So you’ve got that great idea and you’ve decided to put your money where your mouth is, or someone else to. But the fact of the matter is, any thoughts about your detailed business plans bring you out in hot sweats.
Statistics revealed by Barclays found that less than half of the UK’s small businesses have a formal business plan, with them becoming less popular with the younger generation of business owners.
Despite knowing that this will be the make or break document that see’s your business become a reality, and you’ve read all the guidance there is, there’s still part of you that holds some element of doubt as to whether your doing the right thing.
A business plan is no easy task and it’s not meant to be, you’re potentially asking others to put their money at risk, and for this there needs to be no doubt in your mind of possible failure.
Whilst you can read all the guides and tutorials there are, unfortunately there are something’s they just don’t seem to cover which can actually have a dramatic impact on the success of your plan.
So put aside the rigid guidelines for now, and get clear on what they don’t tell you about business plans.
The Little Things Matter
It may seem shockingly unfair that your plan will be judged on spelling, punctuation, grammar and style, but when you’re presenting your idea to potential investors they are also looking at you as a business leader.
If there’s sloppy mistakes at the beginning, how will you fare later on when the going gets tough?
Run spell checker and have someone proof read the plan before you even let a potential investor glance over it. Even the smallest mistakes will trip you up and lead to an embarrassing rejection that could have easily been avoided.
Style is a slightly trickier beast to tame as we all write differently and different styles will no doubt appeal to different investors, but it’s essential that whichever style you choose it is consistent throughout your business plan.
An alternative route to your style is to make it fit the brief of your intended business, as this can help to encourage the investor to engage with your idea and buy into it before they’ve even seen the figures.
Andrew Clarke CEO of Ground Floor Partners gives an example of this, “A banker I know funded an Indian Japanese fusion restaurant partly because the plan was like the restaurant concept – upbeat, trendy and unconventional.”
By giving your business plan a person you can gain immediate buy in for investors and spend less time explaining yourself.
You may feel defeated if you ask for help but being stubborn about your business plan will not help you to be successful in securing the backing you need.
Find a professional you trust to guide you through this process, because they’ve been there, done that and got the T-shirt, so will be able to instantly flag any discrepancies before you face the investors.
If you don’t have the capacity to gain professional help at this stage there’s nothing wrong with getting feedback from as many of your trusted friends, colleagues or peers, before you hand it over.
At first you will find this frustrating as no doubt every man and his dog will have an opinion on how things should be done, and it’s hard to swallow criticism. But it is a dragons den out there, and far tougher questions may be waiting for you on the horizon once your business plan is complete.
Do it Yourself
If you aren’t comfortable writing your business plan yourself, there are templates that can help you.
This business plan template has been used for over a decade to help lots of entrepreneurs write their business plans.
Or you can check out BusinessPlanTemplate.com, which hosts business plan templates for over 40 types of businesses.
In any case, you can create your business plan yourself. It may push you out of your comfort zone, but it will give you a greater understanding of the challenges ahead.
The Money Factor
There are many who disagree that you need a formal business plan to securing funding. However, when finance is concerned it requires a formal plan that gives clear guidance on the financial projections of the business. Just look at those poor entrepreneurs who fluff their financials every time they enter the Dragons Den and wonder why they walk away with nothing.
As a responsible entrepreneur you have to be realistic about the financial forecast and not hide behinds numbers that you cannot explain. Starting a business is an uncertain process but you have to establish a plan early on to reduce the risk of loss, otherwise how else will you have confident investors?
There are now a number of tools and financial planning aids such as Invest for Excel, which can give you real facts and figures about the business, removing the guess work and your excuse for poor numbers.
The primary purpose of this plan is to evaluate the feasibility of your business. Is it going to be profitable? If you can’t give your investors an honest and authentic forecast, then you will be wasting your time completely.
An Exit Strategy
Nobody likes to think of their business idea as failing, but you will have to face facts that a professional investor will want to know when they will make their money and when they will get their investment back.
By having a defined exit strategy, you will give your investors confidence that no matter how the business goes their money will be safe.
As Sir Winston Churchill once said, “He who fails to plan, is planning to fail.”
The importance of business planning is widely recommended, and whilst what constitutes as a good business plan can be clearly defined, these tricks should ensure that the most common mistakes are avoided.