10 rules — How to write a Business Plan
Successful stories have in common that people want to read them to the end, that once finished they are happy about what they have just learned and that the story has a happy end. Unless you write for someone used to drama and horror stories…
Rule 1: The Reader
Think about the audience you are writing for. You could write the plan just for yourself, just to organize your thoughts. A business plan is usually a communication tool to explain your business model to people, either to work with them or to sponsor the project. Keep in mind that professional investors often cannot spend more than 10–15 minutes reading time to get a first impression.
Rule 2: Positivity
A business plan should be a story with a happy end. If it turns out in-between to be a thriller (typically introduced with statements such as “imagine what could happen if we would not do this project”…), you must very well know the audience you are writing for. To overemphasize the threatening aspects does rather sound like an emergency plan, to twist it afterwards in a way that people are still willing to invest, could become difficult. Much better is focus on the opportunities.
Rule 3: Honesty
Be honest. Your yes means yes, your no means no. Never sell something as fact if it is instead an educated guess. No-one will expect you to know everything. Name assumptions as such and deduct your story from the combination of meaningful assumptions and facts.
Rule 4: Substance
Minimum Content, your business plan should answer at least the following 6 “w” questions:
what are we doing (activity, describe the solution in the context of the application, user benefits)
why are we doing it (strategy, market, message)
what do we earn by doing it (cost, outcome, time 2 money)
who is involved (team, partner)
where are we selling it (target customer, sales channels, service)
when are we going to deliver (time2market)
Rule 5: Lean writing
Maximum Content, write only in the story line what is required supporting that people are buying in your “opportunity” story (see rule 2). Don’t spam readers with tons of data, keep the main texts short. That means, focus on the summary of your data evaluation in the story, put the data itself, if needed, in an appendix, or a separate file, by all means keep your story readable. Those people that want to take a deep dive in the data don’t mind jumping between main text and appendix. If you have done superb data evaluation, still judge if all those are required to explain your business case. Maybe half of them is enough, the purpose of the business plan is not to prove to your boss how much work you did on it.
Rule 6: Good writing
Give the story an arc of suspense. Typically, the peak of the tension in the business plan is reached when people understand what the business opportunity is. Often you start with a market survey, describe what users are doing, what they might need and how we will help them, and based on that you have a business model. Then close the chapter “Opportunity” and in the remaining part go into the specifics of your solution, e.g., by breaking down the planned marketing mix and other operational topics.
Rule 7: Name the risks
Positivity is important, see rule 2, but it should not be blind. People will expect that “the bigger the opportunity, the bigger the risk”. Thus, talk about risks, however, give an outlook how you will handle them.
Rule 8: Resources
A good plan includes as much about the team to bring it to life as it does about the solution. Make clear once you start spending the money, that you have the right people in place and secured over the run-time of the project. Especially, if your development might rely on few key expert resources that are frequently overbooked. Of course, this also applies to external partners.
Rule 9: How to stay in control of your business over (project) time
This rule is easily overlooked and therefore requires a little more explanation: I usually use what is known as the “magic triangle” in product manager training to explain something important that applies to projects and business in general. To avoid failing during implementation of goals, your business plan must take this into account within the strategy.
The triangle is a commonly used tool to let stakeholders know what the priorities of the realization are, as you usually cannot keep all corners within their specified limits at the same time unless they were laid out very generously from the start. So, declare which of the corners are more important, especially from a strategic business perspective. Many articles on the triangle refer to the top corner as “quality”. I would like to be more precise here. Personally, I would not want products with a loss of quality, because your customers have a memory. That’s why for me quality is in the middle, not negotiable, and the top corner is functionality. For example, for a company like Apple, neither Time 2 Market nor the functionality of a new top smartphone is negotiable. They’d rather increase their project budget accordingly rather than risk failure. On the other hand, if you are building products that are under heavy margin pressure, you would certainly focus on keeping costs under control or you could fall out of a profitable business entirely. And only then do you decide whether time or functionality are second or third priority. Trying to keep all corners under control can often have the undesirable result that none of them stay within their limits, and the reason for this I give in Rule 10 below.
Rule 10: Define a strategy, prioritize and focus
In addition to communicating with the stakeholders, the triangle helps to keep the focus in the process. If the priorities of the goals are not clearly set out in your business plan, there is a risk that your project or company will lose direction as each member of the team interprets things slightly differently. While engineers are pushing for all specified functions to be implemented, the project manager is worried about costs and the sales advisor is putting pressure on to meet certain deadlines for roadshows or trade shows. If you try to satisfy all of them at the same time, no one will get the result you want. The same goes for your definition of a new product, or for the whole company, be clear about your goal. If you set yourself the goal of making a product that is supposed to be much better and at the same time much cheaper than its predecessor, this often results in a product that has changed at the end of the project but is neither significantly cheaper nor really better. The reason is similar to the triangle example, different people involved can have their own interpretation, which means that everyone works on different goals and the total is zero in the end. Even the best team can’t outperform if the goal is ambiguous.
Rule 11: The unspoken rule
If you want to do more than an ordinary plan, write your business plan by first thinking about the financial goal you want to achieve. Think from the desired outcome and use the plan not to explain why you chose a goal but how you intend to achieve it. Do you want organic growth of 10–20% of an existing product line or do you want to take a market by storm? In any case, your thinking must be different, the required project landscape, the roadmap to achieve the goal will be completely different. This rule trains your ambition.
