How good is your business plan?

This is a tough question to answer because there are really no absolutes, and you have to know your audience. This is a bit like a job application: you need to show clearly that you fit with the recruiter's needs.

Start with a good basic business plan structure. If you have not worked through my Concept Paper approach, now is the time to do that. See here!

Next: assess the audience. If you think a 'one-size-fits-all' approach to business plans, think again. You know how useless generic CV's are when applying for jobs. Same here. You need to really hit the target between the eyes - make sure they understand how what you are doing, or planning to do, exactly in line with their criteria.

A few examples:

• If the BP is intended to be a base for internal company operations and budgeting you will need to focus on operational stuff, so that everybody knows what they are targeting in the next stage. Sure, everything changes! No BP is ever implemented as written. Even the big corporates (and I have been there!) need to re-plan at least every year. With a start-up that will probably read 'every three months'. But that does not excuse you from doing some planning, and the BP is a good starting base. But, be ready to dump it and start again if reality beckons too strongly.
• If the BP is to draw in an angel investor, then you need to look closely at the angel's motivations, and respond accordingly. Is this 'angel' a retired expert in your field that really wants to stay involved and contribute to something? Maybe the focus in the BP should then be on the practical details, and an exploration of the risks involved and the knowledge that you, modestly, need to acquire to fill any gaps. You see how this works?
• If the target is a VC organization, then you had better have some real earned revenue under your belt - having real sales proves that someone has put out good money to acquire what it is that you are selling. So, focus on the practical (and proven returns) and, eventually, on the exit strategies, and time-frame, for the VC. Talking vaguely about a future IPO is probably not going to cut it unless your business has already gone viral. A staged share buy-back scheme, with a clear algorithm for computing the share price, is probably a good idea. It shows a practical mindset and can form the basis for real negotiations. Don't be overly generous in your initial proposal. These are practical people looking for great financial returns and will try to negotiate you down. So, make sure that you have some wriggle room in your proposals.

These three will give you some idea of the thought process. Of course, there are many other potential readers of your business plan: Aunty Joan, potential partners, even potential supplies (cut out the profit details for their copy, but keep the basic operations stuff and the summary financials to show that you can pay!), and many others.

Again, you can use my Concept Paper approach to work through your BP construction ideas for each target audience. BTW, on a very practical note: be sure that the front page of the BP is clearly titled with who this copy is for. In the rush of those early days, you really do not want to discover that you have handed the wrong version to someone. I have seen that happen!

To get you started, below is a link very simple form that was being used by a VC firm that I worked with a while back (on a due diligence project). It looks deceptively simple . . .
Not all organizations or people will think like this. You are marketing your firm here, so, study the needs of the audience before you prepare you 'ad'.!

Talk to me if you need guidance in thinking it through: email: kenpopekpz@gmail.com

 Linked In: here. Also, please, drop any comments and observations below.

The Business Plan Assessment is here.