The Ten Commandments of Business Plan Development

Over the last few months, Enable has taken you all the way from Idea to IPO. It is very fitting that our journey ends as the Passover holiday approaches. In honor of the holiday, and as a means of providing you with a quick guide to help your company grow and prosper, Enable provides you with The Ten Commandments of Business Plan Development. The first five commandments are provided today, and the next five will be given next week.

The business plan is the common denominator of serious investors and of leading companies. It is a blueprint for success and a tool for raising the capital vital to achieving that success. However, developing a business plan is a lengthy, detailed, and difficult process. Do not take it lightly. The amount of effort you expend in the planning stage will significantly reduce the number of problems you encounter during the capital raising process and in growing your business.

The following rules (commandments) will act as your guide in your quest to develop the best possible business plan.

1. I Am Your Business Plan. Think Me Through

   The business plan development process forces you to think through all of the aspects involved in your start-up venture or expansion. The discipline involved in putting your plans into a structured document will enable you to organize your thinking and make fundamental strategic decisions. It also assures that you cover all of the bases. In preparing the business plan, you must objectively examine and analyze all of the ramifications of your marketing, operations and financial strategies. You must also determine what human, physical and financial resources are required. By doing this on paper, you are not only forced to deal with the business realities of your new venture, but you save the time, energy and resources you would have consumed through actual trail and error.

   The business plan is the first step in the investment process. Without a well-written and hard-hitting business plan, serious investors will not meet with you. The business plan is your company's ambassador to all potential investors. Your business plan must speak to investors in the language that they understand and appreciate. Moreover, because you only have one chance to make a good first impression with potential investors, your plan must be highly professional and customized to show your company's unique advantages and abilities. Investors look at a myriad of business plans and yours must stand-out and be flawless.

2. Thou Shalt Not Create Graven Images. Customize Your Plan

   Many entrepreneurs try to save the time and expense involved in preparing a proper business plan by utilizing "substitutes." These typically include company brochures, spreadsheets, feasibility studies and technical materials bundled together and sent to investors with a cover letter. If you expect investors to invest their most valuable resources - their time and money in you -- you better do the same and provide them with a business plan that shows you respect them and appreciate their time.

3. Thou Shalt Not Swear False Business Plan. Do It Right

   Investors expect to see a business plan that was developed, customized, and tailored for the business at hand. Moreover, developing a business plan is more an art and a process than it is a simple fill in the blank writing assignment. There are a wide spectrum of far-reaching issues facing the individual company that must be specifically addressed if your plan is to have any impact - both in-house and externally.

4. Guard Your Cash Flow and Keep Your Projections Holy

   If you want your company to succeed from both a business and capital raising point of view, your business plan must contain realistic cash flow projections - and you must do your best to abide by them. Focus more of your time on receipts - projecting cash expenditures is much easier. Investors will look at your cash flow projections to determine the amount of capital you require, and to learn if you can see the big picture. You must be reasonable and not overly optimistic. When you meet with investors, they will expect you to be able to provide support and backup for your forecasts. Make sure that all forecasts are realistic. Investors can easily check your projections against the industry norms.

5. Honor Thy Reader and His/Her Short Attention Span

   Investors are incredibly busy and will initially only skim your plan. You must include an Executive Summary that must capture the entire essence of your business in only two pages. The rest of your plan must also be as brief as possible, organized logically and written to grab and keep the readers' attention. For example, The Table of Contents must be user-friendly and enable the reader to quickly locate any topic in the business plan. It must also act as an outline of the entire business plan, so that the reader can quickly grasp the "big picture." You must avoid typographical errors and spelling mistakes, raw spreadsheets, and cumbersome Appendices. You should summarize the product descriptions - focusing primarily on the user benefits. You should not simply cut and paste from brochures and product specifications.

Hag Samach - a Happy Passover to all Enable readers!

Published by Israel's Business Arena on April 18, 2000.