Frank Remarks: Make a New Plan, Stan! (Part 2 of 2)
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Coming up with a business idea is relatively easy—it's the execution that's hard. A good business plan will go a long way in helping you execute your business idea. So here's a list of the important elements you need to have in your plan, their purpose, and tips to keep in mind when writing each section.
When you write your business plan, remember to be succinct, to the point, and reader-friendly. Your plan should be no longer than 20 pages—including financials. Make it look professional. Use a word processor, have it bound, and have it proofread by someone other than yourself. Nothing looks more unprofessional in a business plan than typos and grammatical errors.
If you're writing your plan for investors, be sure to tell them in your plan how their money will be used and how they'll be rewarded financially for their investment.
Finally, keep in mind that my intent is not to teach you how to write a detailed business plan. There are many books on the subject to help you do that. The intent here is to show you the most important elements to include in your business plan.
Every well-thought-out business plan has these common elements.
- An Executive Summary
- A description of your product or service
- An analysis of your competition
- A marketing plan
- A management plan
- A financial plan
Executive Summary
Although the executive summary of the business plan comes first, it's the last section that you'll write. To write the summary, you'll be culling information from other sections of your plan.
The executive summary is just that—a quick summary of your business—and it's potentially the most important part of your business plan. Keep in mind that if you offer your plan to investors, the executive summary is the first and probably the only part of the plan they'll read. If it interests them, they'll read further. Others will read it first to get a snapshot of your business and see whether your business concept makes sense.
Your executive summary should be short—no longer than 2–4 pages, and include these descriptions:
Brief description of your company and the needs of the customer that it will fill
Product(s) or service(s) you'll provide
What your market is and how you plan to promote and sell your product(s) or service(s)
Your key management staff
Type and amount of investment you'll need
How and when investors will be repaid
The executive summary is your chance to reach out and grab your reader's attention and get him or her insanely interested in your business idea. You only have a few short pages to pitch your idea, so it has to be clearly defined and easily understood.
Avoid these common executive summary mistakes:
Lack of focus. You have just a few minutes to get your business concept across, and it should be loud and clear in the first few paragraphs of your executive summary. This is where your unique selling position (USP) should be displayed. Your USP must be brief, to the point, and explain your business quickly and effectively.
Too wordy. Most times, the executive summary is the only section of the business plan that actually is read. So, of course, you tend to explain as much as you can about your business opportunity. Don't! Keep each section of the summary as brief as you can. Just touch on the most important points of each part.
Reads like a preface—not a summary. An executive summary is just that—a summary. It's not an introduction to the plan. Look at it as a mini-plan. Make sure that it touches on all the important aspects of your business idea.
No expression of a unique opportunity. What's the opportunity? Why should anyone invest in your new business? What will investors receive in return for the risk they're taking? These questions should be answered in the executive summary.
Fails to generate excitement. The executive summary is more sizzle than steak. Though it should give the basic details of your business, it should also have a certain amount of hype to it. Remember that you're trying to get people to invest in your idea, so make it sound exciting.