I’ve worked with several people needing to write business plans. Since their needs differ, and on-line business plans tend to be canned, there is sometimes confusion as to what to write, how much detail to go into, etc.
When teaching the Business Planning Seminar to MBA students I learned that when people create a new business they are enamored with their product or service – and thus want to emphasis the features and benefits of the product/service rather than focus on their actual target audience.
So, let me start by saying that there are multiple purposes for writing a business plan and each of these requires a somewhat different approach – although much of the same information.
1. You need to start with a road map for yourself and your team. This is a basic business plan you develop to help you move forward. It doesn’t have to be pretty and it doesn’t need all the fancy marketing words. It’s an internal document – and of course it changes as your business grows. It can be as short or as detailed as you need it to be – but it is the guide for you and your internal founding team.
2. You are asking family and friends to support your idea by investing with you. Here you are making a combination business and emotional appeal. It is probably more the emotional appeal – about you and how hard you will work to make this dream come true – that that they care about and respond to – but they also want to see some sensible financial projections.
3. You need a more formal business plan with financial projects for the bank when applying for a loan. The bank is primarily interested in two things: Your ability to repay the loan and your equity, which might be your business assets – or even your home.
4. You are starting a non-profit because your goals are to help your fellow man in some particular way. You are not planning to make a profit, to go public, etc. So, you cannot make any re-payment promises, or profit-sharing. Instead, you are promising to do something that others can donate to (donations, fund-raisers, grants) that will help humanity and appeal to their emotional interests as well. Thus what you focus on is the manner in which your services will “do good.”
5. You are seeking early stage investors – or angels. These savvy people care less about your product/service than they do about your ability to execute on the promises you make. They want to know Who is your team – what are their prior successes and how well can they work together? They also want to know what’s in it for them if they invest with you. Do not spend most of your time excitedly sharing the wonderfulness of the new product/service you are developing. You need to “sell” that aspect, but quickly. Your primary focus needs to be answering the question: “What’s in it for me (the potential investor?)”
6. You are attempting to sell your company. Now it is important to share the value the brain power of your group offers. Why not just steal your product? Why buy the company itself? Because, of course, your team and staff are smarter, cleverer and more creative together than if they would be split up. That’s your primary selling point. Yes, it is true that having some proprietary secret sauce helps too.
7. The ultimate goal of too many people in my opinion: going public. Here scalability becomes the key to exciting venture capitalists. Can you scale up so you are selling millions and billions of people – and make money doing it?
As you can see, the focus changes when your target audience shifts. Your executive summary should be geared primarily to your targeted audience. Yes, you need the competitive analysis, the operations, the team, the marketing, the finances, etc…. but the emphasis is where you shift depending on your audience.