Secrets Of A Great Business Plan
You've got a great idea for a business - you know it will be successful - if you can just get the money to make it happen. You know that the best way to present your project to lenders is with a business plan.
Lenders have money to lend - if they can just find a business that they can reasonably expect to be successful. They know that the easiest way to review a project is by reading its business plan.
Presenting your business plan to a ready lender should be a match made in heaven, right? Yes, but...
Every borrower thinks that theirs is a great deal. To hear some borrowers tell it, the millions will magically appear with no chance of failure. Life is good and it's going to get better.
Lenders, on the other hand, are paid to make objective judgments - to get past the sales pitch and identify the real deal. Lenders don't care what you think about your project - they know that you love the deal even before they open your business plan. Their job is to make an objective assessment of your plan. In a word, they need facts.
A fact can be defined as knowledge or information based on reality. While you can present anything as knowledge or information, the lender will decide whether or not they believe that your information is based on reality. Do the following and lenders will likely conclude that your statements are factual:
Keep your statements clear and concise - unread is worse than unbelievable it's unknown. Use as few words as possible while still getting across your message. Lose the flowery adjectives and state simple, objective, reasons why your business plan will succeed.
Avoid technical or industry jargon. If you must use jargon, make sure that you explain its meaning. No one is impressed that you know all the latest buzzwords within your industry. Rather, they are unimpressed that you weren't able to communicate your message without resorting to jargon.
Quote research and sources. To state "the industry will grow at a rate of 15% annually" is likely to be read as a sales pitch. To state "A recent US Department of Commerce study shows that..." is likely to be read as fact. Good sources of low cost or free independent research include government agencies, industry associations, franchisors and, if yours is an industry with public companies, stock analysts.
Avoid stating your own opinions. Rather than saying "We believe..." state the reason you believe, hopefully, as a believable fact. If you must use an unsubstantiated opinion try to use that of an outside professional (your accountant, lawyer, appraiser, etc.).
The watch phrases for a successful business plan are "short, sweet and to the point" and "factual and if not provable, believable". A short, well written plan loaded with verifiable facts is much more likely to succeed that a long, poorly written one, loaded with flowery writing and your personal opinions.
The one area of your business plan to which the above does not apply is the Executive Summary. Look for our forthcoming article on that subject.
Lenders have money to lend - if they can just find a business that they can reasonably expect to be successful. They know that the easiest way to review a project is by reading its business plan.
Presenting your business plan to a ready lender should be a match made in heaven, right? Yes, but...
Every borrower thinks that theirs is a great deal. To hear some borrowers tell it, the millions will magically appear with no chance of failure. Life is good and it's going to get better.
Lenders, on the other hand, are paid to make objective judgments - to get past the sales pitch and identify the real deal. Lenders don't care what you think about your project - they know that you love the deal even before they open your business plan. Their job is to make an objective assessment of your plan. In a word, they need facts.
A fact can be defined as knowledge or information based on reality. While you can present anything as knowledge or information, the lender will decide whether or not they believe that your information is based on reality. Do the following and lenders will likely conclude that your statements are factual:
Keep your statements clear and concise - unread is worse than unbelievable it's unknown. Use as few words as possible while still getting across your message. Lose the flowery adjectives and state simple, objective, reasons why your business plan will succeed.
Avoid technical or industry jargon. If you must use jargon, make sure that you explain its meaning. No one is impressed that you know all the latest buzzwords within your industry. Rather, they are unimpressed that you weren't able to communicate your message without resorting to jargon.
Quote research and sources. To state "the industry will grow at a rate of 15% annually" is likely to be read as a sales pitch. To state "A recent US Department of Commerce study shows that..." is likely to be read as fact. Good sources of low cost or free independent research include government agencies, industry associations, franchisors and, if yours is an industry with public companies, stock analysts.
Avoid stating your own opinions. Rather than saying "We believe..." state the reason you believe, hopefully, as a believable fact. If you must use an unsubstantiated opinion try to use that of an outside professional (your accountant, lawyer, appraiser, etc.).
The watch phrases for a successful business plan are "short, sweet and to the point" and "factual and if not provable, believable". A short, well written plan loaded with verifiable facts is much more likely to succeed that a long, poorly written one, loaded with flowery writing and your personal opinions.
The one area of your business plan to which the above does not apply is the Executive Summary. Look for our forthcoming article on that subject.