Streetwise Advice: 6 Critical Points about Business Plans

People, People, People

In seeking equity money from venture capitalists or other outside investors, you will increase your chances of success if you get someone committed to your management team who, if not known personally by a potential investor, at least will have a recognizable name. If you can’t manage this, you should consider getting one or more people on your board of directors whom potential investors may be familiar with.

Alternatively, you can include as exhibits to your plan any positive media clippings you can find, such as items from trade publications about members of your management team. If you don’t have any clippings, try contacting relevant publications to get media coverage—perhaps about your start-up business proposal.

Involve Everyone

Both for start-up and annual business plans, you need to have key employees create their plans and budgets for their departments or business functions. Then work with them until you are satisfied. Have key people get together to get the plan in sync and to get any disagreements out in the open.

The more input people have in creating the plan, the more responsibility they will feel toward it. If you are running a one-person business, where you are the sole investor, the sole manager, and the sole employee, then get at least two other experienced businesspeople to read through your plan and give you advice on your business. Presenting your business plan to others is by far the best and fastest way for outsiders to be able to grasp your idea and your vision and give you feedback on it.

Annual Business Plans Are Not Just Budgets

If an annual plan includes any financial projections, I find that almost everyone tends to focus on them almost exclusively, de-emphasizing the qualitative aspects of planning. Although you do need to use numbers to run a business, numbers alone lead to a shallow plan.

Companies run just by the numbers lose direction, drift from their strategy, and never realize their full potential. It is essential to the planning process to articulate clearly what the direction of the company will be for the coming year and what the role of each person will be in supporting the direction of the company overall.

Use the Annual Business Plan to Improve Performance

In the real world, nothing ever goes exactly according to plan but your annual plan gives you a way of measuring your company’s actual performance against projected performance. Meet with key people at least once a month to review how the company is performing relative to the plan. The emphasis should not be on browbeating managers whose areas are underperforming but on how performance can be improved in the future.

Keep the Tone of Your Business Plan Factual

Don’t use hyperbole or generalizations to describe the potential of your business plan. Investors and lenders don’t want to hear phrases like “We anticipate explosive profit growth.” They want to use the more factual information you present to reach their own conclusions.

Keep Your Plan Succinct

Whether creating a business plan to raise money or an annual plan to run your business, keep it succinct. People tend to go into too much detail when creating business plans. If a business plan is too long, it might be skimmed. If an annual business plan is too long, focus on what is really important or it might be lost. Edit it carefully.

For More on Business Plans

For more on how to create business plans see my course, How to Create a Business Plan. This course includes step-by-step video instructions, samples and fill-in-the-blank templates for both a one page business plan and a full length business plan. It also includes instructions, samples and templates for all financial statements and projections.

How to Create a Business Plan is one of over 130 courses included with BusinessTown. Other popular courses include Start-a-Business 101, How to Find a Business Idea and The Complete Guide to Digital Marketing. You can try BusinessTown for free.

About Bob Adams

Bob Adams is a Harvard MBA serial entrepreneur. He has started over a dozen businesses including one that he launched with $1500 and sold for $40 million. He has written 17 books and created 52 online courses for entrepreneurs. Bob also founded BusinessTown, the go-to learning platform for starting and running a business.