Being a corporate financier then I read quite a few business plans. Their quality varies substantially. Well prepared, professional business plans stand out from the crowd. They explain the value proposition clearly, evidence assumptions, answer key questions and provide comfort on execution. A few reasons for poor plans are jotted below, along with some guidance and actionable steps ...
1. LACK OF PREPARATION
Issue: Value proposition is poorly defined.
Symptoms: Concept hard to understand or lacks focus. Execution concerns (too many distractions).
Recommendation: Express value proposition in terms of What (product), Who (customers), How (execution, such as operations, marketing). Often negative definition (areas deliberately not progressing) is as important as positive definition (areas progressing). Simple, clearly defined value propositions are both easier to execute and attractive to investors.
Actionable steps: Explain business concept to your mother, or better grandmother. Practice 30 second elevator pitch. Express business in one sentence. Prepare one-page executive summary.
2. POOR PRESENTATION
Issue: Documentation appears unprofessional.
Symptoms: Key issues are hard to find or grasp. Content is repetitive and vague. Lack of evidence.
Recommendation: Often poor presentation in business plans masks two independent issues (a) lack of preparation (see above), plus (b) poor document preparation skills.
Actionable steps: (a) see comments above, (b) Obtain management team input, read good business plans and learn MS Word styles/charts/tables functionality (all relatively simple but powerful). Alternatively, depending on business size and circumstances then, seek professional assistance.
3. LOW CREDIBILITY
Issue: Questionable ability of team to execute business plan.
Symptoms: Market assumptions and/or financial forecasts are not believable. Dismissal of potential competitors.
Recommendation: Revisit value proposition. Clarify benefits, target market.
Actionable steps: Undertake primary and secondary research. Obtain feedback from prospective customers and investors. Evidence key market and financial assumptions. Strengthen team as appropriate.
Comments