Rules for effective Business Plan

Sarayu Srinivasan
Sarayu Srinivasan
Intel Capital
The written business plan is often the first contact an entrepreneur has with the investment community. It presents the company on paper before the company can represent itself and opens the door to all subsequent interaction.

As an investor, I evaluate a lot of plans. Unfortunately, many of the plans that come across my desk are uncompelling – poorly structured, unnecessarily long, too casual, loaded with spelling and grammatical errors, encumbered by extraneous details or, conversely, too light on relevant information. The number of basic avoidable mistakes is great. You will note that the low plan quality refers not to actual content (product, service, opportunity) but more about how the information is or is not presented. Part of this syndrome can be attributed to the nascent process of venture capital fundraising in an emerging market. The fundraising cycle, consisting of creating a plan and a pitch, targeting certain investors, taking investor meetings, and so on is fairly standardized in developed markets simply because it has been practiced and perfected with a well documented, consultable history behind it. Time is a precious resource for investors and the high volume of plans and competing priorities can easily turn a difficult-to-digest plan into a passed-on plan. Deftly evaluating a plan, therefore, becomes paramount. A more detailed version of the plan can exist but for the first go round you don't want to run the risk of losing your audience.

Ideally, a first plan should include only key components of the business with growth drivers and brakes. Seems simple enough, right? In reality, crafting a concise but readable plan can be a daunting task. What is included? What is left out or saved for subsequent discussions? Writing an effective plan is a discipline and a developed skill, usually resulting from an iterative process. The plan will likely see several incarnations where it is picked apart, rearranged, and refined before it is in a final form. Remember, this living document must summarize the details succinctly and compellingly without losing meaning and focus. No small feat; especially when it is your business and every detail seems critical to conveying the business idea.

Generally, business plans seem to come across best in a PowerPoint format, but format and sequence (assuming a logical flow) are matters of preference. In my opinion, a plan should not exceed fifteen pages; any additional data should go in to an appendix. The plan also should be able to stand alone; in other words to be read and understood without the benefit of the author's narration.
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Reader's comments(1)
1: I pretty much liked some of the ideas shared across this article. Some of the points to ponder:
1. A picture if worth a thousand words: I know till now we haven't had any roles of pictures in a business plan. Pictures are not just colorful images, get creative and unleash its power.
2. Using Power Point: If you have a huge doco for your business plan, it's worth creating a high level power point and adding references in it for the detailed doco.
Posted by:Rohan Ahluwalia - 27 Aug, 2009

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