If the question is How to Write a Business Plan?

 Then my answer is very simple.


 If your mindset is about how to write a business plan, then it likely you will suffer a double whammy – one, writer block and two, the fundamental error of trying to describe something that you don’t understand.

 So what’s the solution?

 My recommendation is that you think in terms of “DESIGNING” your business plan.

 Let me explain this in common sense terms that we all understand.

 If you were going to build a new house, you would never consider writing the house plan – you or your architect would design the plan.

 The Visual Factor
The term design implies a visual factor. When you can see and understand the big picture, detailing is simpler.

 If it’s a house or a business or whatever, the common sense rule is that if you can’t picture in clearly in your mind – beware!

 Avoid This Error
Making decisions and taking action when you don’t understand, is a common cause of business failure.

 If you have designed something well, then the process of turning and idea or desire into reality has a reasonable chance of success.

 If the solution design is poor (or missing), then failure is a strong possibility.

 A Better Question
A better question is “How to Design a Business Plan“. In my experience there are three options or approaches:

  1.  The “What needs fixing” approach
  2. The “Vision driven” method
  3. The “What do we tell the investors” method

 Many entrepreneurs get off to a bad start by starting with the “what do we tell the investors” (or “what do we tell the bank”) option, because they desperately need the money.

 Typically this type of Business Plan will contain sales and profitability numbers that are not substantiated.

Most investors and lenders are not stupid. They know how to read between the lines and pick up what you are not saying. If your plan has no or low credibility, it is quickly dismissed.

 So What’s The Answer?

My suggestion is that you get clear in your own head how your business can succeed before you to try and influence investors or lenders (or family and friends).

 There are two parts to this:
Part One: Use the “What needs fixing” approach or the “Vision driven” method to design and detail a ‘How-We-Will-Succeed’ style Business Action Plan. This is sometimes referred to as a Strategic Business Plan.

Part Two: Practice the skills that will enable you to:

  1. Effectively communicate what it is the you seek to a achieve – and why it’s important
  2. Effectively describe how to intend to achieve this success
  3. Honestly describe the range of financial performance figures that your plan is based on
  4. Persuasively describe the business case that you asking investors or lenders to get involved with.

 In follow up articles, I will go over the how-to steps for Part One and Part Two described above.

 Andrew Smith
The Business Plan Guy