Saturday, September 18, 2010

Business Plan Writers - Know Your Audience

By Mahesh Raj Mohan

Writing a business plan can be a difficult process. Even if you know your product/service suite down cold, understand the strengths/weaknesses of the competition, and have built pro forma financials that are sane ... you still have to write the plan for a particular audience. What does that mean? A loan officer, angel investor, and venture capitalist are all looking for different things in a business plan. Your business plan’s writing style should take their preferences into account.

So what writing styles should you use for these very different audiences?

Bank Loan Officer: A business plan for bank lending should reflect a “meat and potatoes” writing style. Clarity is the name of the game. Avoid conversational, first-person writing. (“Hi, I’m writing this plan because ...” “I’ve put a lot of blood, sweat, and tears into this idea ...” “Funding is important to me because ...”) Avoid personal pronouns like, “my, our, we, and us,” in general.

The Executive Summary for a bank lending plan should be a literal summary of the entire business plan, with a paragraph roughly devoted to the product/service, market, industry, marketing, and management. Make the repayment terms as clear as possible at either the beginning or end of the Executive Summary. Keep in mind that a Small Business Administration-backed loan requires certain sections for a business plan. (You can read more about that here.)

Angel Investor: Writing a business plan for angel investors can be tricky. If you’re pitching your plan to Aunt Mary or Uncle Butch, then a conversational tone is probably okay. If you’re pitching to a member of an organized angel group, then a business-like tone is in order. For many angel investors, letting them know “What’s In It For Me” (WIIFM) is critical.

Applying a narrative approach to the problem you’re solving can also be helpful. (“According to XYZ Research, 30,000 people expressed a desire for Widget. However, there are no Widgets available. Until now.”) More stringent analyses of your competitors (through a Porter’s Five Forces model or SWOT analysis) are also helpful. They let an angel investor know why your idea is worth their hard-earned dollars.

Venture Capitalist: As you probably know, venture capitalists are extremely busy individuals. They will likely only read your plan’s Executive Summary – at first. Make it compelling, free of typos, compelling, concise, and, oh yes ... compelling. As with angel investment plans, it’s important to “lead with the need” in the opening paragraphs, stating the problem you are intending to solve. Alternatively, a strong opening that focuses on the “total addressable market” in clear and concise language is also appropriate.

Make sure the venture capitalist understands you’ve done your homework, but avoid making grandstanding statements (“The Widget will revolutionize the world.”) The latest market research is crucial – but choose carefully. A report projecting a sector will achieve $70 billion in revenue by 2014 will make you look like an amateur. Focus on your designated market area instead.

Always keep in mind that a business plan is a “living document.” The content and financials within can change as you see fit. Conversely, you may want to keep the fundamentals of the plan, but focus on a different audience. For example, if you decide outside investment is more appropriate for your concept than a bank loan, then the writing style should change accordingly.

A writing style that presents your idea attractively can pay dividends in other ways. Your investor will realize you care about attention to detail. The investor will certainly appreciate the effort you put into creating a professionally-written business plan.

The way your plan is written can give you the edge you need when pitching your dream.

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Today’s guest blog post is by Mahesh Raj Mohan, a freelance writer and editor based in Portland, Oregon. He possesses 15 years of experience as a professional writer. He has written or edited thousands of business plans and served as a business plan consultant for numerous entrepreneurs. You can reach him directly by email or via his website.


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14 comments:

  1. What a great post--just a few days ago business plans were a topic of discussion on a forum I'm a part of. I realized that writing one can be very intimidating for people precisely because we don't often find this kind of information in such a straight-forward manner. Many will put off writing one altogether, or if they're in a position where they need one for funding purposes, it becomes such an overwhelming task that it takes focus away from the real goals of starting one's business. It's great to see it broken down into specific audiences, with tips we can actually use. Thanks!

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  2. Thank you for your kind words and feedback, Natalia, :-) I am pleased that you and folks you know can find some use from this!

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  3. Great post. This is one of the few times that I've (correctly) seen business plans discussed as marketing documents.

    Most entrepreneurs think that there business plan should simply present their roadmap. But rather, the plan must essentially market the company to investors and lenders, and answer “What’s In It For Me” as you mentioned.

    I would like to add that the most important words in your business plan should be "We are uniquely qualified to succeed because." And then follow these words with what about your team, your market, your customers, your products, etc. that make you uniquely qualified to be successful. And if you can't think of anything off the cuff, spend time on this. As figuring out how you will become uniquely qualified to succeed will allow you to do just that.

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  5. I like the helpful information you provide in your articles. The business plan writers always plan according to your goals so that you get everything that you need from your business. They always keep contact with the business and work according to the market needs. Best of luck for the next! Thanks for sharing…….

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