The business plan: insider exposé
I think I’m safe in asserting this is an ‘insider’ perspective on the purpose of a business plan. Not that we should place blind faith in every set of official figures, but having spent a fair few consulting years freelancing via Enterprise Agencies, training providers and Business Links (don’t get me started on that exposé!), I can certainly verify that of the 75% of start-ups whom don’t take professional advice, only 25% make it to the end of their first year of trading.
Conversely, of the 25% or so taking some kind of guidance - whether via an accountant, solicitor, consultant, bank manager, business support brokerage or indeed a successful business person - over 75% of them are still trading eighteen months later.
It almost goes without saying therefore, that at the forefront of most conscientious start-ups’ minds is wise desire for a practiced eye to be cast over their draft plan, or at the very least, basic advice about how to write one, even if they’re a little hazy about the real benefits.
One needn’t spend hours tracking down a template these days: Google ‘business plan template’ and in 0.28 seconds, just under half a million links are at your disposal. However be assured that an odious sixty page document full of repetitive hype and baseless opinion containing an executive summary running to a dozen sheets (complete with a yard-long mission statement), will be about as useful to you and its intended audience as a stand-up comedian is to the occupants of a morgue.
The format of a plan, many have got a handle on. Even the ‘why’ is generally understood. Sadly though, the majority of those who’ve successfully secured debt finance or equity investment, overcome the hazards of fundamental survival and now focus on the path towards the grail of established going concern, fall into an Indiana Jones temple of doom-sized trap. Namely, one filled with sufficient cobwebs and dust that hero-proportioned efforts will be required to locate the long forgotten relic of start-up, the original authentic unmodified plan invariably found in the bottom drawer of the second-hand desk in the spare bedroom; a fond reminder of exuberant dreams unscarred by day-to-day in-the-thick-of-it business skirmish and adventure. In other words, a plan is not just for Christmas.
So, irrespective of whether you are about to take that first-time expectant leap of faith out of the comfort zone into the unknown or a seasoned wound-bandaged but determined all-action serial start-up veteran, here’s a summary from one who has genuinely steered clients’ around treacherous Dragon’s Den auditions (c’mon people it’s more about what makes good television, than what makes a good business):
The initial premise: understand the context of a plan. Avoid opinion unless you can substantiate your conclusions. Research is everything.
The second premise: who is your plan being written for?
1) You. First and foremost. An ongoing Forth Bridge paint job (i.e. a never-ending heads-up to make sure you don’t lose your footing).
2) Pound notes. Yen, Bucks. Roubles. Shekels. Yuan. Euros. You get the picture. Bear in mind though that a conventional debt financing lender requires less focus on some aspects than say, a potential equity stakeholding investor.
3) It can be used solely as a marketing tool to attract interest from those who may wish to piggyback through your activities to reach your intended market.
Third premise: “in the beginning” is a big thing with start-ups. All consuming in fact. “Middles” and “Happy ever after’s” are actually more relevant. And usually missing or else painfully in need of sat-nav. Boiled down and distilled, where is your plan headed? Do you have an exit strategy? Organic or acquisition-based growth? Where’s your motley crew to steer the good ship hither and yon, or are you the usual suspect?
Avoid please, the “Me, me, I, I” style of pitch, or incessant repetition of your brand and/or company name. Lenders especially will decline if everything is dependent on you: you can get hit by a bus - or stray indigenous tribe boulder if you’re an import/export looter intent on unethical trade - and then there’s no business. Equally, if your marketing works, there’s no infrastructure (bodies) to cope leaving you doing 80-hour weeks. Play up the management team/personnel side, even if they’re outsourced and what it is they will actually have responsibility for.
Fourth premise: Keep it simple.
The three key areas are: Finance, Operations, Sales. Your model should show that it’s not a one-trick pony. Bolt-ons make more profit than core delivery. Can you create multiple passive income streams?
You should be able to say what you need to say, ideally clearly articulating the benefits to your clientele (and investors ROI), in less than 8-10 pages including the financials; more than that it should be in appendices to support your assertions, or else you’re waffling.
Give thought to PEST, which is a derivative of SWOT. You have an 80% chance of something happening to you and your business, you have little control over. The point of a plan frankly is, what’s your plan B?
Oh and on page one state what you’re asking for, under a sub-heading: Proposal. Nothing tees off an investor more than wading through a Shakespearean tome before finding out what it is you want from them.
There’s more but those are the edited highlights. Check out the other posts for further hints, visit http://www.qdosology.co.uk, follow me at www.twitter.com/qdosology and finally……good luck!