subject: 3 Tips For A Creating A Great Business Plan [print this page] Writing a business plan may seem like an overwhelming endeavor. Some entrepreneurs don't know where to start so they never do. Others don't know when the plan is finished. Here are 3 tips for creating a great business plan.
How Do I Know When It's Done?
I've seen various methods employed to determine when the Business Plan is actually finished. Sometimes people weigh their plan as they go, and when they reach 2 pounds of paper they stop. Some people drop the document on the floor and see if it makes an authoritative sound. Others write until they reach 50 pages, because, by golly, that's what the nifty book on Business Planning said was the right length of the plan. Some entrepreneurs just keep writing forever, and don't ever actually finish. After all, if you never finish, you never have to worry about the investor turning you down. Fear of presentation--and rejection-- begins to set in, a completely natural human reaction. Once you recognize your fear, you can deal with it.
Pick A Section, Any Section
If you have never written a Business Plan before, you may have difficulty getting the project started. It will seem as though you have an awful lot of blank pages staring back at you.
To get the Plan moving, start with the section that is easiest for you, or of most interest. If you are enthused about the technical superiority of your product, write the product attributes section first. If marketing is your forte, then work on strategies. Many people like to start by writing the history of the company, or how they got the original vision to start the business (possibly because most people enjoy talking about themselves). When you begin to see words on the page, you will get a feeling of making progress, and then you can proceed to the more difficult parts of the plan with less trepidation.
Highlight the Positive, But Don't Ignore the Negative
While it is of course important to talk about what a great opportunity the company represents for a potential investor, don't forget to discuss the risks inherent in the venture also. These are sometimes painful for an entrepreneur to include--sitting down and thinking about what could go wrong and what could cause them to fail--but they are important for several reasons. It demonstrates your willingness to make a full disclosure to investors. It shows your ability to think ahead and anticipate what might happen--the heart of planning itself. And it leads to a discussion of how you might react to these negative events to mitigate their consequences. Highly paid management consultants call this Contingency Planning, but you could also just call it being prepared. Which means that the boy Scouts were the first contingency planners.
Venture capitalists accept and expect large risks: that's why they make you give them such a big chunk of your company. Painting too rosy a picture can be interpreted as an attempt to mislead the investor.
You don't need to go overboard, such as those prospectuses prepared for public offerings, where they have three pages on the company and the management and about twenty pages of "risk factors" written by lawyers. The risk factors are the lawyers' favorite parts of the Plan, because if nothing goes wrong in a business, we don't need to hire them.
