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What Period Should Your Plan Cover? Most plans should project three to five years into the future, or until you have reached your anticipated exit strategy, whichever is earlier. However, you need only include monthly financials for the first year or two, depending on development time. For the second and third years, quarterly financials are usually adequate; annual projections suffice for the fourth and fifth years. Similar time guidelines apply to how much detail you should include when describing your business operations. Quite thorough information should be provided for the first year or two; for subsequent years, a more general Operations description is acceptable. “I don’t like a plan that’s too long. To avoid that, put detailed plans in the appendices so that people can refer to them only if they want to. A well-written plan should be no more than 25 pages, 100 pages total or less with appendices. If an investor is interested, they’ll ask for more details.” Eugene Kleiner Venture Capitalist Plans for existing businesses and in-house corporate use should include historical performance information for the past five years, or the duration of your business, if less than five years. If your business is longstanding, you may want to examine trends over the life of the business, or the last 10 years; this gives you insight into cyclical patterns and helps you anticipate events that are likely to recur. Use Language to Convey Success The language you use in your plan can give the impression you are thoughtful, knowledgeable, and prudent, or, conversely, it can make you seem naive and inexperienced. Your fundamental goal is to convey realistic optimism and businesslike enthusiasm about your prospects. Use a straightforward, even understated, tone. Let the information you convey, rather than your language, inescapably lead to the conclusion that your business will succeed. Avoid formal, stilted language. Instead be natural, as if you were speaking to the reader in person; however, avoid slang and don’t be chatty. Always be professional. Listed below are some other pointers to keep in mind when writing your business plan. Be Careful with Superlatives Readers are naturally skeptical of overreaching self-promotion. Avoid using words such as “best,” “terrific,” “wonderful,” or even “unmatched.” They reduce credibility. Rather, use factual descriptions and specific information to make positive impressions. “The important thing about a business plan is believability. I want to see a simple logic to the whole plan. The more a plan relies on leaps of faith, the less believable it is.” Robert Mahoney Corporate Banker Instead of saying, “Our widget will be the best on the market, clearly superior to all others,” say, “Our widget will not only handle all the functions of existing widgets, but will also add features x, y, and z, and sell for $3 less than our closest competitor’s widget. No competitor of ours offers these features at any price.” When trying to get additional financing for your restaurant, don’t tell the reader that the food and atmosphere are “terrific.” Instead provide specific information that proves you are doing something right: “Due to the restaurant’s popularity, there is an average 45-minute wait for a table on Friday and Saturday nights, and a wait of 15 to 30 minutes on other evenings.” The only exception to this rule is when you use superlatives as part of your goal in a Statement of Mission. Then it is appropriate to state, “We intend to make a dog food unmatched in quality by any national brand.” Even then, however, it is important to include the specifics of what you mean by such a goal. Use Positive Comments from Third-Party Sources Everyone expects you to think your product or service is outstanding; thus, your own glowing comments about your company are meaningless in your plan. Instead, as you do your research, look for statements by outside sources to give readers confidence in your business. For instance, a reader of your plan is likely to tune out when encountering a comment such as: “Adeena’s fashions are equal to those by top designers,” or “Our restaurant serves the best food in the city.” However, the same comment, when made by an authority, becomes quite powerful: “Women’s Wear Daily states that Adeena’s fashions are equal to those of the top designers,” or “The newspaper’s annual survey rated our restaurant among the top 10 in its price category.” You don’t even have to quote a well-known authority; anyone with credible, related experience will do, as this example shows: “The breeder of the winner of last year’s Tri-County Dog Show tested our dog food and concluded, ‘This will be the best dog food on the market, superior to any national brand.’” Use Business Terms Although it is certainly not necessary to be a business school graduate to develop a business plan, you should know and use appropriate basic business terms. You don’t want to be discredited or misunderstood by using words improperly. If business is new to you, familiarize yourself with the Business Terms Glossary at the back of this book. Become familiar also with the terms of your specific industry and use those words when appropriate in your plan. If you don’t know these already, you should be able to pick many of them up while doing background work for the Industry Analysis section of your plan. However, do not fill your plan with a lot of technical jargon in the hope of sounding impressive; there is a good chance that someone unfamiliar with your industry will be reading it, especially if you are seeking outside funding. Certain terms and trends are more popular at one time than another. You may find it helpful to include these “buzzwords” in your plan. As you do your research, keep track of the terms and practices that are currently “hot” with investors or industry leaders. Look to see what they are talking and reading about. Even if you do not include these buzzwords in your plan, you may be asked about them in a meeting with potential funders. Points of Style In addition to using the most beneficial and appropriate language in your plan, you should pay attention to the elements of style discussed below. Use Numbers for Impact People tend to put great faith in numbers, and using numbers to support your plan can add significant credibility. If the figures come from a reputable source, they have even more power. One particularly good technique for making your plan stronger is to state, “Our ________ is supported by…,” followed by specific figures relating to demographics, growth of market, information from other businesses, or market research. For example: “Our foot-traffic projections are supported by figures that show neighboring stores average 22 customers an hour on weekdays and 43 customers an hour on Saturdays,” or, “Our choice of the young adult market is supported by U.S. Census Bureau figures projecting a growth of 32% in that age category over the next five years.” “Style shows thoroughness. Use lots of white space, so I can make notes in the margins. Use a binder that keeps the document together, preferably one that keeps the plan open to the page I‘m on. Use bullet points. Use a block style rather than indented paragraphs. Don’t misspell my name, and don’t address me as ‘Mr.’ Imagine that you have to hand your plan to a customer. So if you don’t know how to make a document look good, get some help.” Ann Winblad Venture Capitalist It is vital to bring data from your Financials into the text of your plan to indicate specifically why you will be able to achieve certain goals. For instance, state: “Our new production method will reduce each unit cost by 43% (currently projected savings: $1.57 per unit), thus allowing us to offer additional features at a competitive price while still maintaining our profit margin.” Do not expect the reader to pick out these kinds of specifics simply from looking at your Financials; the information must be incorporated into the text. Use Bullet Points Bullets are symbols that precede information offset from the text (such as the small boxes before the three sentences below). Bullets: ■ Draw attention to specific information. ■ Make long material more inviting to read. ■ Eliminate the need to write whole sentences. Bullet points are an excellent way to convey information, and they make writing your plan somewhat easier. Because they are read faster than text and quickly get the reader’s attention, use bullet points only with information you particularly want the reader to notice. Be careful not to clutter a plan with too many bullets; use them selectively. Bullets seem to work better with short items than with long ones. Also, each list of bulleted items must be presented in a consistent manner, such as starting with a verb or being a complete sentence. Keep in mind that lists can be as few as one item or as many as 10, though a long list weakens effectiveness. Your bulleted items also become excellent candidates for slides in an electronic presentation, such as a PowerPoint presentation, that you may later put together for meetings with potential investors, department heads, or other readers of your plan. “The physical appearance of a plan (layout, binder, etc.) isn’t significant in making the investment decision. But it sets your mind in a certain frame if it is well done. And it is certainly a negative if it’s done wrong or poorly.” Eugene Kleiner Venture Capitalist Know How and When to Be Redundant Writing a business plan gives you the rarely granted right to repeat yourself. People do not read a plan from start to finish; they turn first to the sections that most interest them and then skip around. For this reason, it may be beneficial to refer in one section to conclusions you have reached in another. For instance, when addressing the issue of staff training in your Operations section, you can refer to the importance of high-quality service to your target market, and underscore the wisdom of choosing this market by restating information provided earlier in your plan: “Surveys indicate high-quality service is demanded by our target market — women ages 35 to 49 — who, as shown in the market analysis, spend the most per capita on our product.” Two cautions about repetition, however: 1) only repeat information that is important and impressive; and 2) don’t repeat information within the same section. “Quantity is not a virtue in a plan. Quantity of thought is important in an entrepreneur. But in some cases, there’s an inverse correlation between the size of the plan and the quality of the plan.” Andrew Anker Venture Capitalist Using Visuals in Your Plan In the case of your business plan, a picture may be worth more than a thousand words. A thousand words, after all, most likely will not be read, but a picture will definitely be looked at. Graphs, charts, and illustrations also are visually appealing; they catch the reader’s attention, forcefully explain concepts, and break up the monotony of the text. Examples of Charts to Use in Your Business Plans Here are some different types of charts you can use to help convey specific information. As you do your research and prepare your plan, look for items that can have a strong impact if presented in a more visual form, such as positive statistics on the growth or size of market. You may also want to include some of these in any electronic presentation you later put together. An electronic presentation will make your plan more compelling. For detailed instructions on what to include in such a presentation, see Chapter 18. Photographs and Illustrations Photographs can be extremely effective in your plan, especially if your company is producing a product that is unusual or difficult to understand. You can include pictures of your location, specialized equipment, or packaging but not of yourself or individual members of your management team. Photographs should be placed in the Appendix only. Illustrations help present information about products or marketing materials still in development. While generally placed in the Appendix, a small illustration can be inserted directly into the text. If an illustration is not of good quality, don’t use it; a business plan is not the place for exhibiting amateur art. Graphs and Charts Graphs and charts are excellent tools for communicating important or impressive information, so you should find ways of including them in your plan. Place charts, particularly of half-page size or less, in the text rather than in the Appendix; this will engage the reader with your plan, as many readers pay minimal attention to the Appendix. A number of inexpensive computer software programs are available for generating graphs and charts (the Excel-based Business Plan Financials package available as a supplement to this book will automatically generate professional charts based on your financial projections. Visit www.planningshop.com). Do not draw charts and graphs by hand. The four examples on page 48 help you identify various types of charts and judge when each would most appropriately be used in your business plan. For even more impact, produce and reproduce some or all of your charts and graphs in color. Chapter Summary When researching and preparing your plan, look for information and statistics that will enable you to make the most positive impression on a reader quickly — you only have five crucial minutes to do so. Find items that will be visually interesting and attractive; use photographs and images, charts and graphs to bring attention to your most impressive information. Attention-grabbing bullet points turn long passages into more readable snippets. Use numbers to support your conclusions. Keep your language believable, and use supportive comments from credible and authoritative sources. In every case, be accurate and do not make mistakes of fact.

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