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Business Plans That Sell!

Writing a good business plan is hard work. Hundreds of books and articles have been written on the subject, each offering different
and often conflicting advice to entrepreneurs. You could read them all and still be left wondering how long your plan should be,
what should be included, and so on. This article tells entrepreneurs to forget about formulaic, "fill in the blank" approaches to
business plans. Instead, they should concentrate on getting their story straight and then telling it in the most compelling way
possible.

By Tom Eckmann, Absolute Business Inc

Northwest Entrepreneur Network

Most business plans suck! Instead of getting an investor to say "where do I send the check?", or a prospective employee to ask
"when can I start?", or a potential partner to say "when can we meet?", most business plans cause readers to ask "when can I
stop?" These plans fail their primary mission, which is to explain the business opportunity, describe the entrepreneur’s plans, and
communicate this information in an effective manner.

Why do so many business plans fail? Why does the Early Stage Investment Forum committee receive hundreds of applications,
yet sometimes struggle to get 15 or 20 plans worthy of presenting? It’s not because there are so many bad ideas, but because
these entrepreneurs failed to fully think through their business ideas and/or failed to effectively communicate them.

A good business plan requires a lot of hard work. It takes solid research and thinking, followed by strong writing and presentation.
It takes a thorough assessment of every aspect of the business opportunity, detailed development and analysis of an execution
plan, and creative weaving of all this information into a concise and compelling story that gets people excited.

Every business opportunity, and therefore every business plan, is different. There isn’t one "right way" to write a plan. You need to
do whatever is necessary to make your story compelling, convincing, and maybe a little entertaining. I’ve had the opportunity to
write dozens of business plans for clients and my own businesses. In the process I’ve learned a few things that I’d like to share with
those who are struggling to write your own plans. The following list is not all encompassing, but it should give you a start in
figuring out what you want to do for your plan.

Facts Tell, Stories Sell! You’ve heard this before, but it’s absolutely true for business plans. Many people believe a business plan
should read like a PhD thesis or instruction manual. It shouldn’t! The primary goal of the written business plan is to tell the reader
about your business and make them want to learn more. So make it interesting! Don’t simply recite facts — weave them into a
story. Make your plan a page-turner, one where people enjoy learning about your business! Don’t be afraid to be creative in the
telling!

A good yarn won’t replace sound thinking. The process behind the written document should force you to think through and
thoroughly understand every aspect of your business. Start with the opportunity: why does it exist? When and why will it grow?
Why are you uniquely positioned to take advantage of it? Why aren’t others? Then talk about execution: what are your major
goals and objectives? What are the critical success factors and major milestones? How are you going to make it all happen?
Finally present the financials: how does this opportunity convert to dollars and cents for all the stakeholders?

Another word about financials. A detailed financial model of your business is very important, but not necessarily for the reasons
you think. The P&L, Balance Sheet and cash projections are interesting, but in reality, the only thing people know about them for
sure is that they’re WRONG! There are just too many variables and unknowns in a new business for these projections to be
anything more than crude indicators. The real value comes from the model creation process. It forces you to think through all the
revenues sources, cost drivers, operating assumptions, and growth projections of your business. The resulting model helps you
understand how and why your business works (or doesn’t work) from a financial perspective and shows you the things you must
control to be successful.

1.Content. As described earlier, the specific contents and format of your business plan will vary depending on your story
and the best way to tell it. But there are certain essential elements that must be woven into the story, including the
market and market size, competition, technology, barriers to entry, etc. There are many books and articles that describe
each of these areas in detail. A good place to look is the website for the Northwest Entrepreneur Network (www.nwen.org).
Check out the "Getting Started" and "Funding" focus areas.

2.Business Plan Structure. A business plan serves many purposes and must address the needs of a wide range of readers.
It’s virtually impossible to do everything with a single document. So don’t try! Look at the business plan as a set of
documents that address different needs.
Executive Summary – the single most important document. It should convey the essence of your
business plan in one or two pages. This document can be given to anyone, and its primary purpose is to
generate enough interest and excitement so that the reader will want to learn more.
PowerPoint Presentation – this presentation should mirror your executive summary. It is primarily a
verbal communication tool – though you’ll be asked to email it to people – so it should be able to stand
on its own. Much has been written on how to prepare an effective PowerPoint presentation. One
particularly good source is Chris Melching’s presentation from last year’s Enterpreneur University, "Hitting
a Home Run with Your Pitch." You can download it from the website at
(www.nwen.org/program/eupresentation.htm).
Full Business Plan – this is the foundation document. It should tell the reader pretty much everything
they need to know about your business. But it is still a high-level document – less than 30 pages max
(and the shorter the better)! While this document should be marked confidential, you shouldn’t assume
the reader has signed a non-disclosure agreement. Some readers will, but most won’t, particularly
investor types. So don’t include your trade secrets, proprietary technology, or other "secret sauce
information" in this document.
Business Plan Appendices – this is where you put the secret sauce and all of the detailed information
that only the truly motivated want to read. The only ones who get to see this information are those
seriously interested in your business and engaging in some level of due diligence, so you should insist
on a signed non-disclosure agreement. These appendices should include your market research,
marketing and operations plans, detailed financial projections — everything needed to substantiate the
claims made in your business plan.

3.You’re never done! The business plan is a living document, and you need to accept the fact that it’s never going to be
finished. As competition, technology and markets change, and you learn more about your business, you will need to
update your plan. The good news is that through dozens of drafts your plan will get stronger and more refined. The bad
news is that one day you’ll pick up an early version and suffer acute embarrassment that you actually sent it out to
people, with pride!

4.Keep your powder dry! For the reasons stated above, you don’t want to send the first or even second draft of your plan to
your "A" list of prospective investors or partners. Try it out first with your advisors and peers and get their HONEST
feedback; be sure to tell them you want a serious critique of the plan and that your feelings won’t be hurt (though they
probably will!). Rewrite it and run it past them again. Then try it out on some friendly investors or VCs who may not be
good investor prospects but who will give you some time and advice. When the severity of criticism diminishes, you’re
ready to send the plan to your prime prospects.

5.Don’t say things that aren’t true and don’t exaggerate. If someone catches you in a lie, they won’t believe anything else
you say. Even worse, it’s a small community and word of your transgression is likely to travel.

6.Base your arguments on facts, not opinions. Unless you are a recognized luminary in your field, be prepared to back up
your assertions with facts and information from credible sources.

7.Don’t be naïve (or say stupid things). This is where some early reviews by trusted, knowledgeable sources can help.
They can tip you off to things you say in a business plan that might label you as naïve or someone who doesn’t have a
clue. Investors today are looking for savvy, seasoned pros and they’re not going to invest in someone who wants to go
through the school of hard knocks on their dime.

8.It shouldn’t be a mystery! Say what your company does somewhere before page 48 of the business plan. You wouldn’t
believe how many plans drone on and on and on without ever clearly stating what the company does! Tell them "who
shot JR" in the very first sentence of the executive summary, then your readers are in a frame of mind to more easily
understand and assess everything else you say.

9.Make sure your financial projections are realistic. Just because investors are looking for hockey-stick revenue growth
doesn’t mean your company can support it. Plan for realistic company growth, and remember there are limits to how fast
you can grow if you want to keep control of your operations and the quality of people you are hiring.

10.Don’t say you have no competition. If you don’t, there’s probably a good reason — like there isn’t a market, or it’s so small
no one else is foolish enough to venture into it! And don’t present a plan that starts with your developing a product, and
then developing the market for that product. It’s just not going to happen!

11.Make the bios relevant (and brief). What you want to convey is that your team is capable of executing your business
plan. Use each bio to reinforce this point. The reader can learn other details from full resumes in an Appendix.

12.Don’t be overly repetitious. Some think you should be able to pick up a business plan and start reading anywhere. So
they say the same things over and over again. Instead, write such a great executive summary that readers are motivated
to start on page 1!

13.Forget about fancy binding or printing. In my experience, most people want the plan in electronic form (Word or PDF
format). The good news is you save a lot on printing and mailing expense. The bad news is that pictures, graphs and
other illustrations can cause the file size to swell. This is OK within limits, but make sure you don’t end up with an
enormous file that leaves a trail of crashed email servers in its wake!

14.Confidentiality. As noted earlier, very few people will sign a non-disclosure statement prior to reading your business plan.
This is especially true of the people you are most likely to send it to! They read lots of plans every day and aren’t going
to risk the legal exposure that comes from signing a bunch of non-disclosures. You can protect yourself in a couple of
ways. First, have some faith in the people to whom you send your plan. They make their living working with early-stage
companies, and if word got around that they divulged secrets or shared information with competitors, they won’t be in the
business very long. Second, acknowledge there are some disreputable folks out there, and follow the path of progressive
disclosure described in item 5 above. Once a prospective investor starts due diligence (i.e., wants to see the secret
sauce), it’s completely appropriate (and in fact essential) to execute a well-crafted – but again not overly restrictive –
non-disclosure agreement.

15.Don’t plan a start-up on top of another start-up. The odds of any start-up company failing are extremely high. If the
success of your start-up is dependent on the success of another start-up, do the math. If they fail, you’re almost SURE to
fail.

In summary, your business plan has to tell your story in a way that gets people as excited about your company as you are! Do your
homework. Convince readers that your business MUST exist. Show them how you’re solving a real problem that people recognize
and will gladly spend money to solve TODAY! That if you don’t do it, someone else undoubtedly will. And finally, that you’ve
assembled the best possible team to make it happen.

One last, but very important suggestion: use your spell checker and have a qualified editor review your work. Nothing turns people
off faster than a business plan full of typos, misspelling and atrocities against the English language. It shows poor attention to
detail, laziness and maybe a little ignorance – not exactly qualities people value highly when considering a new business
venture. Good luck!

Tom Eckmann is the Founder and Managing Director of Absolute Business Inc. AB is comprised of seasoned executives who
provide hands-on consulting and interim management services to small and mid-size companies. You can reach Tom at
206-441-2067 or [email protected]

http://www.nwen.org/venturer/0302/feature.html

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