willing you are to do what needs to be done to creating a winning business. The determination to write a plan needs to be amplified 100 times to succeed in business. The fuel for that amplification must come directly from your passion and no one else. That is how you join the ranks of the elusive 5% of businesses that succeed.
Strategy
Your business plan is a long-term planning document and it will cover a lot of ground. In this section you will paint a picture with words that brings to life how you will get your business started and how you will continuously grow and improve it for the next three to five years. Equally important, preparing your business plan will help you figure out how you define success and what steps you will need to take in order to reach that definition.
Build a strategy for tackling the process of writing a business plan. Here are some tips for business plan preparation:
* Start with the words. The words drive the numbers.
* Beware of technical jargon. Keep the tone conversational.
* Be concise and clear. Short, crisp sentences add authority. Bullet lists are friendly.
* Work on the sections you find hardest first.
* Include mentors, advisors, family and partners in goal setting.
* Don’t be afraid to hire professionals, but don’t delegate decision making.
* Always be realistic (but positive) about your business.
* Be honest, especially when it comes to shortcomings and risks.
* Use a spell-checker and grammar checker. Your plan will be judged not only by the ideas it presents, but also by its presentation and accuracy. Don’t let your business acumen come into question just because your grasp of language isn’t what it could be.
* Only include what’s relevant. Don’t do your thinking in your plan; do it before.
* Remember that the final goal is not a completed business plan, nor is it the acquisition of funding. Rather, the final goal is the realization of your business goals as set out in your plan.
* Embrace the fact that your business plan will never be finished. A business is an ever-changing entity and your plan is no different.
* Keep the key words – who, what, when, where, why, how – at the forefront of your thoughts as well as the forefront of your text. Answer each of the key questions in the first paragraph of each section. The rest of each section will be simple expansion.
* Intimately know the basics of your business strategy before you start writing.
* Start gathering information before you need it – market information, competition facts, etc.
* Only include relevant financial and operational details.
* Don’t make grandiose promises or representations to yourself or others (especially potential investors).
* Allow more room for detail on those sections particularly relevant to your business.
* Let your specific needs and goals dictate the structure of your plan.
* Use charts wherever you can to save space if doing so does not eliminate important detail.
* Work on making your document as visually pleasing as possible.
Looking Forward
When you project the future, you will need to take into consideration where you want your business to be. Be specific but recognize you are making an educated guess. This is where a team of experienced advisors and mentors can add great credibility to your plan. Ask yourself key questions. What will your workforce look like? What will your costs and income be? What expansions and new technologies will you have introduced? What will your loan balances be? Will you have investors? Who will be your customers? What will your market share be? What will your advertising and/or marketing look like and how will it be used? What will your role be in the business?
In addition, you will need to understand the industry, your market, the political climate, economic trends and every other aspect of an intricately woven web of relationships and challenges. You can help yourself and your business by staying abreast of world, national, state and local issues.
You don’t have to be a mind reader to forecast trends. Simply staying aware and doing some consistent study will put you ahead of the game.
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Rich Dad Tips
• Savvy investors know that every projection in a five year business plan is a guess. History is a great indicator of the future, so make sure you benchmark similar companies to ensure the investor or lender that you have a firm grasp on industry dynamics.
• Comparing your projected financials to others in the industry in the appendix of the plan is another useful tool.
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There is another large issue that arises when you provide forward looking projections. You shouldn’t be overly optimistic or overly certain of success, especially when seeking to raise money. Looking into the future is necessary, but you shouldn’t use a far off date to claim that certain profit levels and grand milestones will be reached. Those kind of positive representations, especially when written into your plan, become potential and problematic misrepresentations, especially when investor monies and attorneys are involved. There is no guarantee of success in any business. Forward looking statements as to profits and performance must be made cautiously and conditionally. The SEC (the Securities and Exchange Commission, the U.S. government agency which regulates the sale of stock) has an entire set of guidelines for forward-looking statements. They suggest using conditional language such as ‘we believe that…’ instead of ‘we guarantee that…’ and ‘it is our opinion that…’ instead of ‘it is certain that…’ While the less than 100% positive conditional language may sound wimpy, there are two important points to consider. First, sophisticated investors are used to reading this kind of wording. It is not going to dissuade them from investing. In fact, by failing to use conditional language they’ll wonder if you really know what you are doing. After all, why wouldn’t a prudent business person use the SEC’s suggested language if it could help them avoid a lawsuit? Remember, it is your responsibility to seek legal advice with any claims or assertions in your business plan to protect yourself from liability issues.
Secondly, let’s remember what we are doing here. We are talking about the future. There are no guarantees or certainties. By using conditioned language you are giving yourself the necessary flexibility to account for the many changes that lie ahead. Don’t lock your plan, or yourself, in to a fixed view of what lies ahead. Reserve the right to get smarter in the future!
Finding Expert Advice
In a perfect world, you would have the time and expertise to prepare your business plan completely with yourself and your closest advisors. When you prepare your own plan, you are so intimately familiar with it that its use becomes a natural outgrowth of the preparation process. However, few of us have the management, organizational, writing and editing, planning, layout and design, marketing and financial expertise it takes to prepare an effective plan. And even those who might have the expertise likely don’t have the time.
There are a variety of experts from whom
