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How to Write A Winning Business Plan.
The winner takes it all.
How to Write A Winning Business Plan.
The winner takes it all.
Many business plans written for investors reveal a naivete by the business owner.
I have seen too many who expect an investor to just hand over the money for the CEO to spend as he or she sees fit.
There seems to be a consequential disconnect between the cash investment and the cash return expected by the investor.
I have then seen other CEO’s who do not even have a developed sales plan connecting what they are selling with the needs of the market. They fail to plan for why someone might buy their product or service and have no clear understanding of how they might find their customers or the processes involved in developing a sales pipeline and nurturing those prospects until they become customers.
So, what does the winning business plan look like?
1. It’s Clear and Simple to Understand
There needs to be a clear description of the product or service on offer and written in a manner that even a non-technical person can easily understand what the product is and why someone would want to buy it. Too often this description is hidden behind technical jargon which means that the investor is unclear what is the product or service.
2. Clear Communication
There needs to be a clear communication of the market which the product or service is aimed at. Why it meets a market need, who the competitors are, why the product is better than the competition, and how the sales process will work to obtain customers. This communication is very important as any investor’s confidence will be determined by how effectively you communicate the answers to these questions.
3. Financial Forecasting
There needs to be an underlying financial forecast from which you can show that you have understood all your costs and the relationships between the cash implications of the ramping up of sales, associated cost of sales, and the timing issues around customer and supplier payment terms. This section will need to have worked through a series of scenarios to ascertain the most optimum forecast. It is also important to understand and show the implication of deviating from the selected sales forecast.
4. Timescales
If the product or service requires capital investment, then the timescale for this to be undertaken and the cash flow implications for the new product or service to be available will require more investment before sales can commence. This raises the costs of the project and the timescale before the business becomes cash positive. The plan will need to provide explanations for this work and reassurance that there is confidence in the management team’s ability to deliver.
I have seen too many who expect an investor to just hand over the money for the CEO to spend as he or she sees fit.
There seems to be a consequential disconnect between the cash investment and the cash return expected by the investor.
I have then seen other CEO’s who do not even have a developed sales plan connecting what they are selling with the needs of the market. They fail to plan for why someone might buy their product or service and have no clear understanding of how they might find their customers or the processes involved in developing a sales pipeline and nurturing those prospects until they become customers.
So, what does the winning business plan look like?
1. It’s Clear and Simple to Understand
There needs to be a clear description of the product or service on offer and written in a manner that even a non-technical person can easily understand what the product is and why someone would want to buy it. Too often this description is hidden behind technical jargon which means that the investor is unclear what is the product or service.
2. Clear Communication
There needs to be a clear communication of the market which the product or service is aimed at. Why it meets a market need, who the competitors are, why the product is better than the competition, and how the sales process will work to obtain customers. This communication is very important as any investor’s confidence will be determined by how effectively you communicate the answers to these questions.
3. Financial Forecasting
There needs to be an underlying financial forecast from which you can show that you have understood all your costs and the relationships between the cash implications of the ramping up of sales, associated cost of sales, and the timing issues around customer and supplier payment terms. This section will need to have worked through a series of scenarios to ascertain the most optimum forecast. It is also important to understand and show the implication of deviating from the selected sales forecast.
4. Timescales
If the product or service requires capital investment, then the timescale for this to be undertaken and the cash flow implications for the new product or service to be available will require more investment before sales can commence. This raises the costs of the project and the timescale before the business becomes cash positive. The plan will need to provide explanations for this work and reassurance that there is confidence in the management team’s ability to deliver.
5. Experience and Capability
The experience and capability of the management team will be scrutinized as they will be responsible for the delivery of the plan. The investor must be confident in the management team’s ability to deliver their plan.
6. Scale-up
Most business plans by implication include a need to scale the business in order to create a business that can be sold a deliver the returns to the investors and the management team.
7. Tax Smart
Most UK investments have a strong element of being tax-driven and the proposal should be EIS or VCT compliant in order to make it appealing to UK based investors. Overseas investors are will have different requirements and this should also be taken into consideration.
When you need expert advice and are serious about getting investors, our team is ready to assist you.
The experience and capability of the management team will be scrutinized as they will be responsible for the delivery of the plan. The investor must be confident in the management team’s ability to deliver their plan.
6. Scale-up
Most business plans by implication include a need to scale the business in order to create a business that can be sold a deliver the returns to the investors and the management team.
7. Tax Smart
Most UK investments have a strong element of being tax-driven and the proposal should be EIS or VCT compliant in order to make it appealing to UK based investors. Overseas investors are will have different requirements and this should also be taken into consideration.
When you need expert advice and are serious about getting investors, our team is ready to assist you.
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