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Friday, August 28, 2009

Designing an Effective Business Plan

There are fundamental points every entrepreneur should bear in mind when preparing a business plan. Most entrepreneurs approach the task of writing a business plan from an external point of view, focusing primarily on impressing the prospective investor or sponsor. While it is Ok to write a convincing plan, a superfluous plan that is designed solely to impress often become counter-productive. Bear in mind that the reader is also evaluating you as a person. Most times, the person reading your plan will approach it from a rather critical if not suspicious mindset. So he is also checking to see if your facts add up.

To this end it is important to highlight a few points which I think every entrepreneur should note when preparing a business plan. A good business plan should contain the following four elements: A Summary; your own pedigree or qualification; the purpose of the business; and the profit potential.


This should be a short, preferably three-sentence paragraph that should be capable of awakening the interest of the reader. Endeavor to put in all the relevant facts here in the summary such that the listener or reader will want to know more. Your summary segment should contain an overview of the entire business plan, namely, the history or background of the intended business, the business dynamics, the anticipated profit, and why you are capable of running ( or what qualifies you to run) such a business.

Your Pedigree:

Bear in mind that the reader of or listener to your business plan is not going to base their trust solely on a piece of paper called a plan, but to a larger extent on a promise made by a capable person (you) to deliver the ideas on the plan. So, who are you with regards to the business you are proposing? You need to convince your audience that you have enough expertise, experience, and enthusiasm for the business at hand. Find ways to highlight your knowledge of and training in this area of activity, and the fact that you really believe in the viability of the project.

The Business:

Under this heading you should address such questions as "what do you want to do?" and "how do you want to do it?" This is where you state the purpose of the business. No vagueness in expression or description is permissible here. Any investor, banker, staff, just about any stakeholder in the proposed business is interested in how definite you are concerning the purpose of the business, how sound the business proposal is, and what steps are in place to ensure its implementation. This heading should equally address issues like production, marketing, sales, risk analysis, and implementation steps.

The Profit:

Resist the urge to inflate or exaggerate the profit potential of the business. You'll only end up inviting deeper scrutiny if your profit projections look too good to be true. Only a fool and his money are easily parted, and most business financiers have seen it all. They are no fools. So, knowing that the audience is of sound mind, it's better to present realistic and believable figures based on facts or clearly supported assumptions.

So if you want your business plan to attract positive evaluation, keep these points in mind. Remember that the true value of a business plan is how it helps you to achieve the aims of this business, and how clearly it helps your audience to understand what the proposed business is all about, in terms of purpose, process and potentials. If your business plan promises huge profits but is silent on the actual business process and your capabilities, it is incomplete and unlikely to convince anybody to buy into your plan.


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