Call them unfashionable, long, unread, or boring, business plans are still the main way to communicate what your company stands for to banks, potential shareholders, buyers and general stakeholders. However, business plans’ bad reputation is usually unjustified.
It stems from the many hours it takes to write them, the fact that they are obsolete by the time they are finished, and the general confusion about their purpose and meaning.
On the other side – and this is something that everybody that wrote a business plan can tell you – the exercise of writing them helps you and your team focus on the actual, core business. Customer identification, personal revenues and costs projections, and also the company vision and mission, are not only identified and clarified by the exercise of writing them in a business plan but also enriched. If you are writing the business plan for your startup, keep in mind that putting all your thoughts on paper in an ordered manner will help you spot both business opportunities and flaws in your current model.
What’s more, justifying the assumptions you make while you write your business plan, will inevitably help create a stronger case when you defend your company’s goal and mission to external parties such as investors and major stakeholders.
How to write a business plan
Let’s get this out of the way. Too much has been written about it so here is a list of the top resources on how to write a business plan:
– Sequoia made a clear and concise outline of what a business plan contains together with what is included in every section
– How To Write A Winning Business Plan from Harvard Business Review
– A Business Plan For Startups is a step-by-step worked out example of writing a business plan for a startup
There are many ways of presenting you business plan, whichever you choose, make sure it is tailored to your audience and it isn’t too complicated for them to understand.
We have previously blogged about estimating market size and making financial projections, which could be a useful foundation for writing a business plan.
Now that we’ve covered the basics it’s time for the interesting bits. How to benefit the most from the exercise of writing a business plan and what are the things to look after in order for your business plan to be compelling, interesting, and realistic.
Identify your business purpose
This is the first and most important element of the business plan, and probably of the company as a whole. Each company is started with a purpose -a problem that needs to be solved, a new way of tackling a challenge, a vision of the future that needs to be accomplished, a need that has to be met.
If you are not sure how to put your purpose in writing, I suggest talking to your customers and employees. We have discovered that customers can best identify the need that your product is fulfilling for them.
All in all, the clearer your purpose is, the more defined, the more crystallised it is, the easier it will be to write your business plan.
Side benefits:
Having a clear business purpose will also help align employees, collaborate with people that really stand behind it, raise capital and increase productivity. Fast growing, established companies usually have an extremely defined mission from a very early stage. The ever recurring activity of writing it down (of which business planning is just a fraction), helps sharpen it.
The purpose shapes and defines your business mission. While the mission can be more speculative and revolve around an ideal, the purpose is the reason for the company to exist.
Example:
Mission: Give people the power to share and make the world more open and connected.
Purpose: Create a platform where people can connect and share everything that interests them
Hint: this comes from Facebook
How does this help in writing your business plan?
Plan a strategy to fulfill the purpose
Simply put, your business plan revolves around your business purpose. Once the purpose is set and it is as clear as it can be, it is time to create a plan (or strategy) that allows the company to achieve the purpose in a short amount of time and by bearing as little risk as possible too.
Take the strategy of Tesla:
– Create an expensive electric sport car
– Use the money and knowledge and brand awareness to create a more affordable electric sedan
– Use the money and knowledge and brand awareness to create a cheaper utility vehicle
– Achieve the purpose of bringing electric cars to the world
The strategy is always planned backwards (from the purpose) and explained forwards, to make it more understandable and credible. More about the details of strategy planning and communication here.
Side benefit:
Writing your strategy as part of a business plan will help you be accountable for it. It is quite easy to state that the company will dominate a certain market or launch a certain product in a year. Writing it down crystallises it, makes it more certain and allows you to break it into smaller objectives or milestones to achieve. It also puts employees and management into a goal achieving mode, which is essential for the success of the company.
Craft a story
Communication of your business is the main goal of the business plan. Any form of communication can be measured by how much of what has been said is retained by the listener. And stories help us with that. Before paying attention to the logic of your business plan, a reader will subconsciously scan it for interest. The presence of a narrative will engage him/her at an emotional level that will help their logical brain to stay focused and retain more information.
Granted, long boring business plans are prone to a lack of interest from the reader. But it is our job to try to prevent this as much as possible.
The inclusion of stories, facts, and compelling – more emotional – elements definitely helps on this side.
But the story element can and has to be taken a step further. The whole document is indeed a narrative on its own and, for maximum effectiveness, it should be treated as such.
All compelling narratives and good stories have 4 things in common:
- Great stories are practiced – your business plan should be adopted according to who your audience is. In addition, your business plan is never static – it changes as quickly as every day, so keep your documents and presentations updated.
- Great stories have structure – you need to take your audience on a journey and keep them engaged and entertained. Try to insert a narrative arc within your plan, where you can clearly spot the beginning, the middle and the ending. For instance: in the beginning there was a problem, an issue, a lack of something on the market, your company filled that gap and is currently bringing value to customers.
- Great stories have context – this is how you convince the readers of your business plan that your company is special. Try to answer the questions: Why are you relevant now? What makes you different? Be sharp and use current information on the market.
- Great stories have inspiring protagonists – this is the moment as a manager or founder to show how confidence in the company. While writing and presenting the business plan you have to portray determination to succeed and motivation to keep working for the future of the company. This is the only way to inspire trust in your own capabilities and the mission and vision of the company.
Side benefits:
Creating a compelling narrative on a document such as a business plan will make you analyse the story aspect of your business, allowing you to improve other presentations, marketing materials or sales decks accordingly. Everybody is biased towards stories, and your company deserves the best one.
Make sure your story has RIBS
As the narrative mentioned above is crafted, your various sections of the business plan should be taking shape. How to make sure that they are interesting and solid? Caryn Marooney, Head of Technology Communications for Facebook, suggest the RIBS framework – the story as a whole and each of its parts individually should be:
– Relevant – give only up-to-date and sound information. Make every assumption explicit.
– Inevitable – at the end of your business plan your reader should be convinced that you are the only solution to consumer problem
– Believable – to increase credibility mention what other companies offer similar solution and explain what makes your product different and better.
– Simple – include in your document simple and specific points that will stick with the reader long after reading your business plan.
These four characteristics insure that your final document and its parts are going to be understandable and leave an impact on the reader. You can read more about the details of the RIBS communication here.
Side benefits:
Leaving a long lasting impression on readers, viewers, buyers etc. is always a tough challenge. Being able to craft an inevitable, relevant and believable story in a simple way is the holy grail of communication.
Do not make it dull
As discussed, the activity of creating a business plan is not only not dull, but it has strong side benefits that help you and your team to work out a very large number of important issues. If you write your document with this idea in mind, it will not only be better for the reader and thus for the success of your business. It will also be an activity that strengthens the vision of the company, the team and the strategy.
Embrace the exercise as the most exciting thing you can do. In the end you are planning the future of your company! You are envisioning how it will bring positive change to the world, and you are doing this with the best business partners and people that can make it happen.
If you do this, not only it would be one of the best uses of your time, but it will reflect on the reader, making your plan stand out from a pile of grey, dry documents.
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