A continuation of our ‘Start your Own Business’ series, In an extract from his book in Sunday Business Post 25/4/2010, Starting a Business in Ireland, Brian O’Kane continues on with advice on writing your business plan.
Very simply: you.
No one else. You may receive offers from consultants, many of them highly reputable and professional in their work, to write your business plan for you.
They will quote their extensive experience of business, of raising business start-up capital, of presenting financial information – all valid points and, in many cases, true.
However, whatever experience consultants may have of business in general – and drafting business plans in particular – they lack one essential ingredient: your intimate relationship with your business.
You are the one who has spent your waking hours – and many of your sleeping ones, too – dreaming, planning and guiding your tender and frail creation to this point.
You know what makes you tick, what makes your team tick and what will and won’t work for you.
Only you can assemble these thoughts. Therefore, the first draft of the business plan is your responsibility. Do it yourself because you must have a business plan which is personalized to your needs. Refine and redraft it – again, and again, if necessary – until it’s finished. Then – and only then – should you entrust it to someone who can put the right gloss on it. But let them do only that. Don’t let them put their words on your pages.
How long should it be?
How long is a piece of string? Your business plan should be as long as it needs to be – no longer and no shorter. How long is that? No one can decide that, except you. It depends on your business plan purpose which you are preparing for, the level of knowledge that likely readers will have and the complexity of your business. It’s important to know how a financier reads a business plan.
Few businesses can be done justice to in fewer than, say, ten A4 pages; equally, it will be a dedicated reader (or one who has spotted an outstandingly good business proposition) who will continue past the first 100 pages or so.
If readers want more information, they will ask for it. But make sure they don’t have to ask for the information they should have had from the start – or, worse still (and sometimes fatal to your hopes of raising finance), that the absence of the information doesn’t lead them to discard your plan altogether.
Too many figures and your plan may become off-putting; too few and your plans will simply be treated as ambitions without any underlying substance.
Quantify as much as you can. Your plan is likely to be read by people whose currency is numbers. You help your cause by talking their language. Make sure figures add up correctly. Nothing is more worrying to an investor than the suspicion that you can’t handle figures or there’s a figure wrong or missing – or worse still, hidden.
You need to be able to show the existence of a market for your product, and some indication of its size, in a way that can be verified independently. You will also have to prove to the satisfaction of the bank manager or investor that adequate margins can be achieved to cover cashflow needs and meet repayment of debt or growth objectives.
Don’t clog up the body of the business plan with detailed statistical analysis, although it must contain all the information a reader needs. For example, quote the proposed sales target, but show how you will achieve it at the back in an appendix, and explain the underlying assumptions there also.
The same applies to the CVs of key employees: mention crucial information where appropriate in the plan, but put the details in an appendix.