Many people ask how many graphs or charts they should have in their business plans. As with most other business planning questions, the answer is “it depends”. This article discusses the key factors influencing the number of graphs and charts to include in your business plan.
To begin, the key point to consider in developing your business plan is the time restraints of your audience. If your audience is a retired angel investor, he may have few obligations and can spend an hour reviewing your business plan. However, the more likely scenario is that a venture capitalist, corporate investor or loan officer will review your plan while sitting at a desk topped with fifty other business plans. As such, it is critical that your plan conveys its key points quickly and easily – this is where graphs or charts come in.
In determining whether to use a graph or chart, consider the old adage, “a picture is worth a thousand words.” The point here is that the picture should save a thousand words. That is, the graph or chart should supplement the text; it should not be explained ad naseum in the text, or that defeats its purpose. Likewise, the graph or chart must be relevant and support the text, rather than detract from it.
In addition to respecting the time constraints of the audience, the business plan must respect the audience’s energy level. That is, after reading seven business plans, an investor is likely to skip a page with 400 words of straight text. Even if no charts are applicable to support the page, Growthink suggests using appropriate spacing and/or callout boxes (e.g., key text phrases highlighted in boxes) to make the page more readable.
Clearly, technical drawings and operational designs need to be visually presented in the business plan. Without them, huge volumes of text are often needed to explain relatively simple processes. Importantly, when the text references these charts, the charts should be easily accessible. That is, the chart should be on the same page as the text, rather than forcing the audience to continually turn to an appendix. If the chart is referenced on numerous pages, each page should show the piece of the chart that reflects the text, with the full chart appearing only once in the plan.
Finally, if the business plan is being presented to one or few investors, the amount of graphs and charts should reflect the wants, needs and sophistication of those few readers. For instance, if the plan is being presented only to strategic investors who understand the market, more graphs may be appropriate to convey information for which these investors already have background knowledge.
Conversely, always keep in mind that the plan is not a slide presentation, and too many graphs and charts may position the company as one that is too lazy to complete the process of developing a formal business plan.
To summarize, the amount of charts and graphs used in the business plan must reflect the audience for the plan; an audience that is usually time and energy constrained. The charts and graphs must complement the text, enable the audience to quickly and easily digest the information, and as always, interest the audience in taking the next step (e.g., scheduling an in-person meeting) in the investment process.
About the author:
As President of Growthink Business Plans, Dave Lavinsky has helped the company become one of the premier business plan development firms. Since its inception, Growthink has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share.
Are you planning to start a new business? Or are you considering expanding your current business and require a bank loan or investment from outsiders?
If you are going to look for an investment of capital it is quite likely that you will be required to have a business plan. If you are starting a business, despite the work involved, a business plan can prepare you for the obstacles ahead and help ensure your success.
A business plan is something that many small businesses fail to create, however, many business owners are adamant that having a written business plan is one of the keys to their present success. Creating a business plan forces you to contemplate possible obstacles to your business and prepares you to find solutions that will help you to overcome them.
To find investors or get a bank loan, they will want to see that you have the experience or resources to run the business. They will want to see your projected income as well as your suggested repayment plan already laid out. Taking the time to do this is not only important for them, but it gives you a measuring tool to verify if your business is growing properly. You can gage your success on how close to the plan your business has actually performed. Perhaps you'll do worse, or perhaps you'll do better, either way it helps you determine how well your business is getting on.
If you have never seen a business plan before you may be concerned that is is too difficult a proposition for you to manage on your own.
While there are services available where you can hire someone to write a business plan for you, depending on your needs it may be wise to familiarize yourself with a business plan's layout. This will not only help you to provide the necessary information, but may encourage you to try your own hand at it.
There's a free tool at www.bdc.ca which will assist you in creating a business plan. Some of the topics you will be required to explain are your Market, Customer, Competition, Marketing Plan, Research & Development along with financial forecasts. You may consider hiring someone to help you with your financial sheets after completing the written part of the Business Plan.
Your Business Plan will become your guide and silent business partner - indicating where you need to improve and helping you stay one step ahead of your competition. Make it a priority to have this crucial road map for your business.
Many investors skip straight to the financial section of the business plan. It is critical that the assumptions and projections in this section be realistic. Plans that show penetration, operating margin and revenues per employee figures that are poorly reasoned, internally inconsistent or simply unrealistic greatly damage the credibility of the entire business plan. In contrast, sober, well-reasoned financial assumptions and projections communicate operational maturity and credibility.
For instance, if the company is categorized as a networking infrastructure firm, and the business plan projects 80% operating margins, investors will raise a red flag. This is because investors can readily access the operating margins of publicly-traded networking infrastructure firms and find that none have operating margins this high.
As much as possible, the financial assumptions should be based on actual results from your or other firms. As the example above indicates, it is fairly easy to look at a public company’s operating margins and use these margins to approximate your own. Likewise, the business plan should base revenue growth on other firms. Many firms find this impossible, since they believe they have a break-through product in their market, and no other company compares. In such a case, base revenue growth on companies in other industries that have had break-through products. If you expect to grow even faster than they did (maybe because of new technologies that those firms weren’t able to employ), you can include more aggressive assumptions in your business plan as long as you explain them in the text.
The financials can either enhance or significantly harm your business plan’s chances of assisting you in the capital-raising process. By doing the research to develop realistic assumptions, based on actual results of your or other companies, the financials can bolster your firm’s chances of winning investors. As importantly, the more realistic financials will also provide a better roadmap for your company’s success.
About the author: GT Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. GT Business Plans is the sister site of GT Venture Capital
Every new business owner knows that a business plan is critical – it is drilled into them by potential investors and every banking officer they meet. So why is something that is so important to the launch of a new venture so difficult to write? Good question! In this article I will try to address when you should go out and hire a business plan writer versus taking on the task yourself. First time entrepreneurs often cringe when sitting down to write their business plan. Some spend 6 months agonizing over each period and comma, and even worse others spend 6 months procrastinating and do nothing. So lets break it down and see where / when a business planning company should be brought in:
Who will read your business plan and why?
First you need to really understand the purpose of your business plan and who your audience (reader) will be. This is an important point as a business plan being written for a $100,000 loan is VERY different than a document needed for a $10 million round of venture capital! Since this article is focused on first-time small business owners, I will focus on preparing business plans raising less then $1 million in capital. For this “startup” or “seed” business plan 30-35 pages are perfect. You are not expected to deliver a thick book (and no one will read it anyway!). Once you have this down, you can honestly assess which sections you are qualified / comfortable writing and which may need consulting help.
Here is what you should write on your own
It is important for you to write a basic draft / outline of your business plan. Without this direction you are probably asking too much of your consultant. Once you have your thoughts organized on paper you can see what you are comfortable completing. Here are a few suggestions:
Executive Summary: Draft the opening of your business plan – then hire a pro to come in and re-write it. Your executive summary will be read first and first impressions are critical!
Marketing: You need to write your own definition of your target customer / audience. For the market research on industry growth and fancy charts go ahead and hire a consultant.
Competitive Analysis: You should put together the first draft of this section, as it is almost as important to understand your competitors, as it is your customers. If you find a consultant that is an expert in your field, then you can work together and add to your initial list.
The Dreaded Financials
This is the most difficult part of a startup business plan, as you are making projections and assumptions on products / services that you have not even produced or sold yet! If you are stuck on this section you can hire a business plan consultant to just assist you with completing your projections (income statement, cash flow, and balance sheet). Figuring out the cost of goods, delivery costs, and return rates can be simplified by breaking them down into a “light” spreadsheet. Next you need to understand your startup and operating costs – items like electricity, travel, phone expenses, etc. Again just organize these and your consultant can make all the fancy charts and graphs. Just make sure you understand all of the assumptions – for example if you are opening a retail business, you should not look towards your consultant to “guess” your rent – go out and meet with a realtor and come back with real data. If you work closely with your consultant, the financials are a great section to bring in professional help.
Managing Expectations
Now that you know a bit more about when to hire a business plan writer you also need to manage your expectations. You can’t expect a $1,000 business plan to have 20 pages of competitive analysis and a full-blown marketing strategy! If you carefully work through which sections of your business plan need outside help and then manage your consultant closely, your final document will be a success! My next two articles will focus on “How to Find / Hire a Business Plan Consultant” and more importantly “When to Fire your Business Plan Consultant!”
About the author:
Howard Schwartz is a partner in several business strategy groups, including HJ Ventures International, Inc. Howard has worked with hundreds of entrepreneurs worldwide with a focus on writing business plans for companies interested in raising capital from Venture Funds and Angel Investors. Howard’s business plans have secured several million dollars in funding.
The most important function of a business plan is to create interest among investors so that they write a check. In achieving this goal, business plan writers are often challenged by determining the proper level of optimism in their plan. That is, they must create a compelling story to investors while maintaining credibility.
Optimism shows investors that a company is confident about the market opportunity, its ability to execute on the opportunity, etc. Over-optimism, however, leads investors to believe that the management team does not fully understand the opportunity or the tough road ahead. As such, business plans must be sure to limit over-optimism and show investors they are realistic and credible.
Realism, the opposite of over-optimism, should be used in business plans to portray sobriety and credibility to investors. Realism should manifest itself in management team bios that tell the actual accomplishments of managers, rather than fluff. It should manifest itself in credible market forecasts and sober assumptions of the company’s growth.
While business plans must excite investors so they take action, if they are too optimistic, investors will discount their merit. Conversely, if they are too sober, investors may not feel they will get an adequate return on their investment. As such, business plans should present a compelling, optimistic picture, but continuously refer to hard facts and realistic assumptions to build credibility and genuine excitement
About the author: GT Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. GT Business Plans is the sister site of GT Venture Capital
Way back in business school we had to churn out business plans every semester. As soon as the assignment would drop we would be scrambling for information. Start the number crunching game, do the analysis, do some mental planning and write business plans.
Then we graduated and got jobs. But, we still have to write business plans.
I came across a collection called Business Plans from 'Business-planning-4-you' (http://business.marc8.com/ebook-info.php/name/business_plans/toc_id/1-0-1-5) a few weeks ago. The title caught my eye as I wondered who would be giving away business plans and how many? How would they manage the number of industries? I wanted to find out more.
- It seems that they have over 1500 readymade business plans in their database.
- Covers a wide range of industries: from Abattoir Business Plan to Zen Practitioner Business Plan.
- The cost is $50 as of this writing. That makes it 3 cents per business plan (50/1500 = 0.03).
- They offer about 24 extra bonuses
I know I would be happy with the business plan templates that I could modify and add my own thoughts. I think it would be like instant soup. You have bought the basic ingredient, but you still need to provide a little bit more like hot water and a bowl.
Though I haven't tried the collection myself it looks quite good. I think this would be useful if you are in business school, early part of your career, or even a seasoned business man venturing into new areas.
Till next week and all the best with your business planning! About the author:
About the Author
Sanjib Ahmad is a Product Consultant for "Business.Marc8.com - Business Best Sellers" (http://business.marc8.com).
A is a short brief that explains how a business owner, director or entrepreneur plans to orchestrate an enterprising effort that carries out the actions that are necessary in order for the effort to succeed. Basically, a business plan is the written description of a business’s business model. Those involved in the planning process and management are the most likely to use a business plan. Business plans are also used when approaching potential lenders or investors that have an interest in a particular business venture.
There is a great deal of subject matter that is addressed in a business plan including a number of sub-plans. There are a number of business plan models that can be used to create a new business plan from or there are software options like the Business Plan Pro 2004. If a business is not using a business plan software program, they will most likely follow what is considered to be a typical business plan format.
About the author:
Business Plan
A business plan is a short brief that explains how a business owner, director or entrepreneur plans to orchestrate an enterprising effort that carries out the actions that are necessary in order for the effort to succeed. Basically, a business plan is the written description of a business’s business model. Those involved in the planning process and management are the most likely to use a business plan. Business plans are also used when approaching potential lenders or investors that have an interest in a particular business venture.
There is a great deal of subject matter that is addressed in a business plan including a number of sub-plans. There are a number of business plan models that can be used to create a new business plan from or there are software options like the Business Plan Pro 2004. If a business is not using a business plan software program, they will most likely follow what is considered to be a typical business plan format.
Most business plans will begin with an executive summary that describes the basics of the business model as well as comprehensive explanations for the scheme of the plan. Next, the business plan will move into the background of the plan with a brief history of the company especially if it a newer company and background information that includes how long the company has been in business, the current number of employees, annual sales figures, the location of all the business’s facilities and a complete description of the business ownership.
Next, most business plans will detail what will be involved in their marketing efforts including the competitive environment, customer priorities, product, pricing and promotion strategies as well as the distribution strategy. The explanation of production and manufacturing should include all work procedures as well as production facility requirements, inventory requirements, equipment needs and fixed cost apportioning. Finance details the source of all funds, anticipated returns, a formal monthly cash flow statement and a list of all existing loans and liabilities. Human resources points out where responsibilities are assigned, training that will be required, necessary skills, union issues, salaries and new hiring information. Other areas that may need to be covered depending on each individual situation can include legal strategies, product research and development, marketing research and any inter-company workings.
For those who feel that they cannot complete a business plan on their own or simply don’t have the time that is needed to put together an effective business plan, there are some software options like the Business Plan Pro 2004. The Business Plan Pro creates a complete and professional looking business plan that is sure to clarify the workings of a business and impress those who see it for understanding and funding purposes. The Business Plan Pro 2004 provides preformatted tables, color charts and graphs, graphic forecaster, built-in formatting, Power Point templates and a great deal more. By using software like the Business Plan Pro 2004, the user is guaranteed to have an impressive and professional looking business plan to present to people of import.
About The Author
Greg is the webmaster and owner of " Best-Business-Plan-Tips.com" and has been researching and reporting on Business Planning for years.
