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Brick No33: How to start your business plan
By Matt Weston, Friday 16 January 2004 On Tuesday, I showed you how to get your idea across in just a single sentence – your Elevator Pitch. Today - using this same Elevator Pitch idea - I'd like to share with you my own approach to structuring your business plan: one that I've developed myself with the would-be investor very much in mind. If you can't get your message across on the first page of your business plan, you won't get the funding you want. I think of business plans like I do CVs, demo tapes and newspaper adverts: – If you respond to a job ad, you're vying with hundreds of other applicants (I remember once advertising for an assistant and getting almost 500 replies for the job). If your cover letter doesn't wash, your CV will go in the 'No thanks' pile – If you're a budding musician, your carefully put together demo tape (usually five or six songs) will be in a pile with thousands of others. If the first 30 seconds of your first song don't grab his or her imagination, the record exec will press eject – And if you place a classified ad in a newspaper, you're competing with hundreds of other offers. If the headline doesn't provide a hook that appeals to your target audience, the rest of the ad won't get read It's the same with business plans. Banks and other outside investors (such as public bodies, Venture Capitalists and Business Angels) receive a huge number of start-up business plans every week: their job is to sift the diamonds from the dust. It's a cruel world - and the reality of it is that many business plans get filed away or even binned before the reader has turned the first page. The most important part of your business plan The only page you can guarantee will get read is the first - so if you don't capture your reader's attention and imagination on the first page, your business plan won't be successful. Yet the traditional approach to writing a business plan just doesn't tackle this. I've read dozens of books on the subject, and have yet to find one that really acknowledges this. Fair enough: almost everyone now agrees that you need to start your plan with what has become popularly known as an 'Executive Summary' (a one or two page synopsis of your plan). But almost every business text states that you should write your executive summary last of all, even though it appears at the start of your plan. Even the Sunday Times Business Plan Workbook (otherwise an excellent resource) doesn't touch on the Executive Summary until page 309 of 376): 'Obviously, the executive summary can only be written after the business plan itself has been completed' I couldn't disagree more. When you're writing your business plan, I think you need to start at the start (you can always update it later if you need to). The most important part of your business plan is the first sentence, followed by the first page. If you can't capture your prospective investor's attention quickly, you're running uphill. A Simple, 4-Step Structure The purpose of your business plan is simple: to prove to your reader that your business idea will work. Because of this, I suggest the following simple structure: (1) Elevator Pitch (maximum three sentences) (2) Executive Summary (1 or 2 pages) (3) Main Body (as short or long as it needs to be) (4) Appendices Your Elevator Pitch is the big idea (1 minute reading time); your Executive Summary proves to your would-be investor that your big idea is viable (5 minutes reading time); your Main Body supports the claims made in the Executive Summary; and your Appendices support the Main Body. And don't be scared of being upfront: actually entitle the first section 'Elevator Pitch' - bank managers, VCs and Business Angels know exactly what that means. It has to grab the attention. Have confidence: be proud of your Elevator Pitch, be clear about what your business idea is, and what you want from your reader. Again, I strongly advise you to write your plan in a top-down order, not in reverse. As I've said, you can always tweak your Elevator Pitch and Executive Summary at the end. It's impossible to write your Executive Summary without knowing what Elevator Pitch it is that you're trying to justify; and it's equally impossible to write your Main Body without knowing what Executive Summary you're trying to support. Just as with CVs, demo tapes and classified ads, you need your business plan to stand out. Bringing your simplest, strongest message to the forefront will help you do just that. Many great businesses (and bands!) have failed to get out of the starting blocks simply because they didn't understand this. Remember to sign up: back to top |
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