Plan for Perfection – Five tips for writing a better business plan

Originally published in Air Miles for Small Businesses

Anyone can throw together a business plan using software or online templates, but if your intended plan needs to make big tracks with potential investors and lenders, you need to dig deep and challenge your own assumptions. For qualified advice and a bit of insider savvy, we talked to Barry Sharp, a consultant at AMA Management in Burnaby, B.C., who has helped entrepreneurs craft business plans for over 30 years. Here are his five top tips:

1. Write for specific audiences

Your business plan shouldn’t be all things to all people. Tailor it for specific groups – it’s perfectly fine to have multiple versions. “Write with an audience in mind,” advises Sharp. “We see these generic plans – too many people try to make their plan useful for internal purposes, to impress family and friends, and to get financing. Those are three disparate audiences. » Identify the purpose, whether it’s to raise money or map out your company’s strategy, and shape your plan accordingly.

2. Define your target market

“One of the biggest mistakes is that people say, ‘everybody needs our product,’” says Sharp. Instead of taking the “build it and they will come” approach, pinpoint your market and figure out your unique selling proposition. « Is there a demand for your widgets? If everybody wants them, why aren’t they on the market already?” says Sharp. « People are very close to their idea or product or business, but you need to take a more global view. »

3. Include a thorough risk analysis

Every company has its risks, and a strong business plan addresses them. “People write business plans optimistically, as they darn well should – if your passion isn’t showing, what are you in business for?” says Sharp. « But people tend to have blinders on and look only at the positives. » Show your audience that you’ve thought about the potential negatives – such as equipment failure or the departure of key staff – and how you’ll mitigate those risks.

4. Explain how you’ll get from here to there

Imagine potential investors poring over your words with a pen in hand. Will your business plan answer their questions, or does it require leaps of faith? If you’re projecting sales growth, show how you’ll make that happen. Explain your unique selling proposition, what pain point you’ll solve and why customers will choose you over competitors. “I see business plans all the time where people say, ‘we have a product, we’ll sell 100 a day, and in two years, we’ll sell 1,000 a day. How? Why?” says Sharp. « What are you doing to change things? »

5. Defuse logic bombs

Scour your plan for inconsistencies, or “logic bombs,” as Sharp calls them. He offers an example: You want to open a sandwich shop. You’ll hire three employees, and you predict a lunch-hour crowd of 200 customers. It sounds promising – until a skeptical banker points out that’s three customers per minute. These kinds of inconsistencies are common, says Sharp. « It’s easy to say ‘look at the roadblocks,’ but if it’s your business, you’re too close to it most of the time to see the issues. » Find your logic bombs before someone else does.