Business Planner, Not a plan writter

Nine out of ten investor groups and lenders say the majority of business plans they receive do not provide the information needed to match their funding criteria.

Too often boiler plate or plans using a general template are submitted.

Many make the mistake of viewing a business plan as nothing more than a creative writing exercise that can be completed in a few days; a one-time document or something to be done cheaply and quickly to attach to a loan application or give to potential investors.

res ipsa loquitur (Latin for "the thing itself speaks") ... the "facts speak for themselves." A Small Business Administration (SBA) study revealed that the degree of business success is proportionately related to how comprehensive and detailed the business plan.

The number one reason businesses fail is lack of capital. I maintain lack of capital is experienced due to poor or insufficient business planning.

A US Bank study of failed businesses determined the number one general business factor for business failure is poor business planning. 78% of all businesses studied failed for lack of a well-developed business plan, including insufficient research on the business before starting it.

AT&T commissioned a study of small businesses. The survey found that companies that had a business plan were far more likely to succeed than those that did not. Commenting on the study, Ian MacMillan, the director of the Sol C. Snider Entrepreneurial Center at the University of Pennsylvania's Wharton School said, "A comprehensive and complete business plan is crucial to the success of any business."

SBA and numerous studies by several banks conclude whether they are start-ups, established, or long-term businesses the majority of those that failed because they had poor business plans.

Numerous studies have concluded that companies with comprehensive business plans enjoy greater revenue and profit growth than companies that don't have one, and their failure rate is much lower.

One first has to understand that the investor group is going decide whether to spend time looking at an opportunity by using their criteria and methodology to evaluate the risk and reward of an opportunity. First and foremost it is about the numbers. If GAAP compliant financials are not part of the plan most likely they won’t look further.

The plan should also include cited research justifying market demand for your product or service, as well as, a competitive roundup showing why you meet an unfilled need, offer a better product or service, and what differentiates you from the competition.

A key point to understand is that the person reviewing your plan needs to approve deals and, being risk averse, only wants to approve successful investments; therefore, the paradox is that they approach the opportunity by trying to prove why they should not approve your funding request. A well written business plan will present a logical business case supported by third party research.

We often receive requests for a business plan to be completed in a day or week. We can’t accommodate those requests because they do not allow the time to develop a solid business case.

We are also approached by those who see the plan as nothing more than a required attachment to an application or something they need to get an appointment with a potential investor.

The process of developing a comprehensive custom business plan refines the business model, objectives, and provides a road map to success.  I adhere to the adage ‘the business model is the why of the business, the business plan is the how’.

Several engagements have revealed the client business model was not viable and had to be refined or their estimate of cash needed was inadequate. Fortunately most refined their model and adjusted their cash requirement to begin their journey to success.

I often think of the client who had ample cash. I requested an urgent conference. I advised that research revealed his growth projections would most likely be higher, as would his profitability. However, his model was cash intensive and without refining the model he would be out of cash in 24 months. He opted to stay with his model. I received a call 23 months and 3 weeks later. They were out of cash and out of business.

The situation would not have been flagged by a template or a presentation document.

One owes it to their business and themselves to spend the time, energy and money to develop a comprehensive business and strategic plan.