Business Plan: The Executive Summary

By Andrew Smith | June 30, 2009

Now, or in the near future do you need to secure serious business funding?

 This may be from a bank, from investors or maybe from a well-heeled potential shareholder.

If the answer is yes then please read on.

Let’s start with the basics

I’m making the assumption that you have a Strategic Business Plan or an Internal Business Plan.

 In other words, you are clear on the purpose and direction of the business. And you have a system of action plans or a roadmap to get you from where you are now, to where you want to be.

 If you don’t have a good workable plan of this type, then this should be your first priority.

 Elsewhere in this blog are articles on how to do this. If you are short of time, the simple 100 day plan might be an attractive option.

 Back to getting the money  

To persuade someone to invest or lend you money, you should prepare a document that investors call “An Information Memorandum”.

 This is typically a 10 - to 30 page document that provides information on what the business is all about, the amount of money you are seeking and the risk/reward information needed for an investment or loan decision.

 The very critical part

Most Information Memorandum documents are never fully read. Many are instantly dismissed. The reason for this is because the Executive Summary did not ‘hook’ the reader.

Financially successful people are usually busy people. They like business proposition to be presented to them in a clear and concise way.

If you can prepare an executive summary that instantly grabs an investors attention in the right way, you are well on your way to success.

It was my intention to provide you with a series of tips to help you achieve this. But here’s a much better way.

Frank Peters is a very experienced angle investor in Southern California. As well as his own personal angel investment experience, he gained a wealth of experience as Chairman of the much admired Tech Coast Angels http://www.techcoastangels.com/

 On his website, Frank has published what he calls his irreverent Guidelines for Executive Summaries. http://www.thefrankpetersshow.com/attachments/ES.pdf

 This is a gem - straight from the horse’s mouth. Follow this and you will be far ahead in the race.

Andrew Smith
The Business Plan Guy

Topics: Business Plan Tips & Ideas | No Comments »

Business Planning: The 100 day plan for 2009 (Part 3)

By Andrew Smith | May 31, 2009

Let’s start with a quick refresher.

 The purpose of your 100 day plan is to have a simple and speedy way to reorganize or refocus your business or organisation.

 In Part 1 of these articles, you learned how to start the process of getting clear organized thinking by creating a brief Vision document.

 This document answers the number one strategic question: “What would my/our business or operation be like if it was *functioning* effectively.

 In Part 2, we started a process of smart solution simplification. As mentioned, for your 100 day plan to be effective, it must be simple enough for all concerned to fully understand.

 To begin this, you were asked to identify just two or three priorities from all of the vision goals that you identified.

 Next, you were asked to name or describe the “Solutions” or “Processes” that would be needed to achieve the vision goals you have named.

 At this point, let me stress it is not necessary that you know how to do the needed action steps.

 So Step 1 and Step 2 are very *WHAT* focused. Not how focused.

 The “how-to” solutions

Finally, it’s now time to handle the “how-to” action steps for your 100 day plan.

 Because doing the action steps is a step that trips up many, let me explain the logic that I suggest you follow.

 Know or not-know
I’m going to suggest that 90% of all of the action plans that you will need to create, come into just two categories:

  1.  You know how to do what’s needed
  2. You don’t know the how-to action steps

 The other 10% is likely to be: “I think I know some of the action steps, but lack some skills or knowledge for taking effective action. In other words, it’s a combination of the two categories mentioned above.

 So here is how the action plan system works.

 Select one of the “Solution” requirements you identified in Part 2

  1. Make a decision as to whether you are, or are not, confident on the required how-to action and implementation steps.
  2. If you do understand what need to be done, do this:Make a numbered list of the required action steps. Beside each action steps, note the name of the person who will perform the task and the desired or required completion date.
  3. If you *do not* know how to achieve the selected goal, do this:Make a list of the steps that you (or a team member) will take to:
    (a) Learn how to perform the needed action steps - or
    (b) Delegate or outsource this requirement - or
    (c) Seek help from friends or business associates - or
    (d) Investigate the feasibility of this goalAgain, for the selected action option, note the name of the person who will perform the task and the desired or required completion or decision date.

 As you can see, this procedure puts you and keeps in control. If you understand the situation, it’s simple and straightforward.   

 If it’s a requirement that’s beyond your knowledge or skill, this method gets you into “plan the next part of the plan” mode.

 If you have any questions or suggestions for other planning related articles, I can be contacted at Andrew(at)apt.co.nz

 Andrew Smith

The Business Plan Guy

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Business Planning: The 100 day plan for 2009 (Part 2)

By Andrew Smith | April 30, 2009

In Part 1 of this article, I covered the first part of your 100 day business plan. The focus was on functional vision.

In other words, it was about you getting clear on what your business would look like and be like if it were functioning effectively.

 The next logical step in your 100 day plan is to be able to answer the question: “how will I (or we) make this happen?

 In this post I will show you a simple way to design the “how-to” section of your 100 day plan. So this is about strategy, or to be precise strategy design.

Simplification

The first strategy tool I need to show you is the art of simplification. I believe that simplification is the ultimate form of sophistication.

Remember, this is a 100 day business action plan. Simplicity is essential. If it’s going to work, it has to be simple for you (or your team) to understand and do.

So here is what you need to do.

Step 1.

In Part 1 of this article, you prepared a one or two page document that:
(a)  identified the important key functions that are the basis of how you operate or do business. Marketing and financial management were mentioned as potential examples.
(b) described what it would look like or be like if these functions were working effectively.

Your first step in the making it happen process, is about setting some priorities. You can’t do it all at once. If you spread yourself too thinly, you will surely fail.

So do this.  

Carefully read through your one or two page vision document (from Part 1). Then select just two or three vision goal that you believe would move your business forward.

Only you will know what these should be, but let me repeat a couple of examples vision goals I gave you in Part 1:

Example 1: “We have a great understanding of what our customers want in terms of value for money.”

 Example 2: “We are able to relate well to our clients and describe the benefits or our services in ways that motivates them to buy.”

Again, let me remind you to keep it simple and just go for two  or three functional improvement goals. In you next 100 day plan you can select another two or three for the making it happen process.

Step 2.

Take a fresh sheet of paper. At the top, give your page the title: “100 Day Plan - Making It Happen Solutions”

Next list your two or three selected vision goals. Start with the words “Our selected focus goals for this 100 day plan are:” (then list your selected items.)

Step 3.

Your next task is a simple one.  All that is required is that you name or identify the solutions you will need to address each chosen goal.

So let me show you by example. Here is what your page might look like:

————————————————————

100 Day Plan  -  Making It Happen Solutions

Our two selected functional improvement goals are:

1. We have a great understanding of what our customers want in terms of value for money.

2: We are able to relate well to our clients and describe the benefits or our services in
ways that motivates them to buy.

Making It Happen Strategy

For goal number one, we will implement a “Customer Survey Process”.

The purpose of this survey will be to better understand our customer’s perceptions
on value for money as they see it.

For goal number two, we will implement a “Client Relationship Plan”

The purpose of this plan is to:
(a) Establish ways that we can better get to know and relate to the 20% of customers
that provide the bulk of our income.
(b) Engage a professional copywriter to translate our products technical features into
simpler customer benefit language that is more likely to stimulate sales.

 ————————————————————————————————————————-

As you can see, all this one page document needs to do is:

(a) List the improvement goals that you have selected to work on
(b) Name (or describe) the process or processes or solutions that you believe will be needed to bring about the improvements required.

As well as naming the solution, it is a good idea to write a brief “purpose” statement for each solution process. This starts to clarify your improvement intentions.

If you have trouble naming the solution required for a particular goal, all you need to do is write the goal or a shortened version of it and add the words “Solution Process”.

So for example goal 1 “We have a great understanding of what our customers want in terms of value for money” - you could call this:

“The understanding of what of what our customers want in terms of value for money solution plan.”

In other words, just add the words “solution plan” to the goal.

Now this may seem a gross simplification to you, but I promise it will still work.

What about the action steps?

In Part 3 of this article, I will, show you how to translate any solution plan name into simple action steps that you can do.

Andrew Smith

The Business Plan Guy

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Business Planning: The 100 day plan for 2009

By Andrew Smith | March 30, 2009

 Over the past couple of years, the 100 day plan has become my most requested service. It’s a great tool to quickly instigate a business transformation process.

 And, in these current economic choppy waters, it’s a great way to quickly refocus or reinvent a business that is no longer viable in its current state.

 So in response to several emails, here is a “do-it-yourself’ version.

 This 100 day plan is suitable for:

The first two steps are vision focused. To be able to move forward, you need to get clear on what your business or organisation would need to “be like” to survive and thrive in this new economy.

Step one: Make a short list of the major “functions” or processes that are the basis on how you operate or do business. Typically, these might be marketing, service delivery, human resources (or team), financial management and administration etc.

 Keep it as simple as possible by focusing on just the major functions. Look to identify the three to seven functions that are the fundamentals or workhorse of your business or operation.

 Step 2: Get a clean sheet of paper.  Select the first function from your list. Then write a paragraph or two that describes what it would look like and be like if this part of your business was operating very effectively ? in the current economic climate.

 Very-very important. This is a “WHAT” exercise, not a “HOW-TO” exercise. Do *not* write down any ‘how-to’ methods or solutions. Keep your descriptions result, outcome or performance related. Keep in mind, you are creating a “Vision”. A business operation vision.

 For example, for your Marketing Function, you may say something like: “We have a great understanding of what our customers want in terms of value for money.”

 Or you might say: “We are able to relate well to our clients and describe the benefits or our services in ways that motivates them to buy.”

 At this stage, it is not necessary that you know how to do this. The how-to solutions will be worked on later. Your job at this stage is to understand what excellent operational competency would look like for your particular business type.

 Repeat this procedure for each of the major functions you listed in Step 1.

 If possible, see if you can keep this to a one page Vision Document. Two pages would be the maximum.

On completion of these two steps, you should be able to answer the “Number One” strategic question: “How would I/we know if our business was operating successfully?”

In part 2 of this blog post, I will show you a simple way to manage all of the “How-to” solutions.  

Andrew Smith

The Business Plan Guy

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Business Plan Templates – good choice or bad?

By Andrew Smith | February 28, 2009

I frequently get questions about business plan templates. Here’s a part of a recent email I received. 

“I want to write a business plan. The option that appeals to me most is using a template. It seems to me that this is a good way of not reinventing the wheel. What is your opinion on using a business plan template?

So here is my reply.

Hi Jerry, before I can answer that question properly I need more information. But to save time, here is a pre-prepared response that I have on file.

Business Plan Templates – good choice or bad?

The first thing you need to get clear on is purpose. In other words, why do you want to create a business plan, what do you want the plan to achieve?

To help answer this question, you need to get clear on what type of business plan you need to create.

Broadly speaking, there are two types of business plans.
Type One: The first is the kind that you might take to a bank or potential investor. Its purpose is to persuade someone to lend you money or invest in your business.
Type Two: The second is essentially an internal plan. It’s a business success blueprint or business direction roadmap. Its purpose is to effectively convert ideas and goals into good decisions and smart action steps. If it’s a good plan, you will always be clear on what you need to do next; on your pathway to success.
If you would like more information of this topic, see my previous blob post at

http://thebusinessplanblog.com/writing-a-business-plan-avoid-this-frustrating-mistake/

TYPE ONE:
Now if your need is for Type One, and you have really got your business act together, then a business plan template could be a good tool to prompt you for the right information. If your not sure what “getting your business act together” means, checkout the link above.

But there may be a better way for you!

Consider this. If you know who or whom you are going to approach for finance, do some quick research. See if you can find out – what is their criteria for lending money or providing a grant.

If you know this information, your business plan or financing application can be better targeted than a generic business plan template.
TYPE TWO:
If the purpose of your business plan is to get your business operation organized and positioned for success, a business plan template may be a bad idea.

Here’s why.

The success or otherwise of your business will be greatly impacted by three major factors.

The first is your vision or passion. What you seek to achieve and why it’s important. Developing clarity is this are is vital. Particularly in this challenging new economy. This should be goal number one of your business planning process.

The second is your ability to put in placed the processes and systems that can turn your vision into practical reality. Designing these systems and processes should be the number two priority of your business plan.

The third and vital factor that you must come to grip with is what I call “The Making-It-Happen plan. Time and time again, business plans are created only to die on the shelf. To succeed, you must be a leader and take charge. The Making-It-Happen process needs to be a daily priority for you, the business leader.

Now I think you will find that a business plan template would be a poor substitute for some common sense and effort on your part.

This blog is totally dedicated to enabling people like you to be able to plan for business success. Take a look at some of my other post for topics that can help you achieve your business goals.

Andrew Smith
The Business Plan Guy

Topics: Uncategorized | 1 Comment »

Business Plan – How to make better decisions in an economic downturn

By Andrew Smith | January 31, 2009

For so many reasons I hate and try to avoid using any jargon.

 However, this one is so valuable, I’ll make an exception.

 The word or term is “Fundamental Attribution Error.” It’s psychology jargon, and it is likely to be very relevant for you in these challenging economic times.

 I’m not a psychologist, but let me give you my understanding of what Fundamental Attribution Error is - as I got it from a psychologist. Particularly as it is relevant to your business decisions.  I promise to use simple language.

 Making Good Decisions
It goes without saying, that decision making is a major factor in just about any form of planning. Bad decisions can be hard or impossible to correct with diligent actions.

 So what does Fundamental Attribution Error have to do with decision making?

Everything.

 We make business decisions based on what we believe to be the truth or the real situation. In other words, we make choices based on our conscious understanding of an opportunity or problem or situation etc.

 Now here’s where it get interesting (and dangerous).

 In simple terms, our conscious awareness comes from what we see and hear - and two other sources. The two other sources are imagination and memory.

 At present, your conscious awareness is coming from information being transmitted to your brain from what your eyes are seeing on your computer screen or a printed page.

By some incredible miracle, you brain is converting a pattern of dots or pixels on a computer screen or page into meaningful information.

 Now this is a big simplification, but let’s considers what happens when you see something or hear something.

 One part of your brain recognises patterns i.e. letters, words, numbers. And I think you will agree, we can usually do this with a high degree of accuracy. If I’ve made a typo error (which I often do), you will likely recognise the pattern error.

 Then - and this is the interesting bit, another part of your brain gives meaning to the data or information being received.

 This is where your accuracy can go to hell!

 When your brain interprets or puts meaning to what you see, hear, imagine or remember, something else occurs. Your brain applies filters.

 Your brain takes into account your emotions, beliefs and past experiences etc. This step can enhance or distort the raw information being processed by your brain.

 In some situations, your brain can completely filter out certain sights, sounds and memories etc. If you want more on this, do a Google search on “Reticular Activating System”.

 Back to plans, decision making and Fundamental Attribution Error.

 Fundamental Attribution Error is when your brain gets it all wrong. It distorts information to such an extent that you make choices or decisions that in hindsight or the cool light of day are wrong.

 Here’s an example. Last week, I was talking to a client, let’s call him Joe.

 Joe told me that because of the current economic conditions, he had decided to suspend the planned release of a new product.

 As the conversation continued, I noticed that he was getting quite emotional and a little irrational. It occurred to me that his decision to cancel his product release may have been questionable.

 After a bit more discussion, I asked him get out pen and paper and work through a simple four or five step procedure. (I have listed this procedure for you below).

 Later that day I got an email from Joe.

 As it turned out, there was only one factor was likely to impact this specific product release. And all that was required to address this factor was the addition of one paragraph in the distribution agreement.

 The product lunch is now progressing.

 What does this mean for you?
If you have to make important decisions, consider this procedure:

 Make a list of what has changed that will or could impact your situation.

For each item, indicate the importance with an number between 1 (low and 10 (high)

Then, for each item indicate the likelihood of the event occurring. Same scale 0 = very unlikely, 10 = very likely.

For each item/issue, multiply (3) by (4). This will give you a weighted impact factor. If you add up these numbers, you have a weighted decision factor.

If the consequences of this decision are important, show your assessment to other people for comment. Preferably people will knowledge and experience in the issues involved

Now this procedure is still open to errors, but it should help you avoid the damage or consequences of Fundamental Attribution Error.

 

Andrew Smith

The Business Plan Guy

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2009 Business Planning and the Importance of the Big Picture

By Andrew Smith | December 30, 2008

Bottom Line: If you are making important business decisions in these challenging economic times, always consider the big picture. Making knee-jerk reactions to economic fears may cause you to shoot yourself in the foot.
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Ben’s Story
In October I had an email from a client I’ll called Ben. Ben wanted some advice on updating his business plan for 2009.
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What he had in mind was some major changes to handle the current economic downturn.
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Ben’s company provides specialised electronic equipment and services to the building industry. They have been in business for about eight years.
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In a telephone conversation I learned that the proposed changes involved dropping several low or no profit products and services. The advice he was seeking was on how severe he should be with his cutbacks.
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At a first glance, Ben’s thinking seems logical and appropriate for these times of economic uncertainty. However, there was another factor that it appeared Ben was not taking into consideration. A factor that I was surprised he did not mention.
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I suspect that economic fears were getting in the way of common-sense decision making.
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Background
For the past two and a half years, Ben and his team have been developing and introducing some very specialised products and services. Their strategy was based on being able to better solve some industry problems that their competitors were not competent or cost effective at providing.
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This strategy had had its ups and downs. A plus factor was that it got them into several high end building contracts. Some of these have developed into very worthwhile business relationship.
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On the down side, Ben and his team had underestimated the time and cost it takes to develop and promote new problem solving approaches.  Thus cost recovery was a slow process.
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Another down side was that three of their ‘work-in-progress’ development projects still require considerable time and cost before they were marketable.
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My Suggestion
My suggestion to Ben was to take a big picture approach to responding to current economic conditions.

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I suggested he make up a spreadsheet list of products and services that should be vetted for retrenchment. I also suggested that all work-in-progress developments be included in this list.
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Next I suggested that he create two additional columns in the spreadsheet. One for a “Profitability Rating” i.e. Low, Medium or High. The second column I suggested he name “Opportunity Factor”. The purpose of this column is to indicate the likely value of other business that this product or service could attract.
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In other words, what I suggested to Ben is that is that he thinks about a bigger picture when making profit and loss decisions. In management circles they refer to this as a “Strategic Switch”. It’s about using longer term strategic thinking rather than short term (knee-jerk) tactical thinking.
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I’ll update you on Ben’s decisions and outcomes.
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Conclusion
Next time you are under pressure to make important business decisions,  pause for a moment and use some brain power to consider the big picture consequences.
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Andrew Smith
The Business Plan Guy

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Business Plan: A smart way to set and organize your priorities

By Andrew Smith | November 30, 2008

Establishing intelligent priorities is a critical part of any good business planning process.
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However, the task of making these priority decisions can be

challenging, And open errors - sometime very serious errors.
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So here’s a way to both simplify the process - and reduce the

opportunities for making mistakes. It’s a systems approach,
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The Old Way
Traditionally, decisions are frequently arrived at by providing an

answer to the question “What are our top or ‘A’ priorities?”
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This can lead to several forms of confusion and poor judgement. The more options you have, the greater the chances are of making poor priority decisions.
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Change your thinking
So is there a simpler/better way? I believe there is . . . and here’s

how it works.
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The Five Steps
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Step 1. Make a simple list of the priority options you currently have.
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Step 2. Read through your list and select the items that are of lesser

importance for the next month or so.
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Mark these item ‘C’ priorities.
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A ‘C’ priority is an item that you can safely delay taking action for

the next 30 days.
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You may also have some items in your list that are important, but can’t

be actioned until some other preparation or preliminary event has

occurred. These are also likely ‘C’ priority candidates.
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Step 3. (Now this next step may seem radical, but bear with me. It’s

the essence of a simplification process.
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So do this:
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Temporally, mark all of your other priorities to a ‘B’ classification.

That’s right. Make *every* other item that is not a ‘C’ priority a ‘B’

priority.
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So at this point you are absolutely forbidden to have any ‘A’

priorities. This is the business equivalent of tough love.
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“But, but, but, . . .” I can hear you saying.
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Trust me for a moment, I promise common sense will prevail.
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Before I continue, let me define what a ‘B’ priority is. A ‘B’ priority

is an item you can or should take action on – if you have *spare*

resources available (time, money, materials etc.)
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Step 4. This is where you get to differentiate your important stuff. Do

this.
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(a) Scan through all of the items that have a ‘B’ priority.
(b) Any item that you think is or could be an ‘A’ priority; upgrade

it to a ‘B+’ priority. Important – do *not* make any of them ‘A’

priorities.
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Step 5. Scan through all of your newly created ‘B+’ priorities and

upgrade just two or three of them, to ‘A’ priorities.
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I strongly recommend that you keep your ‘A’ priorities to two or three.
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If your track record of getting thing done is poor, you may wish to

consider have just one ‘A’ priority ant a time.
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Managing your priorities
As you complete an ‘A’ priority, you can then choose a new ‘A’ priority by reviewing your ‘B+’ candidates.
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So you now have a living priorities system.
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As you will recognise, this is a bottom-up method of establishing

priorities.
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It simplifies the selection of true top priorities by filtering out all

of the lesser important issues.
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Andrew Smith
The Business Plan Guy.

Topics: Business Plan Tips & Ideas | No Comments »

Survival Plus Business Planning – Tomorrow’s Business Successes Are Being Planned Now!

By Andrew Smith | October 31, 2008

In the past, most business planning is directed towards successful growth or expansion.
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However, for many the current global financial situation has changed this. For many, the focus of the latest business plan is just about survival.
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While the logic of this is understandable in the short term, I would urge readers to go beyond just survival thinking. Some types of survival thinking can actually create more problems than they solve.
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The alternative I would suggest is “Survival Plus”.
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The “Plus” factor is about looking for the opportunities that a change in circumstances presents. Let me explain.
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For many, business will never be the same. So survival tactics can only go so far. The great opportunity for you is to take the lead and start thinking about what your type of business will need to be like in the future.
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Then start planning on the changes you would need to make to start being this success business of the future.

Here are some ideas for your “Survival Plus” business plan
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What systems will you need to create to learn about what your customer’s new goals and problems are?
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How will you go about converting this information into new products and services?
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How will you position your changed or reinvented business?

How will you present and communicate your new business model to your customers or clients?
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How will you measure and asses your new business strategies?
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How will you keep the business development momentum alive?
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I’m happy to respond to any questions or comments you have on this topic

Andrew Smith
The Business Plan Guy

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How to prepare a simple and powerful strategic business plan in one day (Part 1)

By Andrew Smith | September 29, 2008

Many business owners/managers know in their heart that their business or organisation would be more successful if they had a clear business plan to work to.

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But for many there is a problem.

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The problem is the perceived time and effort that would be required to produce an effective business plan.

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Problem solved!

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The purpose of this three-part article is to present

you with a simple, common-sense method to prepare a business plan that will do two things:

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(1) Show you how to get clear on what your business or organisation would look like if it was performing effectively

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(2) Show you how to translate this information into the needed action steps to translate the vision into reality.
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The Big Picture
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So let’s get started with an overview on how the preparation of a

business plan can be made both simple and effective.
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The “Functional” approach
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Explanation: For any business or organisation to be successful, it must be “functional” in its core business capabilities.
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Let me clarify what is meant by “functional” core business capability as it relates to your business or organisation.
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For a typical commercial business, these functions could be Marketing (or Sales & Marketing), Customer Service, Team (or Human Resource),

Financial Management, Administration and Asset Management.
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Some refer to these functions as “Key Business Activities”.
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For a non-profit organisation, most or all of the above functions will

be required, but the terminology may vary.
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For example, the term “marketing” may be inappropriate for some

operations, but there may be a definite requirement for “Members

Communications”. So the term “Marketing” would be replaced by “Member Communications” or “Client Communications”.
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The fundamental logic of this functional approach is as follows:

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If you are highly “functional” in all of your key business activities,

then the complete business or organisation will be a success.
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A qualification. In some situations the above may be an over

simplification, but mostly it is a truism. 
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A Simple 3 Step way to prepare you business plan in one day (or less)

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Part 1 is about vision or goal setting
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Part 2 is about strategy
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Part 3 is about taking action
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  (to be continued)

Topics: Uncategorized | 1 Comment »

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