Nine Tips on Writing a Winning Business Plan
Although you may spend several weeks or even months researching and writing your business plan, the reality is that a reader, be that a loan officer, investor or visa officer, can dismiss your plan in five minutes or less if you do not make a strong first impression. Your business plan must pass the initial cursory examination in order for it to be examined in greater detail, so the most important aspects of the document must jump out to even the most time-poor and distracted reader.
As you write your business plan, you must keep firmly in mind those things that will add to its impact and those that will detract from it. The following article details nine tips that you will need to remember once you are ready to put your business plan into its final form in order to maximise the impact that your plan has upon all those that read it. Even if it is a strategic business plan for internal use only, these tips will help make your plan easier to review, more effective as a working document and more likely to have a positive impact on your business.
1. Get Your Facts Right
Probably the quickest and easiest way to kill the interest of an investor or undermine the confidence of a loan or visa officer in your business is to make a mistake. If a reader knows that a statement that you have made is simply not true, you will lose credibility even if the reader gives you the benefit of the doubt that this was just a mistake and not a deliberate attempt to mislead. You must make certain that your facts are correct.
The easiest way to make sure that this is the case is to make sure that all of the important statements in the business plan are attributable to a reputable source or tied to primary research that you have conducted yourself which is included in the Appendix. You can explicitly reference your sources in the business plan by using footnotes or endnotes or you can just make a separate note of where you got the information to which you allude in the document. In either case, you need to be able to tell your reader where you got your facts from should they question them.
2. Aim for a Concise but Comprehensive Business Plan
There are trends in business planning as in all areas of business. The trend for many years was that when it came to business plans, the bigger the better. Then, largely as a reaction to bloated business plans that had grown to 50 - 100 pages in length, new business planning concepts such as "The One Page Business Plan", "Lean Planning" and the "Business Model Canvas" began to emerge as a means to obtaining the majority of the benefits of the planning process without needing to invest an enormous amount of time, effort and money into documenting every detail of your company or business idea both now and for five years into the future. The pendulum seems now to be swinging back to an equilibrium position when it comes to the length of a business plan. I would describe that equilibrium position as "concise but comprehensive".
A business plan needs to answer all of the major questions that a reader would have on being introduced to your business for the first time. This is impossible to do with a one-page business plan but it would be even more frustrating for a reader to have to dig for the answers to the questions they have amongst endless detail that would be best provided in response to a specific request for that additional information.
How long should the perfect business plan be? There is no "one size fits all" answer to this question but here are some guidelines which may prove to be useful.
- Limit the plan to a maximum of 40 pages (excluding appendices). 25 - 30 pages is the sweet spot for the majority of businesses.
- Only a business plan for an extremely complicated product or business should exceed 30 pages (excluding appendices). If the document is intended for either a very motivated reader or for an internal readership you may want to go slightly beyond this but the communicative and persuasive power of the document will have an inverse relationship to the number of additional pages beyond 30 that are added. Overlong business plans normally betray fuzzy thinking on key business issues.
- A start-up or uncomplicated small business will more often than not only require a business plan with 15 to 20 pages.
- Limit appendices to less than the number of pages used for the body of the business plan. Whilst it can be useful to present additional information in the appendix, you need to avoid making the whole document appear burdensome or it may not even be picked up or read except by the most committed readers.
These guidelines apply to most business plans but if you are confident that your case is the exception to these general rules, feel free to present it in whichever format you want.
3. Don't Pretend You Have a Crystal Ball
One of the reasons why traditional business plans became so voluminous was that they would contain detailed projections for five years. Perhaps in earlier times when the pace of change was not as rapid as it is today, this might have been ok but now it looks foolish to pad out a document with the fine details of what you will be doing 48 to 60 months from now. It is impossible to predict with any accuracy what will be happening in your business much further out than 12 months from now unless you have a crystal ball!
As a rule of thumb, month to month projections are only required for the first one or two years. After that, quarterly or even annual projections are more appropriate. Similar guidelines can be applied to how much detail you should include when describing your business operations. The information should be fairly thorough for the first year or two but after that, a more general description is perfectly acceptable (or even preferable).
Although you should not pretend to be able to see far into the future, it is important when analysing the past performance of an existing business to look deep into the past to tease out patterns and trends that will help you anticipate events that are likely to occur or recur. If your business has been operating for three years, I would include three years' worth of financials and any other relevant information from as far back as makes sense in the context of the point you are trying to make.
4. Don't Overuse Superlatives
Readers are naturally wary of hyperbole when reading business plans. As the founder or business owner, it makes sense that you would believe that this is the "best" product of all time, you are proud of your "unmatched" customer service and that potential investors would be "crazy" not to invest in your "disruptive" business. However, self-promotional words like these actually reduce credibility. Instead of trying to tell readers how "wonderful" your business is, make a positive impression by virtue of factual descriptions and specific information.
For example, when trying to get a loan to extend the seating capacity of your restaurant, don't tell the reader that the food and atmosphere are "fantastic". Instead, provide specific examples that prove you are doing something "fantastic" such as saying "Due to the restaurant's popularity, there is an average wait time of 30 minutes on a Friday and Saturday night and a wait time of 15 minutes on other evenings".
5. Showcase Positive Comments from Credible Third Party Sources
Your own glowing comments about your business will be disregarded as puffery by the readers of your business plan. Instead, seek out statements from customers and respected outside sources to give your readers confidence in your business. Returning to our restaurant example, instead of saying "our restaurant serves the best food in the city", it would be more effective to say "the newspaper's annual survey rated our restaurant in the top five in its price category".
It is not absolutely essential to quote a well-known authority (although that helps!). Anyone with credible, related experience would do. For example, a fellow restaurant owner that is well known in the community could say that your Italian restaurant has the best lasagne and chicken fettuccini alfredo in the area and that would carry more weight than your own words about your own business.
6. Write Using Business Language But Refrain from Excessive "Buzzwords"
Contrary to what many business planning consultants would have you believe, it is not necessary to have an MBA to be able to write a compelling business plan. However, it is important to understand and use appropriately basic business terminology, especially terminology that is specific to your specific industry.
This should not be interpreted as a license to fill page after page with technical jargon in the hope that this will make you look impressive. This is much more likely to confuse your reader than impress them given that the business plan is most likely to be read by someone with little or no experience in your specific niche and industry.
You should also avoid excessive use of "buzzwords". Certain terms and trends are fashionable in different industries at different times and an occasional mention of these things shows that you have your finger on the pulse in your industry. However, overuse of these "buzzwords" gives the impression of a shallow understanding of the actual issues that have given rise to the cliche. Your time would be better spent demonstrating that you understand and have a plan for these issues as this is more impressive to an investor than the mere repetition of term or practice that happens to be "hot" right now.
7. Use Numbers to Create Impact
People tend to put more faith in numbers than words so using as many numbers and statistics as possible to support your business plan can add significant credibility, especially if these numbers come from an authoritative source. For example, "our foot traffic projections are supported by figures that show neighbouring stores average 22 customers an hour on weekdays and 43 customers per hour on weekends".
It is vital to bring data from the financial section of the business plan into the text of your plan to indicate specifically why you believe you will achieve certain goals. For example, "our new production partner will allow us to reduce each unit cost by 23%, thus allowing us to offer additional features without compromising our unit profitability" Do not expect the reader just to draw this conclusion themselves from a cursory glance over the financial projections. It is important to incorporate any financial highlights prominently in the text of the business plan.
8. Use Lists and Bullet Points
Bullet points are an excellent way to convey information and they make writing your business plan easier. Bullet points should be used whenever there is information that you particularly want your reader to notice. As such, it is important not to overuse bullet points or the text will be what stands out amongst all the bullet points! A long bulleted list weakens effectiveness.
9. Make Your Business Plan as Visual as Possible
It is a truism of persuasive writing and marketing that a picture is worth a thousand words. This definitely holds true when it comes to business plans. A thousand words are unlikely to be given the attention which a graph, chart or illustration will attract. They forcefully explain concepts and break up the monotony of the text.
As you are carrying out the research for your business plan, it is helpful to keep an eye out for data that can have a stronger impact if presented in a more visual form such as positive statistics on the growth of the market. Impactful charts and graphs should be half page size or less and placed in the text rather than the appendix as many people ignore the appendix unless they have a specific question which is only partially answered in the main text.
Photographs can also be very effective, especially if you are offering a product that is unusual or difficult to understand. Illustrations can help present information about products still in development. However, only a small illustration should be placed in the text and only then if it is visually attractive and relevant.
Conclusion
You only get one chance to make a first impression and your business plan is an introduction to your business for bank managers, investors, venture capitalists, and visa officials. All these readers have certain expectations and your plan will need to meet these expectations if you hope to achieve the outcome you seek. The pressure to deliver is huge as a poorly written business plan will destroy your credibility and could cause your fundraising efforts to fail or your visa application to be refused with potentially devastating consequences.
I am an advocate of business owners writing their own business plans, especially if you are writing it principally for your own benefit. However, there are instances where it makes more sense to employ a professional business plan writer. It's important that you carefully weigh up the pros and cons of writing or not writing your own business plan as this is a decision that could have far-reaching consequences for you and your small business.
Having completed hundreds of business plans over the course of the last decade, we understand through hard-won experience what each specific type of reader is looking for in a business plan. If you choose to work with us, you can be confident you will receive the level of quality required to secure a bank loan, third party investment or to obtain the visa that you need. We will save you an enormous amount of time, energy and money and send you on your way with added confidence, greater clarity of vision and a clear strategy for achieving your business goals. We can even support you in your implementation of the plan and the achievement of your goals.
If you want to discuss our business writing service here at Continuous Business Planning, feel free to contact us for a confidential, no-obligation discussion of your business idea.