To construct an effective and more accurate business plan, it helps to understand how the experts — such as investors and bankers — evaluate business plans.
The first section of the plan read by most experts is the Executive Summary. This should be a one-page summary of all of the key points in the plan. It is not an outline or an introduction written to get the reader's attention.
For example, when addressing the financial aspects of the plan, summarize expected profits and revenues, and tell the specific amount of money you are seeking in loans and investments. Although it is the first section that is read, it should be the last section you write. A good approach is to capture in one sentence the main point of each section of the finished plan.
Experts next look at the consistency between the marketing plan and revenue forecasts.
Even though the marketing plan is usually toward the front of the plan and financial statements at the very end, these experts will go back and forth to make certain that your sales forecasts are consistent with the story you are telling in the marketing plan. The link between the marketing plan and revenue forecasts is the backbone of any business plan.
Developing a sound marketing plan starts with extensive research of the industry, the competitive environment, and your potential customers. Do your homework. Identify the key trends in the market. Understand the weaknesses and the strengths of your competitors.
Learn how your potential customers think. Use all of this information to develop a strong and compelling marketing plan to explain how you will engage your customers.
Show them the money
Next, shift your attention to forecasting revenues. The story the marketing plan tells in words should be the same story that the revenue forecast tells in numbers.
Take your time. This is probably the hardest step of writing a plan if you do it correctly. Revenues are the simple formula of "Price times Quantity." However, the price and quantity of your sales are the two most uncertain issues you will face in your planning.
Save the money you would have spent on the latest business planning software package and then treat yourself to dinner when you finish writing the plan the correct way.
House of Meetings by Martin Amis
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