5 Tips for Writing a Better Business Plan

By: Eric Powers Click author's name for more of his/her articles

A successful business plan is one which convinces funders that the entrepreneur has both a good idea and the means of executing it. These tips will guide you towards creating a plan which will achieve just that.

Be As Clear As Possible

The language and ideas used within the plan should be as clear as possible. Complicated terms and wording do not make the plan seem more sophisticated, but, rather, make it more difficult for the variety of funders who will consider it to read. Any unusual terms you must use should be defined in the plan.

Have a Basis In Research and Data

A good plan bases its content in research and real data rather than the guesses and gut feelings of the entrepreneur. The sources of this data is shown to make it clear where information is from, so that readers do not assume it was made up by the writer.

Seek Strategic Fit

There should be a fit between the nature of the market opportunity (the industry, the competitive situation, and the customer demographics and needs) and the strategy and tactics chosen. The tactics should not always be the default for the industry if there are reasons to act differently. Furthermore, promotional methods should be chosen that are specifically expected to work best, rather than giving a long list of options to choose from.

Acknowledge The Cons and Counter With The Strategy

If there are drawbacks to any of the ideas in the plan, these should not be ignored. Rather, the problems should be specifically mentioned along with the methods to deal with the problems. This answers the questions of readers before they can even ask them.

Be Neither Too Conservative Nor Too Aggressive

The plan should be relatively conservative in its projections, out of the range of potential outcomes for the business. However, for investors to want to invest or for lenders to feel comfortable making loans, there must be profit in the business to make it a worthwhile endeavor.

Winning Business Plans Are Like Stories

A winning business plan tells a story to funders about the business in question. Like any good story, the plan must be captivating and interesting, providing more within its pages than first meets the eye. Rather than being a story of the past, a business plan is just as much a story of the future, describing how the business will operate, act, and succeed over the coming years.

Exposition

The plan begins with exposition, setting the stage for the business. This includes introducing the players, such as the founders, customers, and competitors. This also must include describing the market situation in detail, wherein a clear problem for a customer group will be presented. This problem, arises from an unsatisfied need for customers and the inability of current businesses and options to satisfy that need. This problem creates the market opportunity your business will act upon. The industry analysis, customer analysis, and competitive analysis sections offer this exposition and background.

Action

The action of the “story” is the future plans of the business, detailed in the marketing, operations, and management plans. Marketing is the first step, as customers must be reached with the product or service through a combination of promotion, pricing, distribution, and branding. The operations plan explains the functions the business it will need to execute on a daily basis and how it will grow over time. The management team description details why the founders are qualified to lead and what their specific responsibilities will be. Together, these sections show a focused, competent business which moves forward decisively to take advantage of the market opportunity spotted and to find future opportunities.

Climax

If there is a climax to the story for a funder, it is in the financial projections. Assuming the opportunity is attractive, the strategy is in place, and the qualifications of the founders are appropriate, funders will expect to see returns which more than compensate them for the risk of investing in or lending to the company. Returns to funders may be shown through interest payments, dividends, or the growth in value of the company leading up to a strategic sale. The financial plan must provide narrative to show what these financial results will be and the financial statements must support these words with numbers.

Article Source: ABC Article Directory

About The Author: Eric Powers is associated with Growthink, a business plan consulting firm. Since 1999, Growthink's business plan writers have developed more than 2,000 professional business plans for entrepreneurs and business owners who have raised more than $1 billion in growth capital. Call 800-506-5728 today for a free consultation with a professional business plan consultant.