Occasionally we get requests from clients to develop their business plan. Clients expect that with our experience and expertise that we could prepare a "winning" plan. We respectfully decline these assignments because we believe it is a disservice. Business plans are too important to be delegated to business plan writers, consultants or other professionals.
There is a role for consultants and professional service firms to assist with research or even sections of the plan where the founders have limited or no expertise. We’ve helped business plan writers with valuation, benchmarking, competitive analysis, supplier selections, research and evaluate alternative technology solutions, perform due diligence on acquisitions or developing data and information needed to satisfy certain elements of the plan. But the business owner must be intimately familiar with the details of the plan. There is no substitute for committing a large effort to developing the core elements of the plan themselves. In particular the founder must own any sections that define the value proposition, addressable market segments and business model.
Business planning and business plan writing are not casual exercises. Many times during the course of writing the plan, founders will discover opportunities for differentiation or sometimes completely re-think their initial strategy. The gut intuition that led to forming a start-up is often correct. Successful start-ups are usually based on a refined and focused strategy that only becomes apparent through thinking through alternatives and deliberately trying to articulate the reasoning behind a company's formation. It is always costly to remedy flaws and initiate mid-course corrections. Many times these problems would reveal themselves with better planning.
The business planning process is also a time that many models and processes are evaluated and abandoned. The writing of a business plan is an opportunity to resolve inconsistencies, research shortcomings and validate assumptions. The plan should reveal and resolve these elements to the satisfaction of the founder as well as any audience that sees the finished plan. It is during the writing of a plan that the founder is able to appreciate the other elements of the business. Many times the founder will be expert in the technology or market. Writing the plan helps the founder explore and understand the interactions that are required not for a successful technology or product launch, but all of the elements required for the business to succeed.
Writing is a valuable exercise in that it usually stimulates more critical assessment of the subject. It provides a means to more clearly express your ideas than conversation. And it provides a template for further refinement. Conversations, casual or otherwise, are excellent for assessing merit of an idea or reaction of a potential client or customer. Written proposals require more from both the author and the audience. The writer must devote significant time to develop and articulate the plan and the audience requires more effort and time to read and reflect on the document. To get the most effective feedback, the plan needs to be approachable, succinct and interesting.
Plans don't have to be long but they do have to be comprehensive. Most good plans have the following characteristics:
- 25 - 40 pages written in a professional manner with Executive Summary, Market Assessment, Company Description, Marketing and Sales Tactics, Product and Services, Operations, Management and Ownership, Finance and Use of Funds as the primary sections.
- Logical, cogent, easy to read and comprehend. It should present the evidence that makes starting a business propitious, an assessment of why a particular market is attractive (it's buying proclivities, not its size), the competitive and supplier landscapes, identify the fast followers for the product and present believable financials (no hockey stick growth models).
- Should feel genuine not canned, condensed or off the shelf
- Should be validated and not rely on unrealistic or unverified assumptions
- Should focus on addressable markets rather than on service or product
- Attentive to details, internally consistent and not shoddy, sloppy or casual
- Thorough awareness of competitors, regulations or trends that may impact operations, position defense or sales.
- Plans are a chance to validate the assumptions leading to business formation and to ascertain customer acceptance of the business products or services being offered.
- Plans define and codify the vision of the founders, the mission of the company and the goals to be realized from starting a company.
- It provides an opportunity to evaluate and create strategic barriers to entry that will prevent competitors from adopting your tactics or quickly replicating your model.
- It is the first time most founders have thought through and expressed their value proposition. While simple in concept this is very difficult to do well.
- Concentration on customer needs (what they want, not what they say they want) and their reasons to select the product or service;
- What the firm is significantly better at than anybody else - along what dimension of expertise will the company focus their best people;
- How is the firm positioned in the market and how well can barriers and defense be employed to protect that position; and
- Who cares? What makes the product or service offering unique, approachable, understandable, attractive, believable and why do particular customers select your product/service from alternatives.
- And good plans always reflect the passion of the founders. This element is crucial to effective business planning. If the founders are not excited and do not share their enthusiasm about the business, the plan will be devoid of the emotion that is necessary for conveying import.
There are a variety of excellent online resources for helping with the writing, research and financial aspects of business planning and start-up. State and Federal agencies have comprehensive sites to cover taxation, incorporation, advice and financial assistance. The popular business press maintain online sites with access to articles and sometimes whole sections dedicated to business formation and planning. There are local, state and regional business associations that provide seminars, course work and publications to assist with business planning. Community colleges and state universities have a wide variety of programs, information sources and occasionally student projects that might assist with research or market assessments. There are entire websites dedicated to planning and business plan writing as well as financing – loans, grants or equity. And many libraries have excellent reference sections with historical information as well as experts on researching just about any topic.
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