Writing a business plan

Expert advice is a must have for the start-up entrepreneur

Here at Sharp Audio, I am busy writing a business plan for the Band Off, our signature annual festival featuring a competition from local up and coming talent. When you write a business plan, it is best to take the advice of experts. By definition, almost, the author of a business plan is new to the game; advice from people who have been there before is invaluable.

This week, I happened on some wise advice from Guy Kawasaki, the erstwhile Apple guru who metamorphed into a business consultant. On his blog, he often talks about the needs of start-up companies, since that is what he does in his day job: listen to investment pitches. He has nine points of good advice.

I won’t share it all with you (you can read the blog yourself), but I would like to highlight some important point Kawasaki raised that I will be taking to heart.

1. Catalyze fantasy. The very nature of the business plan makes it an exercise in guess work. While we want that guesswork to be as accurate as possible, simply hearing some industry analyst speak highly of the market is not enough. The plan, like the pitch, must capture the imagination of the audience and make them see why it makes excellent sense as a reality.
2. Approach your business plan not as a means of raising money, but as a means of analyzing your business to make it the best it can be. Focus on your objectives (what you are going to do) your strategies (how you are going to do it) and your tactics (who, where and when you are going to make it happen). Money follows ability. Show that the money your investors give you will be effective, and you are more likely to get funded. And even if you don’t, you still have a plan for your business.
3. A good business plan is an extension of an excellent pitch. Rather than writing a long, boring, ineffective plan and then basing a pitch that itself will not work, write a good pitch, a short, pithy, approachable synopsis of what your business is and what it will do, then expand it into a full business plan. Investors are sold by the pitch; they read the business plan next out of due diligence.

I also looked at the website of SCORE in Chicago, a large, but friendly market. One of their expert retired executives, Peg Corwin, gave an excellent rundown on how to estimate expenses for a startup, one of the more difficult tasks in creating a business plan.

Corwin offered three suggestions: get competitive quotes; break it down then build it up and get industry feedback.

The first suggestion applies to actual expenses like rent, insurance and raw materials. Get quotes from suppliers and collate them into your expense calculations. Most of the business plan is speculation; this is one area where you can bring in the facts. Do it.

Second, Corwin has what she calls estimating the pieces and building up the costs. For example, rather than pulling a travel expense number out of the air, figure out the cost of a taxi ride and multiply it by the three associates that will be claiming that expense.

The most important suggestion for numbers that do not lend themselves to actualization is to get industry feedback. Network, research, interview. Learn what others have experienced and develop your financials accordingly. They will have more credence if they are in line with industry projections and industry ratios.

There are other experts out there, I’m sure, but the advice from these two I have found helpful in the past and are sure to be helpful in the future. I hope it helps you, too.