Lessons from 10 years of writing business plans (part 2)
It’s been ten years and 300+ business plans since I started writing business plans and looking back I have gained some insights about the process (and art?) of creating these ubiquitous document, no matter their form: executive summary, one-pager, investor presentation or strategic plan. Specifically, I have come to believe that a successful business plan comes down to nailing three (it’s always three, huh!?) major aspects: balance, storytelling and attitude. I covered all matters of balance in part 1. This means it is time to talk about storytelling.
Yes, it’s not simply a plan. It’s a story
“Those who tell the stories rule the world.” — Hopi American Indian proverb
People read business plans (well some do, in any case) and like any reading material it should be an interesting story. What kind of story really depends on the writer and the product or service. It can be a romance story, between the market’s unmet needs, and the solution the hero coming to meet those needs, or it could be a thriller, building up tension with the growing gap in the market until all tension is released when we realize our hero (read: product) will save the day. The story needs to draw in the readers from the get-go as they identify with the market needs and feel the “hunger”. It then climaxes naturally to the solution section which invariably solves all existing problems in a smart and satisfying way.
But even within basic story-telling there are several things you should take into account. Here are my two cents:
“If you wish to influence an individual or a group to embrace a particular value in their daily lives, tell them a compelling story.” -Annette Simmons
When you read a story you want it to carry you along. This means that it has to flow from one chapter to the next. Business plans are the same. There has to be a logical order to their structure. For the reader each section should raise questions that the next section answers, and our company should be presented as the one to solve these questions with a new product, service or business model.
What this means for you: Make sure that your document “flows” that you do not zig-zag between the need and the market and then go back to talk about the solution and again back to the market. Do no repeat yourself, and keep the energy flowing. The best order is very similar to what you were probably told in high-school writing: intro, question, answer and details.
The intro is simply the first part of the plan, which should outline basically the whole plan. This is very important as many people will not really read beyond this point. This is your elevator speech and the basic information any savvy investor will need to know about your company.
The “question” is relative to what the plan is about. It can be an interesting representative of the demand (“1 million people each day eat ice cream”), or a need (“ice cream makes people fat”). But it should raise awareness to the fact that there is some gap between demand/need and supply/solution.
The “answer” is the service or product. The reason why this will solve the need that we presented before. And the “details” is all the information that is relevant such as the market, competitors and business strategy.
What makes it difficult is that this is really a story about numbers. And numbers are rarely very interesting to the common reader. This is where the real challenge lays and what differentiates a good business plan from the herd of mediocre plans.
It’s about the next step. All the rest is pure sci-fi
“Stories of imagination tend to upset those without one.” — Terry Pratchett
Whenever I work with a startup founders, there will come a time when they get that glint in their eyes about their vision and how to achieve it: “We’ll do this and then that and after that we’ll get a gazillion customer and we will use big data and machine learning and personalize everything and then they will throw their money at us!”. Or something like that.
However, we are writing a business plan, not a sci-fi or fantasy story. If we don’t get past the first step we will never reach our vision. So this first step is our story. The next step will be the sequel.
What this means for you: Vision is nice. It’s inspiring. But to achieve your vision you must first succeed in your first step. And then in the second. And then in the third. And so on. There is no way to plan for all the surprises you will encounter along the way. So don’t. State you vision, but plan on achieving only the next step, the next milestone, surviving the next year. You can and should plan that. All the rest, leave for vision seminars with the founding team.
Cookie-cutter technique just don’t cut it
“Storytelling is the most powerful way to put ideas into the world today.” — Robert McKee
Do you think Stephen King writes his books by using a template he downloaded from the internet? Would you read such a book? I know I wouldn’t. And yet I have seen an endless number of business plan templates (and I’ll probably upload a few of my own soon) and met the people who attempt to use them. It never works properly. The results are clunky and unreadable.
Truthfully, every time I set out to write a new plan I find out that each plan is unique and is best built fresh from the ground up. The main reason for that is that the plan is a reflection of the company and project and should have its own internal logic, story and flow. So aside from the headers, there is no real use for templates. They actually create more work when you try to fit your story in to someone else’s template.
What this means for you: You don’t need a template. You need the headers for a business plan. Well, here they are:
About the company
The Business Case
Now go and write about each part as if you invented the concept of the business plan.
If you have to explain it — you did it wrong
“Humans are not ideally set up to understand logic; they are ideally set up to understand stories.” — Roger C. Schank
Business plans are like jokes. If you have to explain them they don’t work. So if someone asks a question about some information that should be in the plan (or maybe something that actually is in the plan) you know that you did it wrong. Go back and rewrite and make sure that the answer to that question can be easily found in the plan.
What this means for you: Let as many people as you can read your business plans. Let them ask their questions and make sure that each time you hear a question it will be addressed in the next version of your plan. Yes, this is a never-ending cycle, but that is the way it should be. Always be revising your business plan.
Get the information out fast
“No, no! The adventures first, explanations take such a dreadful time.” -Lewis Carroll
On a similar note, take into account that most people don’t really read. They might browse the plan, but will not read every sentence and every word of it. It is therefore vital that you can show them what they really need to know straightaway.
When I started out I would write several paragraphs about a subject and everything would lead to the point I was making (known as “the punch”) which would appear at the very end of that section. The common reaction from readers would be to stop reading after a single paragraph and ask me about the point. Read on, I would say. It’s right there. At the bottom. Big fail!
What this means for you: If there’s something you want to say, say it first. Start with the punch. Then delve into the reasoning that led you there. That way anyone skimming the document will read it and understand.
Write a lot, delete 90%
“When you write a story, you’re telling yourself the story. When you rewrite, your main job is taking out all the things that are not the story.” -Stephen King
A good read does not mean a lengthy read. Most business plans should aim to be tight and focused, and mainly short. However, most times it is actually easier to write a lengthy document, let the page soak in all the possible information (remember all the questions from the previous section?). The problem is that you don’t always know when you write something what is and what isn’t important. For that reason you need to write everything. Once it’s written, you can re-read it and delete anything that’s really no interesting, important or relevant. That would be something like 90% of what you wrote. That’s good. The remaining 10% will be gold.
What this means for you: Be liberal with the delete key. Look at each sentence and think — will this business plan or section still make sense if this sentence is gone? If the answer is yet — delete away!
Summing up part 2
“Some of these things are true and some of them lies. But they are all good stories.” — Hilary Mantel (Wolf Hall)
If you want someone to read your business plan make it readable. Make it a story that will entertain and educate. How do you know it works? Read it to yourself. Aloud. See if it flows into a compelling tale. Then read it to other people and see if they understand. Don’t try to work off of templates, write your own story.
In the next (and final) installment I will talk about attitude and how it shapes how you and your business are perceived.
Originally published on Investable Solutions’ blog.
Yossi is a partner in Investable Solutions, a boutique consulting company made out of specialists in technology and venture funding and aimed at making sure startups maximize their fundability and investor’s time is not wasted with companies seeking capital pre-maturely. He is also a mentor in several accelerators and incubators in Israel