invest and buy after talking without ever opening the business plan. They are buying you.