By Jon Bradford, MD of Springboard
One of the most anarchical tasks when raising funding from any source is the requirement for a business plan. As someone who has historically written many business plans for others but also regularly advises start-ups in raising funding, I can honestly say that writing a business plan is a major “time sink” and should be avoided at all costs.
But maybe, I might be a little hasty. The creation and development of any business plan is a massively valuable exercise. When properly undertaken, the journey the writer of the document must undertake helps to test many of the key assumptions of a business and ultimately its potential viability.
But this can equally be one of the major flaws of any business plan. Typically the document will not be prepared by senior management but outsourced to a third party and hence the learning involved is lost. Probably the biggest problem in writing a business plan is that an undue proportion of the effort spent in the creation of the plan is writing it.
Far too much time is spent thinking about how the document is written rather than its content and even worse the formatting of the document itself. It gets worse. When the writer receives feedback about the plan, additional revisions and amendments typically lead to further confusion. When the plan is finally presented to the funder, they will have their own personal view about the content and formatting of the document and this is no guarantee that they will actually provide you with funding.
So how can one address this problem?
Simply put, don’t write a business plan. Common practice in the United States is the creation of a “slide deck”, with each slide representing each section that you would ordinarily include within a business plan. However, the focus of this “slide deck” is upon its content rather than its grammar and formatting. Each slide should have evidence to support its contents and together they represent all of the elements of a business plan.
Edits and amends to the plan only take a matter of minutes and it creates a great platform on which you can articulate your plans to third parties such as funders. Feedback can be quickly incorporated and it is possible to get a steer on what a funder is most interested in and whether they are likely to fund the proposition.
Possibly the most soul-destroying task I historically undertook as a Venture Capitalist was reviewing and binning business plans that clearly had taken considerable amounts of time to prepare but had fundamental flaws. If the team had presented their ideas in the form of a simple presentation, we could have all saved a lot of time.
Before you start to tell me that I am completely delusionary, I do accept the point that no (typical) UK funder will accept a “slide deck” in lieu of a business plan. However, I believe and I tell my teams to sit down and write a business plan if, and only if, they believe there is a high degree of certainty that a funder is likely to write them a cheque.
And finally, let’s not forget, any business plan is a living document. The moment immediately after the business plan has been finished is the point at which the document is out of date.
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