I go through the following steps in creating a compelling business plan:
1. Create the spreadsheet.
You’ve got to start with the numbers. How are you going to make money? What kind of volume will you need? Make sure you make this an “insane” spreadsheet that not only had tremendous depth, but also has intimately linked all the relationships into killer formulas. Ideally, I should be able to adjust the sales figures and the amount of office space required in year 3 should change.
2. Make the powerpoint presentation
Summarize your business plan in a presentation. Take a look at the other posts in the presentation category for examples and tips.
3. Make a bunch of presentations
Present your plan to anyone who will listen. On second thought, grab a few people who don’t want to listen and pitch it to them too. Listen very carefully to the questions and refine your pitch to address the issues that matter.
4. Write up the executive summary
After you’ve made tons of presentations and gotten sufficiently beat up, you by now have a pretty polished pitch. Great! Now condense the pitch to a two page (max) executive summary.
5. Write the business plan
The business plan should be an expansion of the exec summ and a written detail of the presentation. By now, you should have this so locked up that writing the plan should be pretty easy.
Keep in mind a few things:
If you’re lucky, investors will read the 1st paragraph or two. I remember one VC telling me that any “business plan” he reads has to fit on the upper part of his car’s steering wheel because he reviews new plans while stuck in traffic. DFJ says to summarize your whole plan in a paragraph and I couldn’t agree more. I like to also include the “deal” (amount of money you’re raising and the ROI) in that same space.
No one reads the business plan until the last minute
By last minute, I mean that investors will read the business plan after they have already made the decision to invest and now need to perform a collection of due diligence. You don’t need the business plan to open doors or even get in front of an investor. For that you’ll need good introductions and a great exec summary.