Notes for Preparing Your Business Plan

The first paragraph of your business plan is of critical importance. If you don’t grab the reader’s interest and attention with the first paragraph, they are unlikely to read further. Remember, your completed PPM will be more than 100 pages. You need to give the reader a good reason TO READ IT. Having someone review your business plan for the following is a good idea.

1. You need to write the Business Plan to the level of your investor prospect profile. If you are not soliciting institutional investors but Accredited Investors, the plan needs to be written to their level of understanding.
2. You should refer to any confidential information generically and offer to provide it under a separate confidentiality agreement. (Information in the public forum cannot be enforced in a confidentiality agreement. Also, it allows you to verify who is requesting the information in the event it is a competitor.
3. What information is missing? Such as not including:
   • a. An executive summary. A summary is not a business plan. It’s a summary of the business plan.
   • b. Does your business plan include a SWOT Analysis? (Strength / Weakness / Opportunities / Threats.)
   • c. An understandable description of the business.
   • d. Provide a clear description of the products or services.
   • e. A detailed background of the founder(s). (curriculum vitae)
   • f. Marketing Plan
   • g. Pro Forma financials.

Author’s Comment:

You should keep all the notes you use as the basis of your proforma forever. Think about how difficult it is to be on the witness stand five years from now, trying to remember what you were thinking when you put together the proforma numbers. Having a set of detailed notes that you created contemporaneously with the pro forma is an excellent future strategy.

Author’s Comment 2:

It is not a good idea to use:

• • Unexplained abbreviations.
  • Big words to show how smart you are.
  • Word playing is when you say one thing and imply something else. (There is a big difference between honest mistakes and deliberate mistakes.)

Author’s Comment 3:

• • When you engage in ‘word playing,’ you provide direct proof that you intended to mislead the investors deliberately. That’s not smart…
  • Fixed statements that you cannot prove. Unsupported representations.
    Example…Our exit strategy for the investors is to “take the company public”.

NEXT: What Documents do You give to the Prospective Investor?