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2/18/07

Business Plan Formation Part 9

Business Plan Formation Part 9

After this long 9 part series, you should now have knowledge of the basic, essential business plan documents. The final step is to put everything together into a cohesive, easily understood plan. Sections you should include are: (1) all the sections discussed in this blog, as they apply; (2) a title page; (3) a table of contents; and (4) any ancillary documents that may be specific to your product/idea/concept.

In order to easily explain certain formatting issues, the following represent some frequently asked questions:

How long should the business plan be?

The length of your business plan depends on your product/idea/concept. The more complex your product/idea/concept, the longer your plan may have to be in order to fully explain everything to your potential investor. However, I do caution that you not make the plan too long. What constitutes too long? If you find yourself repeating the same thing over and over, you may want to consider a revision. Always keep in mind the “if I were an investor” question. For example, “If I were the investor, would I want to read X amount of pages on this idea?” BE HONEST with your answer!

Should I include drawings or renderings?

Once again, this depends on your product/idea/concept. However, as a general rule, I would say yes. Be aware that this could cost you some money. If you happen to know an artist or architect (depending on your product/idea/concept) you may be able to get these for free. For most of us though, this will probably cost some money.

If I do include drawings or renderings, what show they depict?

Once again, this depends on your product/idea/concept. The best way to answer this is with the “if I were an investor” question. For example, “If I were the investor, what images/pictures/renderings would I want to see regarding this product/idea/concept?”

Should I bind my business plan?

Without out question, YES! You want your plan to look as professional as possible. Just go to Kinkos, OfficeMax, Office Depot, or wherever else does binding. It is relatively inexpensive and can usually be done in a couple of hours.

Should I have somebody read my plan before I pitch it?

Once again, absolutely YES! In fact, have somebody read your plan before you bind it. This way, if any changes need to be made, you can easily make them without paying for binding twice. Be sure that you get an UNBIASED opinion. This means that you should not (unless they are an expert of some kind) give your plan to your parents, siblings, friends, or significant other. Find a disinterested third party to read your plan and give you some real constructive criticism.

Can I add other documents to my plan?

Yes, you can add other documents. Just make sure that they will help you present or explain your product/idea/concept. My blog posts have been about documents that I feel are essential to a business plan. I did not cover all possible areas or sections of a business plan. If you feel your plan needs more financial documents, marketing documents, sales documents, etc., add them as you will. However, make sure that the additional documentation is relevant, necessary, and informative/explanatory.

In what order should I put my documents?

General order of business plans is up to you. Take into consideration the audience you will be presenting to (idea orientated vs. numbers orientated) and the purpose of your plan. A couple of pointers to keep in mind: (1) title page goes first, followed by the table of contents; (2) the ES should be the first page of your actual plan; and (3) your contingency plan should always come last. Everything else is up to you. Consider the story you want to tell and to who you want to tell the story. Whatever you decide, make sure your plan has a logical flow and does not randomly jump from section to section.

Should I include confidential information in the plan?

Confidential information is the information that you may be afraid of sharing. For example, let’s say you created a new computer program. Should you include the complete programming code for the program? My answer is no. Instead, I would suggest that you bring something to prove that your code works. For example, bring in a computer that is running your program.

Another example would be for a restaurant. Should you bring in the entire menu and recipes? Once again, my answer is no. Maybe bring in three recipes (one appetizer, one entrée, and one desert) to show the potential investors. This way you prove that you know what you are talking about, and the investors have an idea on what you want to accomplish.

This may sound cynical, but not all potential investors want to help. Some are out for themselves and will look for an opportunity to take advantage of you. Therefore, you should only give away enough confidential information to prove you know what you are doing, but not enough that a dishonest potential investor could take advantage of you.

Should I include a confidentiality agreement for potential investors to sign?

No. You can try, but for the most part, no potential investor will sign it. Remember, you are there to try to advance your situation. You are looking for financing and maybe a little expertise. You want your product/idea/concept to be mutually beneficial to all parties, but at the end of the day, you are pitching your product/idea/concept to make your life better, not theirs. Potential investors already have money and resources, why should they sign an agreement when ultimately they may not need your business?

If a group of us worked on the plan together and a disagreement exists about what sections to include, how do we resolve the dispute?

In this situation I believe that the person that created the idea should make the ultimate decision. If both are all members of the group came up with the idea, the person who is the expert on the product/idea/concept should make the ultimate decision. If more than one person is an expert on the product/idea/concept than a compromise needs to reached. For example, if one person wants the section in the plan and the other wants it out, a possible solution is to include the section but have the person that does not want to include the section decide where in the plan the section should go.

Bottom line, if a big dispute occurs over the formatting of your business plan, your business group has bigger problems than the plan. If you people cannot work together on a business plan, who are you supposed to execute a product/idea/concept?

If anybody has any other questions, please feel free to leave a comment, or e-mail me at cashspeak@yahoo.com.

Finally, as Anna Quindlen said, “If your success is not on your own terms, if it looks good to the world but does not feel good in your heart, it is not success at all.”

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