Sales & Marketing
Top tips to writing a business plan
7 min read
09 July 2013
Your business plan can make or break you. How do you write a great business plan? From start to finish, here are our top tips on putting together a killer business plan.
What do investors look for in a business plan? What should you – and shouldn’t you – include in your business plan?
When you’re preparing your business plan to be presented on slides, VC-guru Guy Kawasaki says the key is adhering to the 10/20/30 rule: a PowerPoint presentation should have ten slides, last no more than twenty minutes, and contain no font smaller than thirty points.
“If you must use more than ten slides to explain your business, you probably don’t have a business,” says Kawasaki.
The basic structure
Pete Hendrick, the entrepreneur who set up Rocket PR in 2007, says before you even start writing your business plan, there are three ingredients you can’t do without: a great product or service, a talented team, and cautious optimism. “These are the three elements needed for a perfect business plan.”
Dave Breith, the founder of the £24m telecoms firm O-Bit Telecom recommends you focus on sales. “Lead with sales in the plan, especially if you’re a startup. Everything is led by this.”
If you want a cheat-sheet of how to organise your business plan presentation, Kawasaki suggests the following ten slides for your business plan:
- Your solution;
- Business model;
- Underlying magic/technology;
- Marketing and sales;
- Projections and milestones;
- Status and timeline; and
- Summary and call to action.
But remember, keep the presentation under 20 minutes and to the point: you’re trying to convince people to give you money and invest in your ideas – not to award you a doctoral thesis.
You don’t always have to give a PowerPoint presentation either, as Jos White, co-founder of Notion Capital, suggests. “A CEO who can pitch their business without slides, perhaps with an opening preamble and then some whiteboard sketching supported with a few handouts, such as financials, is very compelling if they can really put it off.”
White says the important thing is to get your message across. “Potential investors hear from lots of people with very similar pitches and are generally busy people with short attention spans. You’ve got to be ruthless with cutting down your pitch to make it stand out. Detail can come later – the first meeting is about hitting hard with your top two or three messages and being remembered.”
Details count… but so do summaries
Rob Wilmot, the serial entrepreneur who co-founded Freeserve – and now a director at BCS Digital – gets a lot of people asking if he can look at opportunities for investment. What does he look for?
“I usually make up my mind after looking at just two things: the executive summary and the P&L forecast,” he says. “If I can’t grasp the concept from the summary, I’m usually gone. I look out for a well articulated summary that tells me what I can expect to get out of my investment.”
The best business plan summaries, he says, are those that have been kept to one side of A4 with bullet points.
But he adds that the numbers in your business plan are also key. “I need to see where the money I’m going to invest will be spent, and how it’ll create value in the company.”
He says investors don’t like seeing money they invest go to existing salaries. “I need to see that I’m investing in growth. Bolster success, don’t feed failure.”
Hendrick says you should avoid focusing on revenue alone, though. “The most basic metric for business success is profitability, not revenue. Your business plan goal should be a profit figure but also – depending on your industry – a percentage operating profit of margin.”
“At the end of the day, there’s no stronger business plan than one where you let the numbers do the talking. But keep it simple, if you over-complicate your business plan, you’re asking for trouble.”
Your business plan isn’t just a one-trick pony
Once you’ve written your business plan, try to keep it up to date – it can become a key management tool.
After using your business plan to raise finance and sell your idea, update the business plan regularly. You can use it to increase sales, enter new markets, evaluate your strengths and weaknesses, and much more.
“Don’t be afraid to go back and update it,” says O-Bit’s Breith. “You don’t have to sign it in blood, and changing circumstances will necessitate changes.”
Your business plan has to be seen as a blueprint to your business’s future, so you should adapt and review your business plan regularly.
“As a rule of thumb, you should revisit your business plan on a quarterly basis, or even more frequently if you’re seeking finance,” says Gary White, corporate finance partner at CBHC LLP.
“The more banks and third parties understand about the business – how it works, what the market is like, where the company derives competitive advantage, etc – the more likely they are to offer support.”
Business plans aren’t state secrets
Finally, why not let your employees in on the business plan? It can help provide clarity to your business and keep staff motivated, knowing what they’re working towards.
“I can’t understand why so many senior managers want to keep it a secret from their staff,” says Stephen Wright, CEO of the Institute of Sales & Marketing Management. “The usual justification is ‘what if the competition gets hold of it?’, but if the competition emailed over their business plan to you, would it make that much difference?”
It’s true: the risk is minimal compared to benefits your business could gain. All but the most disaffected staff are interested in the future of their organisation, so letting them in might help you achieve those goals.