This is the second article in a series of two. Whereas the first article focusses on what business plans are and why you need one, this second article elaborates on the characteristics of a good business plan. And in the third one, finally, we will discuss the sections to go in it – and what should go into each one…
A business plan isn’t just a document for you. It’s the way you’ll showcase your idea to investors and other stakeholders. So make it specific to the opportunity, and tailor it to your company. No two business plans are the same. But there is best practice you can follow. Good business plans generally share these five characteristics…
1. Clear and concise
The first job your business plan has to do is convince a potential investor, partner or other stakeholder to read it. So the structure of it needs to be logical and easy to navigate – and the content needs to be interesting and easy to understand.
Remember, the person reading your business plan may have little to no knowledge of your business or the sector you operate in. So keep your language simple and avoid technical terms. Make sure you explain everything clearly.
As well as being clear, your business plan should also be short – we recommend a maximum of 20 to 25 slides. Be mindful of your audience’s time – use short paragraphs, headings and bullet points to make it easy for readers to find the information they’re looking for and don’t fill pages with information that’s not relevant.
As well as being concise, your plan needs to be specific. Focus on what you want to achieve and how you’re going to get there. Spend time answering key questions, such as: What is your business there to achieve? What need are you addressing? Who are your target customers – and how will you get them to understand and buy into your idea? You also need to be clear about the key assumptions your plan is based on – and how you’ll adapt it if one or more of them changes.
Set out what you want to get from your plan and what you see the next steps being – whether it’s securing investment, finalising deal a deal with a partner or getting your management team to invest time and resource. Remember, your call to action should be practical, realistic and specific.
Your business plan is designed to help you achieve a goal. This means it needs to be as accurate as possible. There’s no point in only talking about positive outcomes if there are potential obstacles to consider.
So before you start setting out your plan, take a step back and assess your idea objectively. What are the opportunities – and what are the risks? What does your research say? Be completely honest about how viable your idea is and be transparent about your data and where it comes from. Being completely accurate at this stage will help you and your potential partners as you start to implement your plan.
A business plan is a living document that has to work in a real business environment. To be useful, it has to be grounded in evidence and research. So rather than only relying on business theory, take a practical approach too. Desk research on your market can be useful. But in today’s uncertain, volatile world, field research – including speaking to customers, testing products or services in action and interviewing key stakeholders – is vital. It shows you’ve really thought through and evaluated your idea.
Your plan should also consider the context you’re working in. A general model might be impressive in the classroom – but you may need to adjust it for your marketplace. Ground your plan in real-world information and experience and it will become a much more useful document.
Ultimately, you want your reader to remember you and your business opportunity once they’ve finished going through your plan. Design your plan in line with your brand’s visual identity to make it stand out. And keep it short, interesting and absolutely relevant. Don’t be afraid to present it as a story.