Thursday, February 7, 2013

Proper Techniques to Business Plan Writing

Proper techniques to business plan writing with Dr.Steven Gedeon - PhD, MBA, PEng, Venture Capitalist and Entrepreneur.

Business Plan Writing - Question and Answers

Is a business plan useful just for the entrepreneur?

Steve: business plans play a variety of roles. Certainly a number of business I have started up, we never had a business plan. I have seen a lot of well written documents and I said don't waste your time writing a business plan.

Certainly for some businesses you shouldn't waste your time, just get out there and just do it, do it,do it,do it and why bother write it down on a piece of paper. But business plan certainly play a very key role for certain reasons, for example: If you're trying to raise financing or to promote yourself as a credible intelligent entrepreneur. You should keep it short, I would say very few people will read more than twenty, twenty five pages. A lot of people won't go beyond the executive summary before they make a decision on it. So, there are a lot more of different reasons to write a business plan.

What are some strategies to get what is in my head right on the paper? Do I have to think about an outline before everything or should I start writing right away?

Steve: Writing the business plan itself is not nearly as important, as the process by which you think through what is a successful business. If you think through and write through what makes a successful business then the business plan will write itself.

So, when I teach the course for example, what I start with is saying: Just write down what your idea is? Clearly and succinctly what is your idea?

Surprisingly that's hard for a lot of people. It seems clear in their own mind, but when they try to put it down on a piece of paper, the idea get's buried under too many words. You've got to be able to convey what your idea is in a sentence, maybe two. If you can't clearly articulated it in a paragraph, then it's not clear in your own mind. That's the first phase: What is it?.

Then second phase, I usually go through is: I say tell me in detail who your customer is and why they care?

Very often what'll happen is as people think about who their customer is and why they care, then they have to go back and change what the original idea was. So, the idea of being able to really focus on who that customer is, is so important and most entrepreneurs don't get this. What they do is; they say I'm selling to women, well the problem is you can't sell to women.

The thing I like to say to students sometimes is: imagine you started a company, there's a telephone start making phone calls. You are selling to women! - what are you going to do? Just pick up the phone and call the first person: Hi, are you a woman ? let me sell at you or stand on the street corner in a chicken outfit, hey women buy my thing !. All this is wrong.
You have to have in mind a particular woman, doing a particular thing. What is it about that particular individual that makes them pay attention to your idea, love your idea and buy from you. The more you can focus on, the better you can articulate who that target demographic is.
Get to know their psycho-graphics what they read?, where they hang out? - The more you know, the better you can place your message in a place where they'll see it
Just to make clear; by doing the above analysis we are still working through, think through the right business. That wasn't executive summary writing.
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The business planning process itself - Dr.Steven Gedeon

Most business planning books seem to say: you start at the beginning and you write through the end. But that's not what you think through business. The way you think through business is: you start, you start thinking through a little bit, then you realize you got to go back to the beginning and start over again. Then you think a little bit more and go back to the beginning  So you have this cycling process to go through before you finally figured out how to make it all hang together. Now you can start writing a business plan.

So the first thing you do is: to say in general terms what is the business; then say who I am selling to, remember this is in detail not just: women or people between the ages of twenty five and thirty five; people are different you got to honor that when you're trying to sell your product to them. As example, Figuring out who your customer is, it will tell what the price point need to be.

Then obviously you need to look at who your competitors are. Then comes kind of the core business concept of strategy, - How are you different from your competitors in a way that's important to your customer. Which means you got to know who the competitors are, who the customers are, and you got to know how are you different. Now that you figure that out, you probably have to go back and rewrite what your business is all about.

At any time in this process should you be taking breaks to talk to any potential customers?

Steve: The market will tell you anything you need if you ask it. But so many people write these business plans that are castles in the sky, dreams based on: You know it's a billion dollar market, and I'm gonna just get a fraction of it, and they act like that means anything. That's not the way businesses are build, businesses are built one customer at the time, once sale at the time.

As a venture capitalist I am sure you looked through hundreds of business plans, what was the most important component or what did you first look at to determinate if you should keep on reading a business plan?

Steve: I can speak with the authority on this matter, everybody agrees on this point. First thing you look at is the executive summary; but the first thing you really look at is the management team. People will bet on the jockey before they bet on the horse  People will bet on an "A" team with a "B" plan over an "A" plan with a "B" team. So they look at the management, the overall business idea and then right to the financials.

This is it for now, feel free to leave your thoughts and do not forget to share.