Here is the second post in my series about planning, pitching, and launching a new business venture. In partnership with Microsoft and Office Web Apps, I’ve created a Word document that outlines a good business plan. It’s saved to my SkyDrive folder here. Feel free to download it and use it as inspiration. And if you’re working with a partner, you can use the free Word Web App to stay in sync.
I provided the PowerPoint document before the Word document because a good business plan is an elaboration of a good pitch as opposed to a good pitch being a distillation of good business plan. You should give your pitch a few times to see what works. Change the pitch to make it better and then write your plan.
Think of your pitch as an outline, and a business plan as the full text. (How many people write the full text and then write the outline?) The more you pitch, the better your outline and the better your outline, the better the plan. After you perfect your pitch, then start writing the business plan. At a high level, here are some tips for writing an enchanting business plan:
1. Write for all the right reasons. Most people write business plans to attract investors, but most venture capitalists have made a “gut level” go/no go decision during the PowerPoint pitch. Receiving (and possibly reading) the business plan is mostly a mechanical step in due diligence. The more important reason to write a business plan, whether you are raising money or not, is to force the management team to solidify its objectives (what), strategies (how), and tactics (when, where, who). Even if you have all the capital in the world, you should still write a business plan. Indeed, this may be especially true because too much money usually causes sloppy and lazy thinking.
2. Make it a solo effort. While creation of the business plan should be a group effort involving all the principal players in the company, the actual writing of the business plan–literally sitting down at a computer and pounding out the document–should be a solo effort. Ideally the CEO should do it because she will be pitching, defending, and implementing it.
3. Put in the right stuff. Here’s what a business plan should address: Executive Summary (Overview), Problem/Opportunity, Unfair Advantages, Sales and Marketing, Competition, Business Model, Forecast, Team, and Status and Milestones. In other words, this is the same list of topics as a PowerPoint pitch. If you were extremely articulate, you could theoretically transcribe your pitch, and you’d have your business plan.
4. Focus on the executive summary. True or false: The most important part of a business plan is the section about the team? The answer is False. The 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.
5. Keep it clean. The ideal length of a business plan is twenty pages or less, and this includes the appendix. Many people believe that the purpose of a business plan, like a PowerPoint pitch, is to create such shock and awe that investors are begging for wiring instructions. They are wrong. The purpose of a business plan is continued due diligence with activities such as checking personal and customer references. The tighter the thinking, the shorter the plan; the shorter the plan, the faster it will get read.
6. Write deliberate, act emergent. I borrowed this from my buddy Clayton Christensen. When you write your plan, act as if you know exactly what you’re going to do—in other words, act deliberate. You’re probably wrong but take your best shot. However, writing deliberate doesn’t mean adhering to the plan in the face of new information and new opportunities. As you execute the plan, you act emergent—that is, you are flexible and fast moving and change things as you learn more about the market. The plan should not take on a life of its own.
Again, here is my template for an enchanting business plan. You’ll see that the template is very similar to the tips in the PowerPoint document because, again, your business plan should be a derivative of your PowerPoint pitch. I appended tips for each section in the Word document, so that you can write an enchanting one.