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To write or not write a Business Plan? Now that is a Question!

 

I have been active in the UK business start-up scene for some years having composed 3 business plans for start-ups seeking £100-£250k in funding.  Two were for training businesses and one was for a location-based smartphone application.

 

Recently I had the opportunity to respond to a question from another start-up founder who was looking at preparing a business plan, but did not want to invest too much time preparing it in too much detail.  His problem however was that he wanted it to be all things to all people - an Elevator pitch; a PR deck; a reference point for the Founders; an Investment document.

 

Here is my response:-

 

Firstly, decide who your audience is for your business plan.  In your question you refer to it being an Elevator pitch; a PR deck; a reference point for the Founders; an Investment document.  Each of these are different documents with different purposes.

 

Quite rightly you don’t want to start investing considerable time building a fully comprehensive business plan, if that is not what is needed.  My advice would be to first build a Pitch Outline that will succinctly describe your start-up offering.  Ideally this will be no longer than 1 page covering the following topics:-

 

  1. Customer Problem – what is the problem you are trying to solve
  2. Your Solution – how you are going to solve it
  3. Business Model – what are your revenue streams
  4. Competitors – who are you competing against
  5. Your Team – what is your experience, and who makes up your team
  6. Investment Funding – how much money do you need – in return for what equity – and what is your exit strategy

 

If you can articulate all this then you have the basis for your Elevator pitch and PR deck (probably in PowerPoint); an Executive Summary followed by full Business Plan.

 

Next I recommend you create an Executive Summary around 4 to 6 pages long covering the following topics:-

 

  1. Title Page
  2. Executive Summary – outlining your product and/or service (0.5 page), including 1 or 2 sentences that very succinctly describes your product/service and is what you would say in 10 seconds if I asked you what you do.
  3. The Product and/or Service – description of what you have to offer the market and how it works.
  4. The Marketplace – who are your customers and what is the value of the market you are entering.
  5. Competition – who are you competing against and why you will succeed where they are not.
  6. Go-to-Market Strategy – what is marketing and social (if applicable) strategy.
  7. The Numbers – a summarised 3 to 5 year Sales Forecast, P&L and Cash Flow showing consolidated figures for 1st  and 2nd 6 month period of 1st Year plus years 2 to 5.
  8. Milestones – demonstrate what key tasks, activities and objectives need to be meet by what dates during the first 12 months.
  9. Management Team – a summary of the resumes of the Founders and other personnel supporting you.
  10. Operational Plan – detailing your recruiting strategy and how you are going to keep costs down until revenue / bank balance goes cash positive.
  11. Non-Executive Directors / Advisors – a summary of the resumes of the Non-Execs and Advisors supporting you.
  12. Start-Up Funding Requirements – what money you need; for what purposes; can it be provided in tranches against meeting milestones?; what equity will be given in return for the money.
  13. Exit Strategy – a summary of your exit strategy.  Will it be a trade sale and to whom, or public offering. What is the P/E ratio over 3 to 5 years and how does this compare to your competitors.

 

This should be enough for you to start generating interest in your start-up, however once you need to actively solicit funding then you will almost certainly have to build a comprehensive business plan to demonstrate a thorough understanding of your market; your offering; your competitors; your strategy; your experience; your financial understanding.

 

My business plans typically run to about 60 pages in length plus financial forecasts (Sales Forecast / P&L / Cash Flow / Balance Sheet / Personnel Growth).  All research / reference material is compiled and maintained separately for anyone that wishes to review it.  I normally use Palo Alto’s Business Planning software to create the basis of my business plans and financials, however it isn’t very good at formatting, so I export it to Word and complete it there.

 

Feel free to call me if I can be of further assistance as I can provide some example templates to you.

 

Regards … Gary