Lessons
about
business planning derived from an extensive survey conducted
by PlanWare include the following:
Decide the underlying purpose of the plan at the very outset - to
raise money, secure approval etc. - as this will largely determine the
comprehensiveness and length of the plan, amount of research required,
use of external help and overall time scale.
From the outset, specify the structure of the plan in the form of
a detailed table of contents. Use this to identify critical issues requiring
research and/or external assistance.
Create a work program and timetable which allows adequate time for
researching, writing and redrafting.
Recognize that the process could be much more difficult than expected
and consider seeking external assistance, sooner rather than later,
for the most vital areas.
The more important the plan, the longer it will be and the longer
it will take to complete.
Here are some suggestions to follow if you want to
write a trulydreadful business
plan, or to avoid if you wish to write a good plan:
Don't include a contents list, don't number
any pages and don't follow any consistent approach
for section heading etc.
Do write the plan's summary before you write the
plan, or, better still, don't include any summary.
Do develop your business strategies and ideas progressively
as you write the plan. It will draw readers into the process and
make the ending more unexpected !
Do start the plan with
your financial projections - the more detail and tables the better !
Don't summarize the projections - let
readers figure out the full-year totals, profits, cash flows
and so on for themselves.
If you include projected balance sheets, make sure that they don't balance.
Don't produce any separate cash flow forecasts,
just rename the P&L or income projections.
Do ensure that your financial projections indicate
40% profit margins in the third year. If raising external capital, do explain
that the projected return to investors will exceed 100% per annum
within three years.
Do mention in the marketing section that your proposed
offering has no competition. This will save you having to do any
market analysis.
Do base the plan's marketing section around a few
quotes from research reports that you found on the web.
Don't consider customer behavior, needs or trends
unless you wish to present a series of supportive (unresearched)
theories that will support your plans.
Do base your sales projections on the presumption
that you will gain, at least, a 1% share of the total market and don't bother
with any market segmentation.
Do pad out your sales plan with lots of buzz words
like customer-driven, first-to-market, market-led. Do underpin
it with a disproportionately small (or large) marketing budget
but don't be
too explicit as to how, where and when it will be spent.
Don't include any background to your business idea/invention,
progress to date or current status.
Do spend at least ten pages describing your offering
- do make this as detailed and technical as possible to impress
your readers. Don't mention
any benefits as these should be obvious !
Do anticipate technical breakthroughs and new offerings
but don't discuss related costs or risks.
Do include a 6-8 page CV for yourself but don't
worry about building a management team or sorting out operational
issues like production, delivery etc. Do make some
heroic assumptions about these matters and do pledge to address them
at a later date.
Do spend as little time as possible on the plan
but do make sure that it runs to at least sixty
pages even if this entails lots of padding and inclusion of superfluous
or irrelevant
material.
Do use as wide a variety of font types, sizes and
colors as possible to add style to your plan and don't bother
using a spell checker.
Don't let a qualified outsider see your emerging
plan and don't bother with reading over or redrafting.
Once your business plan has been drafted, you should turn your attention
to its presentation. First impressions can be very important and it is
essential that your plan makes a good initial impact. Here are some suggestions:
Convey a quietly professional impression. Your plan
should not come across as either dry academic thesis or as a glowing
promotional brochure. Aim for something in between.
Add an attractive cover page. A color picture of your proposed offering
would help distinguish the plan and serve as an introduction
to your products or services.
If the plan is longer than about 30-40 pages, consider dividing it
into two volumes. Use the first volume for the main plan and place
detailed, backup material in the second volume.
Get a trusted, experienced outsider to read your plan to check that it makes good business sense, reads well and is clearly presented. Don't be resentful of any criticism - use it to improve the final plan.
Make sure that pages are numbered and that the plan contains a contents
list.
Be sure to spell check the plan once it has been finalized.
Use easy-to-read fonts and sizes. Print on one
side of pages. By all means use color but in a restrained, business-like
way.
Double check the 2-3 page summary of the plan to ensure that it
is interesting and reflects the plan's detail.
Remember, many recipients will use this summary to determine
whether your plan merits further examination.
When binding your plan, use a system that allows pages to
be opened flat.
Once you have completed the main parts of your business plan, insert
a section entitled "Conclusion" and
use it to wrap up your plan and to leave the reader with a warm and positive
view of your business and its plans. Briefly, review what the business
does and expects to achieve. Indicate why it will succeed and why it
should be supported by investors etc. Be very positive and confident
to encourage favorable reactions and draw on some of the strengths and
opportunities identified in earlier parts of the plan dealing dealing
with Mission, SWOTs,
Strategies etc.
Confine your Conclusion to a few carefully-drafted paragraphs and
write it once the plan is almost complete. At this stage, get someone
to read a near-final draft plan to check that it makes good business
sense, reads well and is clearly presented. Ideally, that "someone" should
be a detached, independent person involved in business with experience
of your industry and/or business planning. Hopefully, they will be able
to see "the wood
from the trees" better than you can. Don't be resentful of any criticism
- use it to improve the next draft. If your plan is lengthy or important,
anticipate several drafts.
Key questions you should be asking yourself
at this wrap up stage include:
Is the plan nicely presented - bound, page numbered etc.?
Has the
plan been spell checked
in its final form?
Is the plan's length
appropriate to its purpose
?
Have the business's (funding)
needs been clearly stated
?
PlanWare offers an interesting range of free business planning software
which can be useful to cash-strapped entrepreneurs wishing to launch
businesses on a shoe-string and to students doing B School or college
projects. The following items are likely to be most useful:
Exl-Plan Free - Excel-based, fully-integrated, business finance
planner suitable for high-level, short term projections.
Free-Plan - 150-page Business
Plan Guide and Word-based Template.
Business Plan eGuides - compendium of easy-to-read, informative
papers on business planning matters.
PlanWare's paid-for software includes Exl-Plan (comprehensive
multi-year financial projections), Cashflow
Plan (detailed, rolling,
12-month cash flow projections), Plan Write Business
Planner (stand-alone,
comprehensive business plan writer) and Quick
Insight (expert system
for evaluating business ideas and new ventures)..
How long should it take to write a business plan and how should the
time be allocated?
Some useful answers to these questions can be gleamed from
an ongoing survey being conducted by PlanWare
amongst people who have prepared written business plans.
Based on over two thousand responses, more than one-third (38%) of
the respondents spent less than a month on their plan; a similar
proportion (37%) worked on their plan for 2-3 months; and the balance
(25%) spent several months on the task. More detailed analysis of these
findings indicated that:
The elapsed time to prepare comprehensive plans was considerably longer
than that for basic plans.
Over one-third of all plans compiled within
an elapsed time of one month were used to seek bank
loans or
approvals from shareholders/directors, or they were compiled for
internal/personal use.
About one-third of all plans
used to raise venture capital/equity took least three months to
research and write.
The survey also showed that the task of actually writing the plan
was usually the least time consuming part of the planning process
as almost two-thirds (63%) of respondents spend
more time researching than writing their plan. For a fifth (21%) of respondents
researching and writing times were about equal. Only a small minority
(16%) undertook little or no research before drafting their plan.
Here's the summary of a planning tip contributed by Intuitive
Life: A Business Weblog by Dave Taylor:
A book I'm reading recommends that businesses consider outsourcing
their business plan development because they'll "get a better business
plan, faster, and at lower cost" than doing it in house. This is
absolutely wrong-headed thinking: if you outsource your business
plan process, your company will be more likely to fail, not less.
It's the process of creating the plan that's important not
the end document. When you share your business plan with an investor
or venture capital firm, they want to see something coherent and
learn about a smart business, but just as importantly, they want
to know that your team can sit in a room and hammer out a single,
unified vision of your company, one that covers all the major bases,
from marketing to defending your intellectual property, cost of
sales analysis to partnership ideas. And yet, pop over to Google
and you'll find hundreds of companies advertising that they'll
write your business plan for you, that they'll "help you clarify
your business goals" and that they'll "help you get funded with
a rock-solid business plan." Reject these companies. All of them.
The only part of business plan creation you can safely outsource
is unbiased analysis. Once you're done with your plan, it can be
a darn good idea for you to run it past a professional business
startup consultant, because they can give you the investor's view
of your plan. Expect to pay at least $1000 for this service.
It's really like a Zen Koan because the journey is the reward.
If you think that having a beautiful printed business plan, perfect
bound and with color illustrations is going to impress an investor
more than one that your team has sweat over, fought over, and hammered
out over time, you're wrong. It's the implementation, not the idea
that investors are paying for: if you can't even own your business
planning process, the odds of you getting your product out the
door, executing on your plan and generating a return on investment
are pretty darn low.
So here's some free advice from a serial entrepreneur and management
consultant who's been there and read hundreds of business plans:
write your own business plan. Fight your own fights with your partners,
argue about sources of revenue, debate income projections, and
force yourselves to figure out enough of Word and Excel to capture
that moment of your company's life. Because business planning
is all about process, not destination.
What is the ideal page length of a business plan? Well, what is the
length of a piece of string? The answer really depends on the purpose
and scope of the plan - are we talking about a basic or comprehensive plan.
See the tip below on Decide on your
type of Business Plan at the Outset.
Analysis of findings from an ongoing
survey about business plans by PlanWare indicates that
the main parts (i.e. the body of plan excluding appendices etc.) of many basic plans
are under
ten pages long whereas comprehensive plans
are often 10-25
pages long. More specifically, the analysis found that almost half
of all comprehensive plans
were at least
26 pages long as compared with just one-tenth of basic plans
(see Fig 3 below).
When budgeting your plan's length,
go for the shortest possible plan consistent with your business's
scale, objective of the plan etc. - aim for quality rather than quantity!
Bear in mind that the overall length of the plan is likely to increase
as writing progresses. If your plan gets too long, do some ruthless editing
and redrafting. If it is any consolation, it should be much easier to
shorten a long plan than to lengthen a short one!
Based on the suggested
section lengths in our Business Plan Guide,
the length of a comprehensive plan could range
between 27 to 47 pages (excluding cover, contents list and appendices).
This works out at a minimum of about two pages for each main section
within the plan. Obviously, this length should be scaled back to about
ten pages or so for a new or established business (of almost any size)
preparing a basic plan by excluding sections
and scaling back the length of remaining sections.
Decide
on your Type of Business
Plan at the Outset
Before you put "pen to paper", decide the type of business plan you need:
Basic plans are short (often under 10 pages plus appendices
etc.); relatively quick to prepare (under one or two months); use
limited external assistance; need few drafts; and require much
more researching than writing. They are somewhat more difficult to
prepare than anticipated - all parts equally difficult. They are
frequently used to assess the viability of a business or for internal/personal
use and they are rated as important/useful for the business.
Comprehensive plans are longer than basic plans; require
some months to prepare; make slightly greater use of external help;
and require somewhat more time researching than writing. They are
more difficult to prepare than anticipated, especially the financial
projections and market analysis parts. They are often used to help
raise venture capital/equity or bank loans, and they are viewed as
being critically important/useful to the business.
Based on a survey of over 400 business plan writers, the following table
characterizes "typical"
plans written for different purposes:
Purpose of Plan
Type of Plan
Approx Pages *
Elapsed Months **
External Help ?
Number of Drafts
Parts of Greatest Difficulty
Internal/ personal use
Basic
10
<2
No
1-3
Market analysis
Raise bank loans
Comprehensive
15
1
Probably
2-4
Financial projections
Seek venture capital/ equity
Comprehensive
20+
2-5
Probably
2-5
Market analysis
Assess viability of business
Basic
10
2
Possibly
2-4
Market analysis
Secure approval from shareholders/ directors
Comprehensive
15
2-3
Possibly
2-6
All parts equal
* Main sections only - excludes appendices, attachments
etc.
** Covering research, writing & redrafting.
Before any detailed work commences on writing a comprehensive business
plan, you should:
Clearly define the target audience
Determine its requirements in relation to the contents and levels
of detail
Map out the plan's structure (contents page)
Decide on the likely length of the plan
Identify all the main issues to be addressed.
Shortcomings in the concept and gaps in supporting evidence and proposals
need to be clearly identified. This will facilitate an assessment of research
to be undertaken before any drafting commences. Bear in mind that
a business plan should be the end result of a careful and extensive research
and development project which must be completed before any serious writing
of a plan should be started. Under no circumstances should you start writing
a plan before all the key issues have been crystallized and addressed.
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