's Capital Club Monthly
Everyone talks about the importance of the business plan and they are correct to do so. Whether the plan is read by potential investors, friendly business associates or magazine editors, it represents the first opportunity to make an impression upon them. It will take lots of fancy footwork to overcome the bad impression created by a poor one. Therefore, when all else is said and done, your plan's key points should be abundantly clear. [Clear means easy to read, easy to understand, complete and accurate.] The authors of books on plan writing are right to point out all the details one should remember when constructing a plan, and the importance of a well-rehearsed presentation to accompany it.
However, no book on plan writing I have read focuses on one particular benefit that I have learned from several attempts at writing business plans: to write a clear plan, one must have a clear idea of the business being planned. And it is the process of writing that clarifies.
Long ago, in journalism school, I learned two axioms that kept occurring to me as I wrote the business plan for this publication: If You Can't Explain It, You Don't Understand It; and, Muddy Writing Reflects Muddy Thinking. As I wrote the plan for VCCM [Venture's Capital Club Monthly], all the areas that I thought I could "fudge" became so apparent that the plan started to become farcical. At that point, I knew the only way the plan would get funded was for me to stop writing a plan and start planning a business. After that realization, the hard work really began, as I had no choice but to answer the questions I knew others would ask. Sure enough, readers asked questions about exactly what I knew was weak in the plan.
The process of writing itself benefits the business plan. Through the process of writing, the business becomes defined, its weaknesses become evident and demand to be rectified. As the plan goes through subsequent drafts, the thoughts of new readers can be included, so that the plan becomes consensual. By following the outline in many of the "How To" books, the gaps in your own thinking should emerge. As you gather the information necessary to respond to the suggested outline, your plan becomes denser, containing more of the stuff it is supposed to contain and you become more confident of the quality of the business.
Sales and financial projections were the hardest part for me. I resisted making projections in which I had no confidence, and yet I knew the plan was supposed to contain them. I resolved this dilemma three ways: (1) I did a lot of research to find "comparable" information; (2) I assigned probabilities to the projections, thus indicating those numbers where I had great certainty and those where I did not; and (3) I went ahead and made projections based on nothing but "feel," and when the time came, I admitted to "making the numbers up" where no data were available. I asked the readers to suggest sources of data I may have over looked. When no one could suggest a source, they were more understanding of the necessity to "plug" a number in.
My point is to appreciate the writing of the plan as a necessary thinking exercise, totally separate from the necessary fund-raising exercise. While you may hate to write at all, in this case it is unavoidable and you had better plunge in. Show your work around, don't be defensive about the criticism, re-draft to include good suggestions and anticipate the questions others will ask and include the answers.
One last thing: once you've written it, start updating it.