Business plan is a very important part of every business venture and that is why you hear about it very often.
Unfortunately, most people who think about starting a business usually don`t consider writing a business plan.
I have read from different business experts about the fact that most start-up entrepreneurs do not write business plan but what I have not read from anyone is why this is so.
Why is it that most people have fear (so to say) about writing a business plan?
I know the answer.
You see, there are many myths and lies you probably have heard about the subject of business plan. Some people present business plan as if it was a university thesis or an academic report to be defended before certain professors. Other people think that a business plan has to be 50 pages long and that it must be written in a certain “approved” format.
Well, I am here to tell you that all those opinions are not valid. Because there are some ugly lies around this important business step, most people are “afraid” of doing it
Journey with me as I will reveal the real truth about business plan and at the end, you will discover that it is actually easy to write a business plan.
Why do you need a business plan?
There are three reasons why anyone may need a business plan.
First, if you`re about to start a business and you want to convince certain people to raise capital for you. In this case, you want to use your business plan to “sell” your business idea to the investors so they will be willing to finance your business.
Second, if you want to start a business and you`re willing to be successful. Though you don`t need external investors, you obviously need to grow, to compete and to win the battle of the market place. You need a business plan.
Third, you may need a new business plan because the economic or market situation has make your last plans obsolete. Yes, business plan is not like an academic paper which may stand for many years and still be relevant.
I wrote a business plan last year (I think April) and by December, it was already obsolete. Why? You really don`t know tomorrow. Your projections, plans or tactics are dependent on many factors that are beyond your power and when things change that affect your business (positively or negatively), then your plans also must be re-written.
How long should a business plan be and how many years should it be?
I am sure you know that my answer will not be in agreement with what you have been told before and the reason is because, you see, most people usually see the world we are as a formal world where everything has to be done formally.
That`s not true.
The world is not formal and every meaningful thing in the world is informal. Let me explain with an analogy.
If you are chatting with me on facebook, you will be looking at my profile picture and assume that you`re speaking with someone you`re seeing right in the profile picture. But no, the man who you`re seeing wears a good suit while the real me is wearing boxers and a signet.
You think I am formal, but I am not.
How long should a business plan be?
Depending on your objective and who will read it. The last business plan I wrote was written on a single sheet of A4 paper. I typed and printed it out.
If you intend to write a business plan for yourself and not to convince any investor, I strongly recommend that you write your business plan in a single sheet of paper or two, worst, three.
I know this is a strange advice so let me explain.
You see, human nature loves complexity while simplicity is the only valuable thing. Anything that is too complex will give you stress and then become a burden on you, then you`ll abandon it … making it useless.
If you are planning to write a business plan for your own usefulness, you will have to review it often (or else you won`t even follow it), so tell me, which document is easier to review, a ten pages document or two?
You know the answer.
What if you want to write a business plan to convince the investors?
Some people will advise you to write 50 pages and some other entrepreneurs might have written 100 pages in the past, but let me tell you the truth, nobody has time to read your thesis except the university professors.
The only people who have so much time are the poor people and I am sure if at all you want to use your business plan to get an investor to finance your business, then you`re talking about someone who is (probably) very busy.
Let me tell you this so you will understand what I am saying here.
Many CV have been submitted to me by the job seekers in the past and I am sure they would have prepared those CVs thinking, “I will impress the employers”. Well, here comes the sad news … I have never in my life read a CV, I scan through them.
I don`t have time, please.
Your business plan is like the CV for the job seekers. How long should it be?
Its again depends on who will read it. 10 pages may help you. 15 pages may help you, but when you`re going beyond 20 pages, I am out!
If you forget everything, make sure you don`t forget this… the investors you will give your business plan to really don`t have time.
How many years should it be?
Another area where people miss it. They are writing 5 or 10 years business plan.
Think about planning for your business the way you think about goals for your life.
When I first learned about goal setting, I was impressed by that idea and I started by writing 5 and 10 years goals.
I was wrong.
It never worked. I later started writing one year goal and now I am writing goal for a third of the year (4 months).
The reason is simple… you`re a human being like all of us. What you think/plan will happen will not happen the way you plan it.
Any business plan that is more than one year is actually questionable. That is my opinion. Any other business expert may tell you something different.
So what and what should your plan contain?
Before answering that question, permit me to cross out a popular lie about business plan.
Most people believe that if your plan is well written, it will win you huge amount of money from the investors. This is like telling a graduate, hey, if you can write your CV very well, you will be employed in a big company.
That was then. I hate certificate and CV and every single time people have submitted them to me, I have asked myself, what can this man/woman render as value for us (as organization)?
Do you think I am the only one with this mindset? Do you think your intending investors will be bought by a super-written plan? Think again.
Most investors will rather judge your five sentences than your 50 pages plans. That doesn’t mean that you shouldn`t write your plan very well. It simply means that you have more to do than just writing a plan.
You have to understand in and out, front and back, up and down of your intending enterprise.
In fact, the written plan is nothing but the abstract of what is in your head, or else, you`ll fail in your attempt to convince business partners or investors to help your business.
Some people believe that business plan is what anyone (an expert) can sit down somewhere and just write for them. A man called me about two months ago and that was what he wanted me to do for him.
If I write a “superb” plan for you, will I still be the one to defend it when your investors ask you questions?
That is why the first task you have is to understand your business very well.
Okay, now let me tell you seven things that your business plan should contain. I will not write any complex term or academic jargon here (because I believe the world is not complex)
1. Your business name/title.
This is obvious. Example… Africa Business Classroom`s Business Plan
They call this Executive Summary, but don`t be deceived by this name. It simply means, why you are writing this plan.
What do you want to achieve with your plan? If you`re giving it to an investor, what do you want from him?
Constructively state your objective here. If you`re giving your plan to someone you want to convince to partner with you, state your objective and if your intention is to get him to finance your business venture, state that here.
3. Business description.
What and what is your business all about? What is your industry all about? What are the future possibilities and threats in your industry? Describe your intending business here.
An investor expects you to have been familiar with your product/service and market, as close as you are to your wife.
He wants you to convince him of your intending marketing strategies and that is the reason for this face. How do you intend to win a good market share?
This is very important, even if you`re not presenting your plan to any investor. In the business terminology, they will advise you to conduct a market analysis.
I hate to use big grammar.
What that simply means is that you should spend time to research and understand your market, then position yourself with the tactics to win. That`s what an investor wants you to tell him here.
Read more about marketing strategies here
5. Competitors` analysis.
Here, an investor will want you to convince him that you understand the strengths and weaknesses of your competitors. Some people come up with a formula they call SWORT analysis.
It simply means that you should analyses the Strengths, Weaknesses, Opportunity, Reward and the Threats in the market place.
This will help you to know how to play your business game and if you`ll be presenting your business plan to an investor, this will encourage him that you actually understand your “enemies” and are able to kill
6. Your people.
If I want to invest with you, won`t I have interest in knowing who and who will be part of your business team? That is what you will want to write here. Who will be doing what, who will be handle what and who will be employed later to take care of what? These are the answers you have to provide here.
Don`t hype things here. Don`t write in your business plan that you are a computer programmer if you only know how to operate MS word. Don`t write in your plan that you have the best marketing expert in the world in your team while you have none.
The truth is, your weakness is a strength. Don`t present yourself as Mr. Perfect for anybody in the business world. This is because most people you will meet are smart.
Come on! Only fools will believe you if you try to impress him with your perfection.
7. Financial situations and forecasts.
Here you`ll want to write about the financial requirements of your business, amount on ground now and what and what is needed.
Above you have it. A guild that can help you to write a good business plan.
And you see, all I have written here are by no means a “standard formula” because I don`t believe there is anything as such.
I call it guild and that`s what it is.
Anything above may be removed and anything may be added, but don`t forget this three things.
First, always think about your objective.
If your objective is to have a focus and business growth, your business plan will definitely be different from someone who wants to use his plan to win an investor.
Second, don`t forget that nobody really has time for your academic thesis, except your professor in the university, and since he is poor, don`t write anything clumsy, lousy or too long.
Third, you may think there is a formal and proper way to write a business plan but the only proper way is the way that will achieve your objective. What and what should you include in your business plan to be able to “sell” your business idea to the investors?
Include just that and you will win.
I love you