‘Rules’ for Effective Business Plans

Business Plans

You only get one chance to persuade each target that your project, of the hundreds they see, is worth staking their hard-earned, risk free, money on.

Effective Business Plans

Investors are experienced people confident in their decision making. If not impressed first time, there will be no second chance.

Your business plan must swiftly and effectively communicate your proposition, demonstrate that you are competent, that your proposition is practical, and inspire confidence. Most business plans do not do this – so by taking care you will have an edge.

‘Rules’ of Effective Business Plans

Though in entrepreneurship there are no rules, to produce an effective business plan this is as close as it gets:

• keep your language clear and concise — think of the reader who will lose interest if confronted with waffle. Use diagrams, graphs and tables where possible.

• double-check that you have clearly described the opportunity — investors tell us most plans fail to immediately and effectively communicate to the reader what they are trying to do. KI(R)SS: Keep It Really Simple Stupid.

• have others review it — have a person, even a few people, review your plan critically to ensure that it is clear, concise, complete, compelling, and inspires confidence. This is free and vital feedback and a ley person should understand it.

• ensure it is easily ‘verifiable’ — everything you say should be able to be easily substantiated. Do not make general statements without supporting them with a reputable source, and concrete data. State the sources of your information in the document. This independent evidence will support your model.

• make sure you have quantified the market size, major trends, and your objectives — do not draw spurious links: if you have an idea for a molecule that might deal with a specific area do not quote the size of the global healthcare market! Be relevant and specific with information.

• explain the assumptions behind your financial plan — including how your sales forecasts (or just cost forecasts if at concept stage) have been arrived at, communicating the supporting logic and that the financial data flows out of the model, is consistent with it, and is realistic.

• avoid excessive salaries or benefits — Ensure your plan does not include excessive salaries and benefits for the management team, such as a Porsche, particularly before the company delivers results, this is a big investor turn-off.