The 20-page business plan that is heavy on the financials and short on passion is so '80s. Today, experts encourage entrepreneurs to keep it short and sweet — one page or even just a paragraph — and put a lot of themselves into their business plans.
"Things have certainly changed in terms of what constitutes a business plan," said Chris Libis, CEO of Executive Recruiting Consultants, a national executive search firm based in Dell Rapids, S.D. "In today's environment, the traditional business plan will bankrupt you."
Keep it simple
Libis said business plans, including the one he developed for his own business, should be concise and to the point. The plan should cover five elements: a description of the product/service, how that product/service will be provided, how the company will generate immediate revenue and who the primary clients are for the product/service.
Unlike traditional business plans, modern business roadmaps should embrace new media, he said.
"Consider a three- to five-minute video that you can post on YouTube," he said. "You have to have some sizzle."
A YouTube video is just one way an entrepreneur can put technology to work for your business plan.
"Today's interactive internet makes it much easier and cheaper to test 'proof of concept,'" said Patrick Schwerdtfeger, speaker and author of several business books, including "Marketing Shortcuts for the Self-Employed" (Wiley, 2011). "That allows entrepreneurs to plan a given test long before worrying about larger business development strategies."
But even for more highly detailed business plans that are often needed to attract investors, owners should concentrate on the table of contents to keep the document focused.
"The TOC is effectively your outline for the plan," said Mike Samson, co-founder of crowdSPRING, a Chicago-based online marketplace. "Take your time with it; make sure you are including all of the relevant topics. At a minimum, your plan should include sections on the company you are forming, your marketing plan, financial information and your growth strategy."
He also said business owners should include a brief executive summary at the beginning of their business plans.
"Many of the people you hope will read your business plan are ridiculously busy," he said. "Lots of folks will read only the summary and flip through the rest of the plan. It makes for both a challenge and an opportunity; the stronger and better-written your summary, the better chance you have of a follow-on meeting to make your pitch in person."
It is also important to keep your audience in mind when developing your business plan.
"Who will be reading your plan?" Samson said. "Investors? Potential partners or board members? Industry advisors? As you draft your plan, understand their capacity for detail and their reason for reading your plan. Anticipate the kinds of questions these readers will want answered and answer those for them."
In today's environment, the customer is king, so the business plan should explain how the new venture will find and attract customers.
"Make the case very clear from the beginning how you have solved a problem for a specific customer segment at a price they are willing to pay, and in a way that is better than the next best alternative," said John Torrens, assistant professor of entrepreneurial practice at the Whitman School of Management at Syracuse University.
Primary market research is critical.
"A well-written plan with nicely tied financials is great, but unless you can prove that you have spoken to potential customers and incorporated their feedback into your product or service offering, you won't likely generate investor interest," Torrens said. "This is crucial and often forgotten because it takes time and requires contact with potential customers. Results from electronic surveys, focus groups, interviews and other research should be included in an appendix."
He said raising money through a business plan is still somewhat of a beauty contest.
"The founder must demonstrate that they are flexible, play nice with others, recognize the need for speed in reaching the market, and above all are willing to take advice from an equity holder. The business plan should not be all about the founder though. "