What Makes A Good Business Plan Great

Most companies have some sort of business plan, especially ones seeking outside financing or investors. Unfortunately, while there is quantity there rarely is quality. We have reviewed hundreds of business plans and 95 out of 100 miss the mark. Most say way to too little about what really matters and way too much about what does not matter.
While we all secretly wish we could do our plan on the back of a cocktail napkin, the good news is that putting in the effort to create a quality business plan will help you not only secure what you need today but set the stage to get the most out of your Company’s long term opportunity.
What goes into a Business Plan?
Putting together a business plan is not rocket science, which is probably why everyone seems to have written one. The formats are almost always the same - Executive Summary, Description of Products and Services, Company History, Operations, Industry, Competition, Growth and Marketing Strategies, Management Experience, and Projected and Historical Financial Statements. We have no desire to recreate the wheel here.
What Goes into A Quality Business Plan?
A quality plan always addresses four key points that can mean the difference in achieving your desired outcome.
1. Where is the Company today? First and foremost, readers have to understand your company’s current position. Is it a leader in the industry? If so, how? Who are its top customers? How big is the Company? What is the experience and accomplishments of management? Who are its biggest competitors? To be fair, most plans get this right.
2. What are the Company’s growth strategies? How SPECIFICALLY, is your company going to realize its ‘tremendous market potential?’ How is it going to sign up new customers? Will there be a direct sales team? What will be their compensation plan? If you advertise, how will you advertise and how much will it cost? If you plan to buy a company, what Company? Why does it make sense to buy them? You would be surprised how many plans paint a glowing big picture but supply few details like these.
3. What evidence do you have that this growth plan is going to work? This point is the most often overlooked aspect in most business plans! Before formally writing any plan, we draft and review with our clients all the ‘evidence’ of why we think this company is going to succeed. We then take that ‘evidence’ and highlight it throughout the plan. In most poorly written plans there are glowing adjectives about the market opportunity (words like “unparalleled”, “enormous”, “first mover”) but little ‘evidence’ as to why THEIR company is uniquely qualified to succeed. Useful evidence we have referenced in the past could include backlog schedules, revenue growth from existing customers, financials combining the client and an acquisition target, detailed explanations of management’s unique experience or relationships or a restated income statement that strips out non-recurring expenses (that were needed for growth but have dragged down today’s earnings). Our goal is to find enough credible points of evidence that our growth plan becomes a no-brainer. Investors like no-brainers. Very few plans clearly make this connection. What is the financial potential of your company? If you’ve addressed points 1 to 3, the last objective is to fill in the holes. Show detailed projections that translate your growth opportunity into financial statements. True, no company ever hits its numbers, but detailed projections give management more financing options. With detailed projections companies may qualify for debt instead of equity (thus lowering their ownership dilution). Also, most sophisticated investors discount business plan projections by 25% to 50% because experience has shown (poorly written plans) are usually overly optimistic. Knowing this, we have experience helping clients ‘earn back’ that discount as the company meets or exceeds those (detailed) projections. This approach has saved companies millions in equity and financing costs and can only be realized with detailed projections.

What’s A Quality Business Plan Worth?
While some readers may see hundreds or thousands of business plans each year, your goal isn’t just to get their attention, it is to get the best possible terms for whatever your objective - whether getting financing, or signing a large customer or possibly engaging a joint venture partner. A quality plan translates your compelling business opportunity into a story that grabs a readers’ attention, answers their most important questions and lays the groundwork for a deal that pays dividends for years to come. What’s that worth to you?

Visit Lantern Capital Advisors For Help With A World Class Business Plan