a prudent business person use the SEC’s suggested language if it could help them avoid a lawsuit? Remember, it is your responsibility to seek legal advice with any claims or assertions in your business plan to protect yourself from liability issues.
Secondly, let’s remember what we are doing here. We are talking about the future. There are no guarantees or certainties. By using conditioned language you are giving yourself the necessary flexibility to account for the many changes that lie ahead. Don’t lock your plan, or yourself, in to a fixed view of what lies ahead. Reserve the right to get smarter in the future!
Finding Expert Advice
In a perfect world, you would have the time and expertise to prepare your business plan completely with yourself and your closest advisors. When you prepare your own plan, you are so intimately familiar with it that its use becomes a natural outgrowth of the preparation process. However, few of us have the management, organizational, writing and editing, planning, layout and design, marketing and financial expertise it takes to prepare an effective plan. And even those who might have the expertise likely don’t have the time.
There are a variety of experts from whom you should solicit help in the preparation process. You might want to consider engaging the counsel of retired executives in your field, peers in noncompetitive business, entrepreneur groups, your attorney, your CPA, friendly sophisticated investors or lenders, management consultants, marketing/PR experts, a business coach, a writer/editor, a graphic designer, and a printer. Some companies specialize in business plan preparation and offer all the needed expertise under one roof.
Never completely hand off the job. It is your business. It will be your plan. You are the one who will be using the plan. Meet with your experts and planners at set times throughout the process, so that you stay up-to-date. Don’t go through the expense and time of having others prepare a plan that you cannot or will not use.
Want to know if you are involved enough in the planning process? A simple test is to write your own executive summary and mission statement. (You may want to do this prior to the planning process, as well as at the end.) Then let your planners or experts do the same and compare. This way you can be sure you not only understand your plan, but that your planners or experts understand your business as well.
“Business is never so healthy as when, like a chicken,it must do a certain amount of scratching for what it gets.”– Henry Ford
The better you understand your business, the better prepared you are to write the business plan. Ideally, you will have thoroughly thought out your business long before you ever open your doors for sales. Too many entrepreneurs jump into business with both feet and don’t bother with understanding (let alone planning) until the water is rising. Jumping into the deep end of the pool is not the best way to learn to swim. If you’re lucky, you won’t drown, but even if you make it out of the pool, the experience is likely to be remarkably unpleasant.
The Business Section
The first major part of your business plan should be a detailed description of your business. You’ll address your corporate entity choice between a corporation or a limited liability company. Don’t consider using a sole proprietorship or general partnership. Investors won’t even bother reading the plan because there is too much personal liability. To fully appreciate this see my book Start Your Own Corporation. Your detailed description will also include strengths and weaknesses, a description of your operations, location, personnel, records, insurance and security. Once again, money follows good management. It’s important to emphasize the experience, education and track record of your people.
For The Business, The Market and The Financials sections of your plan, it is best to introduce the section with a brief one-page summary. From there, you can use more detailed subsections. While the entire plan should be succinct, these summaries will allow interested parties to graze for pertinent information.
There are two questions to ask yourself about your business that color every part of this section, though their answers are never directly addressed in the plan:
Why are you in business?
What is your business?
If these seem like easy questions to you, you’ve either done a good job thinking through your business or you haven’t even started. We’ll hope for the former.
Why are you in business? How well do you know yourself, in particular, your personal motivations? When you decided to go into business, was it out of desperation (lost job, family illness, personal injury)? It’s okay for desperation to spur you into a new direction, but don’t let it rush you. Did you decide to go into business out of a desire for personal fulfillment (following a dream, helping others)? Many businesses are begun for one of these reasons, but if you don’t understand the realities of owning and operating a business, you aren’t likely to stay in business long enough to do you or anyone else any good. Did you decide to start a business in hopes of amassing great riches? This is another common reason, but chasing after dollars runs the risk of leading to early burnout and/or disillusionment. Understand your motivations and you can guard against many a typical disaster.
What is your business? Don’t answer too quickly. Just because you sell office supplies does not necessarily mean you want to look and feel like all the competitors. Think about it: There are plenty of office supply stores out there. Most are better established than yours. Many will have lower prices than yours. So why should anyone go to your store? Answer that question and you will know what business you are really in. Do you offer faster service and delivery? Do you have a specialized staff that can help clients with organization, technology or planning? What is it that your customers (or potential customers) say about your business when recommending it to friends? What part of the idea for your business originally got you so excited that you couldn’t wait to tell your family about it? When it comes to identifying the heart of your business, look to your own heart. Concentrate on what your business is rather than what it does. Think back to the spiritual mission and business mission section and ponder what higher purpose you have to serve that will differentiate you in your space and allow you to generate cash flow.
With the answers to these two deceptively simple questions, you will hopefully find the key that unlocks the potential of your business idea – an identity that can’t be duplicated. And it is that identity that will garner you funding, investors and customers. But first we’ve got to overcome one of the toughest parts of business plan authorship – writing about your strengths and weaknesses.
Mikhail
Mikhail was stuck. He needed to finish his business plan in the next two days for a potential investor but couldn’t get past the next section on his template: Strengths and Weaknesses.
Strengths and Weaknesses. How could he write about that?
“Our company’s strength is me. I’m the best taco maker on earth.”
He couldn’t write that, even if it was true. It seemed too brazen, like a tedious NFL show-off player dancing wildly in the end zone. That wasn’t Mikhail’s style.
And weaknesses? How was he supposed to handle that one?
“Our company’s weakness is that management has no idea how to write a business plan.”
Again, while true, it didn’t inspire much confidence.
Acknowledging his writer’s block, Mikhail left the house and walked down to Starbucks for a toffee latte something. Standing in line he ran into Jill, a new friend who had done well starting and selling several businesses. He told her of his barrier to completing the plan. She offered to help and they sat down to brainstorm with their vessels of caffeine and sugar.
Jill agreed that in the business plans she had worked on before, the strengths and weakness section had always been hard to write. But she noted it was a