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Business Plan Advice

Making A Business Plan: What 10 Experts Have To Say about Creating A Winning Plan

Top tips from professionals that have seen their fair share of business plans.

Casandra Visser

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Peter-Jones-Dragons-Den

“Thank you, but we don’t believe this plan will work.” The dreaded words no entrepreneur wants to here after pitching their business plan. Many rejections and failures would be avoided if only entrepreneurs had a better grip on how a business plan should be made.

And what better way to understand what investors are looking for than to learn from business plan experts who see 100s of plans every year?

Below are 10 expert tips and lessons you can use to create a stand-out business plan that screams success.


 

Allon-RaizIt’s the ‘business think’ that goes on behind the business plan that enables your business to fly.

Allon Raiz: Founder and CEO of Raizcorp (Africa’s leading business incubator) 

Why this matters:

It’s not enough to simply follow a template to the letter and not have an in-depth understanding of your industry, customers, team and potential challenges. Investors need to know that you have the best possible understanding of the workings behind your business as well as who you are as an entrepreneur.

What you should do about it:

Do your research and stress-test your assumptions to ensure your idea will be both viable and sustainable. Be involved with writing your business plan instead of getting someone to do it for you. Know your way around every part of your business.

Related: Top 10 Business Plan Resources


 

Martin-Feinstein-Enablis-Business Plan AdviceBusiness plans that are all of five pages long, and terrible plans that are 50 pages long. Write it on a “need to know” basis.

Martin Feinstein: Chairman of Enablis (Entrepreneurial Development Network)

Why this matters:

If you think that making a business plan means spending hours on a thick and detailed document, you’re wrong. Ask yourself what the bare necessities are and build on those points but only if it’s truly necessary. Don’t go overboard with the design either. It’s ok to be creative but you’re there to talk business.

What you should do about it:

In business, clarity and focus are both powerful assets. Strive to embed these principles in your plan.  Ask yourself what the investor would gain from the information you want to add to your business plan and if it’s not something that you could rather elaborate on verbally if asked to.


 

Guy-Kawasaki-Business-Plan-AdviceThe executive summary, all one page of it, is the most important part of a business plan. If it isn’t fantastic, eyeball-sucking, and pulse-altering, people won’t read beyond it. You should spend eighty percent of your effort on writing a great executive summary and twenty percent on the rest of the plan.

Guy Kawasaki, Best-selling author, speaker and investor

Why this matters:

Typically investors go directly to your executuve summary, if you fail to capture their attention and interest there, you will have lost them.  Think of ways to pull your reader in immediately. Use strong wording that jumps out at you and keeps you enthralled. There are many ways to achieve this and still come across as professional.

What you should do about it:

Have trusted business-savvy acquaintances read your executive summary and invite honest criticism. If you are looking for funding test your plan out before submitting it. Make an appointment with funding agencies and organisations to pitch and invite feedback – use the input to improve your business plan.

Remind yourself about why you are passionate about your business, what you can bring to your customers and why you’re different. Now convey this powerfully and simplistically. Watch the video at the end of this article to get started.

Related: Business Plan Tools


 

Andre-Deiderichs-Old-Mutual-Business Plan AdviceIt is imperative to assess other business models in your industry. From this you need to extrapolate, devise and fine-tune a practical business model that will work for you. Individualise it with your own personal stamp that will differentiate it from others, while keeping in mind that it needs to be workable and not merely an impressive plan in theory.

–  Andre Diederichs: SMME Specialist at Old Mutual (International Financial Services Group)

Why this matters:

One of the factors that contributes to start-up failure is a founder’s ignorance of the factors that influence their chosen industry. You need to understand how your business will function every day. In other words, how will you make money? Explain how you will reach and acquire customers, cost structures, profit margins and how you will generate revenue. Entering

What you should do about it:

Research how other companies in your sector function. What processes do they follow to get their product to the right customers and what can you learn? You might even find ways that you can innovate and change things up. Here are examples of four basic business models.


 

Peter-Jones-Dragons-Den-Business Plan AdviceMake it clear and concise and include hard facts. Think maximum impact and minimum fluff. Reveal your passion, drive and determination plus a clear snapshot of your business. Know your market, your figures and forecasts and the risks involved. Be aware of competition and be able to provide evidence to support your claims. Get to know your figures inside out.

– Peter Jones: Entrepreneur & Dragons’ Den Pannelist (Reality Business TV Show)

Why this matters:

If you are unable to convey your business idea clearly and conscisely it is unlikely that your target market will understand your message or value proposition.  Strive for simplicity when you convey your ideas in your business plan and be armed with the research to back up your claims and assumptions.

What you should do about it:

Do “the mom test”. Explain your business idea to your mom, if she doesn’t “get it” in 60 seconds go back and rework it until it is clear and easy to grasp.

Have a reason for all your facts and claims. List your sources in the plan to demonstrate a thorough understanding of the road ahead. Here’s a competitor analysis example you can use.

Related: Apps To Help You Write A Business Plan


Nadine-Todd-Business-Plan-AdviceThe financials can enhance or harm your business plan’s chances in the capital-raising process. By doing the research to develop realistic assumptions, based on actual results of your or other companies, the financials can bolster your firm’s chances of winning investors.

Nadine Todd: Editor Entrepreneur Magazine (SA’s top read business publication)

Why this matters:

Figures can seem a bit intimidating but they are very important when you make your business plan. Whether you are bootstrapping or approaching an investor you need to be able to plan, project and prepare for all expenses.

What you should do about it:

Don’t thumbsuck your numbers, investors have a good idea of what’s realistic. Dig deep so that you can answer any questions that are thrown at you. If you are not comfortable with spreadsheets and calculations, rope in the assistance of a professional accountant. More on how to prepare the numbers in your business plan here.


Doug-Richards-School-for-Startups-Business Plan AdviceWriting a business plan isn’t that difficult. There are hundreds of templates around, and hundreds of others have been written that you can examine for reference. Once you’ve written it, you can hire an editor to help you clean it up so its easy to read and makes logical sense.  

– Doug Richards: Founder of School for Start Ups (Entrepreneurial Education Centre)

Why this matters:

There are loads of great templates you can use when creating a business plan. Just be sure to make it your own and specific to your business otherwise it’s not going to be much use to you.

What you should do about it:

Download a business plan template here, customise it and give it someone you trust to read in order to get feedback.

If you are making a plan specifically for funding, approach the funding organisation/s first and request their template – most funders have specific requirements for the contents and layout of the plans access.

Related: Free Business Plan Template Download


Martin-Feinstein-Enablis-Business Plan AdviceThe biggest mistake people make is to oversell – they want to tell the whole story in the first meeting. Don’t. Tell just enough of the story to show that you know what you’re talking about and are going to make it work, with or without the investor. When you’ve pitched enough to intrigue the listener, stop talking and let them think and ask questions. You want to be at an intersection, not going down a one-way street.

Martin Feinstein: Chairman of Enablis (Entrepreneurial Development Network)

Why this matters:

Many entrepreneurs tend to overthink things once they get a meeting with an investor. Let your business plan do the in-depth talking while you give the bullet points in an oral presentation. Effective selling is as much about listening as it is about speaking. Know when to talk, and when to be quiet and listen.

What you should do about it:

Prepare and practice your presentation! Show investors that you’re confident, passionate and knowledgeable but don’t ramble on about irrelevant details.


Andre-Deiderichs-Old-Mutual-Business Plan AdviceYour marketing plan should include a sales strategy, advertising strategy [pamphlets, signage, media advertising, PR etc], promotional strategy etc. Marketing represents a client or customer’s holistic view of your business. It is therefore of paramount importance not to ignore your marketing processes.

Andre Diedrichs: SMME Specialist at Old Mutual (International Financial Services Group)

Why this matters:

Sales means money and money is important to investors so they need to know what your projections are. Marketing is there to assist sales so it’s important to note what your plan is.

What you should do about it:

Give a brief explanation of how you will be pushing your marketing message and why so that potential investors have an understanding of how you will be backing up your sales efforts.


Tim-Berry-Paolo-Alto-Business Plan AdviceSet a schedule to review your business plan and revise it at least once a month. Understand that it becomes obsolete in weeks.

Tim Berry, Founder Paolo Alto Software (The world-leading business plan software company)

Why this matters:

Goals, markets and processes change and your plan should to.

What you should do about it:

Treat your business plan as a ‘living’ part of your company. Here’s how you can monitor your progress using your business plan.

Casandra Visser is a Digital Marketing & Content Strategist and writes for Entrepreneur Media SA.

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Business Plan Advice

Writing a Business Plan May Not Be Your Idea Of Fun, But It Forces You To Build These 4 Crucial Habits

These key habits will allow you to grow a stronger, more profitable business.

Dave Lavinsky

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The average entrepreneur reacts to the term “business plan” with distaste, seeing it as a necessary evil when starting a business or seeking funding.

While the process of documenting your plan might not be enjoyable, the results you can get from it can be, as numerous studies have shown a direct correlation between a written business plan and a company’s success. Equally as important, creating your business plan forces you to build many good habits.

Goal setting

Your business plan forces you to set goals. You need to forecast what your sales will be this quarter, this year and in five years.

Related: The 3-Step Approach For Testing Out Your Business Idea

Creating goals is the first step to achieving them. And when you create them in your business plan, you are forced to support them. Specifically, you must explain how you will achieve those goals. Who must you hire? What type of marketing promotions must you implement? While you may not ultimately follow all the strategies outlined in your plan, you will assess multiple options and determine the best path to follow.

Goal setting clearly yields superior results than entrepreneurs who “fly by the seat of their pants.” Getting in the habit of setting annual, quarterly and monthly goals will help your business grow.

Focus

The biggest fault of most entrepreneurs is that they lack focus. They start down one path, learn of a new idea and then pursue that new path. This is rarely a strategy for success. Rather, it typically results in multiple “partially built bridges.” Importantly, 100 partially built bridges are worth nothing, while one fully built bridge could be all your business needs to be successful.

Your business plan forces you to focus. It does this most specifically in the “Milestones” section. In this section of your plan, you should document what your milestones are by month for the next three months and by quarter for the following four quarters.

Once you have these milestones documented, you’ll gain the habit of judging all new ideas with regards to whether they’ll more effectively allow you to attain your milestones. If they will, then pursue them. If not, table them so they don’t distract you.

Figuring out your unique qualities

personal-unique-qualities

I tell entrepreneurs to start their business plans with two succinct messages. The first is a clear definition of your business. That is, what it is that you do. This is important since if readers can’t clearly understand what kind of business you’re in, they’ll stop reading.

The next key message is to explain why you are uniquely qualified to succeed. The answer to this question varies. For instance, maybe your management team has incredible experience. Or you have patented intellectual property. Or you have unique relationships with customers or partners that your competitors don’t. Or market trends have shifted and now require an approach upon which only your company can execute.

Related: The Business Plan Is Dead

If your company is not uniquely qualified to succeed, then at the first sign of your success, you will have lots of competitors and nothing to keep customers from flocking to them.

That’s why in creating your business plan it’s not only critical to think about why you are already uniquely qualified to succeed, but what can you do in the future to cement that position. For instance, should you seek patent protection? Would hiring this person allow you to gain an unfair advantage? And so on.

This is an important habit to form. You should always be thinking about why your company is unique and how to make it more unique, particularly if competitors are gaining on you.

Getting others excited to join you

A great business plan doesn’t only document your goals, milestones, action plans and unique qualifications, but it gets the reader excited. The comparison I tend to use here is between an automobile’s brochure and owner’s manual.

While an owner’s manual tells you every key detail about a car’s features, it is boring and not something anyone reads for pleasure. Conversely, the car’s brochure has cool pictures and sells the car’s best features.

While your business plan needs detail, it should be more like the brochure then the owner’s manual. It should get readers excited. You get them excited not by giving them boring industry statistics, but giving them statistics that prove why your company will be successful. You get them excited by showing how your management team has unique qualifications. And how your past successes make you likely to achieve future success.

When your business plan gets others excited, you can use it to raise funding, and gain customers, partners, board members and virtually anything else you need.

This is yet another important habit to form. You should constantly be getting others excited about your business, as this can prompt your long-term growth.

So, next time you sit down to work on your business plan, realise that in doing so you’re building key habits that will allow you to grow a stronger, more profitable business.

Related: Apps To Help You Write A Business Plan


Download your free business plan template here

business-plan-template-300x350Free Business Plan Template Download

This article was originally posted here on Entrepreneur.com.

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Business Plan Advice

The 3-Step Approach For Testing Out Your Business Idea

Here’s how to learn the most from your potential customers and get honest feedback.

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Let’s say you wake up one day and decide the world needs a better mop, and you’re just the person to make it. Before setting out, you interview prospective customers. “Are you looking for a better mop?” you ask someone. The person searches his memory for all the times he’s wrestled with a mop or hated the smell of it, and he ignores the fact that most days he doesn’t care about his mop and can’t even remember the last time he used it.

The hits, not the misses, fill his mind. “Yes,” he tells you. “I am looking for a better mop.” You’re thrilled to hear that and go off to design it. Eight months later, with $20,000 of R&D money invested, you come back and ask him to buy it. “Nah,” he says. “I’ve already got a mop.”

What happened there? First, something psychologists call “confirmation bias.” It’s the tendency to look for information that confirms your beliefs and ignore what doesn’t. And second, “positive test strategy,” when we consciously or unconsciously ask questions that generate answers supporting our beliefs.

These phenomena working in tandem make us feel more reassured, self-confident and driven, but they also create traps for entrepreneurs and prevent us from getting good, honest feedback from our customers.

Related: The 10 Best New-Age Business Ideas You Haven’t Heard About Yet

Fortunately, they can be overcome. Here’s a three-step approach.

1Replace assumptions with hypotheses

ab-testing

Make a list of all the assumptions you have about your customers – their price points, pain points and preferences. Now reframe them all as hypotheses. For instance, if your assumption is that customers want more options to customize your product, your hypothesis is that if you offer more customization, revenues will increase.

If you think customers will buy more of your product at a lower price point, your hypothesis is that if you lower the price, customers will buy more product more frequently.

And if you think investing more in social media will improve customer loyalty, your hypothesis is that by spending a portion of every day responding to customer comments online, you will drive up your retention rate.

2Test the hypotheses

This might be through interviews, surveys or A/B testing.

For that customisation hypothesis, you could create an A/B test on your website: Some customers will see customisation as an option, and some won’t. Do the customised offerings sell better?

For the price hypothesis, set up exit interviews with 20 customers who didn’t buy your product. (Email programs can be set to ping people who go through a sales sequence without buying.)

Was price their chief reason for bailing? And finally, for your social media hypothesis, track each customer who was engaged on social media to see if they buy more frequently than the average customer.

Related: 10 Business Ideas Ready To Launch!

3Ask better questions

If you do surveys or interviews, be careful not to ask leading questions. If you ask a customer, “Was price a large part of your decision not to buy?” they are more likely to say yes. Price is always a factor, but it’s not always the factor.

To get at the factor, let your customer fill in the blank. Ask, “What was the biggest factor in your decision not to buy?” Then she might answer, “The delivery window was too long.” Now you know where to put your effort.

When you let your customers lead you to the truth, it will allow you to set aside your own flawed assumptions and answer their needs better. That way, they’re happier, and you’re not stuck with a warehouse full of unwanted mops.

This article was originally posted here on Entrepreneur.com.

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The Business Plan Is Dead

We are living through the most disruptive period in our history.

Matt Brown

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We are living through the most disruptive period in our history. One only needs to consider companies like AirBNB, uBer, WhatsApp and Tesla to understand how quickly established companies can become disrupted by new entrants into the market.

The reality is that if your company is going to survive in today’s digitally enabled economy, your company needs to adapt to a plethora of new market pressures, increasing disruptive competition and a customer which is becoming increasingly harder to reach.

The New (Current) Reality

No business is immune. The reality is that the world is moving off a linear trajectory and onto an exponential one. Take the advertising industry for example, since the 1970’s it has been enjoying a steady linear growth but then, in the early 2000’s digitisation and connected networks suddenly exploded the number of distribution channels for traditional advertising networks.

evolution-of-media

Related: Why You Should Scrap Writing That Business Plan And Become a Lean Start-Up

There are three key drivers of the evolution of media.

  1. Consumer pull: Consumers, and particularly Generation C, are already fully adapted to the digital environment
  2. Technology push: Digital technology continues to penetrate all aspects of our lives. We are after all living in the fourth industrial revolution. Tech has never been more affordable, but the capabilities of our technology (take cloud computing for example). Has exponentially increased.
  3. Economic benefits: The economic benefits to be captured through digitisation are real. The freelancing market in the UK contributed GBP 109 billion to the UK’s GDP last year, that is more than the entire automotive industry combined. The ability to scale at a fraction of the cost has seen a wave of capital being poured into new digitisation technologies, and the public markets reward early movers with unprecedented valuations.

The Business Plan Is Dead

craig_mullett_matt_brown_show

Business plans are often cited as the first thing an entrepreneur should write for a start-up, but no business plan has ever survived the realities of the market.

I recently interviewed Craig Mullett, the President of the Branison group about this exact fact. Craig has invested in hundreds of start-ups and went so far as saying: “If a start-up has more than one tab on the spreadsheet for its planned commercial model it’s way too much.”

The current business environment is changing so rapidly that even established businesses are suffering from ever increasing changing market and as a result these dynamics are putting proven business models under increasing pressure and duress.

This manifests in things like declining revenues, loss of market share and increasingly, exposure to new disruptive competitors that are not constrained by organisational inertia and arthritic corporate structures.

A startup is well positioned to take advantage of this for several reasons, but by the time a business plan has been written for a market that market in most cases has changed to such a degree that the assumptions and strategy defined in the business plan has already become irrelevant.

Related: 6 Questions Your Business Plan Must Answer

Why Start-ups Need a Business Case

The highly-regarded entrepreneur Brad Feld has this to say:

Today, it’s clear to me that business plans for start-up companies are a historical artifact that represented the best approach at the time to define a business for potential investors. In the past decade, we’ve shifted from a “tell me about it” approach (the business plan) to a “show me” approach (the Lean Startup). Rather than write long exhaustive documents, entrepreneurs can rapidly prototype their product and get immediate user and market feedback.

Agility and the adoption of lean product development methods has all but replaced the need for a 30-page business plan. From an investors perspective, the key requirement of a business case is to table a view on a potential market opportunity at a product level.

Ideally, a problem or opportunity that is sizable and lucrative and based on that problem/opportunity it needs to define and demonstrate how a single action and strategy will solve that problem.

The business case should also predict cash flow results and the non-financial impacts that follow from the action and the execution of the strategy. A business case, unlocks the ability of an entrepreneur to get to market quickly and to disrupt the speed and frequency at which value is created.

The StratLab For Start-ups

With the business plan being past its prime, Digital Kungfu has developed a unique methodology that incorporates the best of aspects of a business plans while speeding up the process for a startup to disrupt a traditional market.

Our process, forced entrepreneurs to think through critical assumptions and strategic drivers about their business and helps them to the key strategic elements necessary to achieve success.

The StratLab workshop helps entrepreneurs gain a basic understanding of what they are getting into before the rubber hits the road and empowers them with a new process of thinking and new way to articulate the value that a start-up will create in any market.

The business environment is constantly changing. The start-ups that will succeed are the ones who have a clear strategy that is designed to make them #1 in their market and which positions them for exponential growth in the future.

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