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Last updated: Friday, May 25, 2007

Business Plans

Many business ideas are destroyed with the business plan.

The idea, needs venture funding, or bank facilities, or grants: but cant get them.

After reviewing many business plans, I think the biggest reason why they fail is the author of the plan forgot the most important issue of all which is:

A business plan is a long sales letter

It is trying to persuade someone to do something using the written word.
And for that reason, it follows the rules of sales copy.

A business Plan - who is it for?

So with any business plan the first thing to consider is:

Who is it for?
What is in it for them?

And every audience is different.

Selling the idea to a bank is very different from selling to a venture capitalists.

It is not the numbers that change in the plan: it is the emphasis of what is presented.

Business Plan - Selling to a bank

A bank is interested in one thing and one thing only.
They are not interested if your plan will make you rich.
You should answer the single question which is:
“Why the banks money is unconditionally safe”

So what is important about a bank?

No bank manager ever got promoted for a success: they get promoted for lack of failures - for not being seen to have taken bad risks

The man you speak to will not make the decision - the plan will be referred to an underwriting group - so the plan must self stand and not be reliant on any other information 

So what are the questions you need to answer:

Why is the business and market safe?
As many examples you can of successful businesses in your sector

Why are you safe?
Show your experience or get directors with experience - and show how your own finances are safe whilst you do this

Why is the venture safe?
Explain Plan a, b and c for what happens if things dont go to expectation that still keeps the banks money safe

Business Plan - Selling to a venture funder

It is a whole different ball game selling to a VC

With a VC you need to tell him in the business plan 

What is the rate of return on his money

How he gets his money out again - the exit is everything

Why the business is scalable: how big it can be!

For sure:

Sure they want proof that the market is there.

Sure they want proof that YOU can do it.

Sure they want a solid USP

But in the end, if you dont show them in your business plan: a return , an exit, and scalability they probably wont get past page 1

Lets put it this way: 

When someone needs a car to carry six people and luggage: they dont look at economy or reliability, till after they know it will carry six people!

And thats the other point to consider. VCs are busy people who have lots of plans hit their desk every day. So you need to sell the idea on page1 if ever you want them to read page 2

Business Plan - Common sales elements of a great plan

A business plan should be a sales letter.

So it starts with a great headline, with all the benefits to the reader.

It needs attention, interest and desire.

It needs testimonials woven in - for the market , the idea and you.

It needs tantalising subheads

It needs to SELL!

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