What makes a Good Business Plan?

At my former job in a major investment firm, I had the responsibility of developing new business for the firm.  In that position I received about 40 business plans a week from entrepreneurs and senior managers of companies seeking financing, and I reviewed about 25 per week.  Why didn’t I read all 40 plans?  Here’s why.

The opening section of a business plan is the business description probably written in two paragraphs.  Here the writer describes his business and product and indicates what his target market is.  If after reading the opening paragraphs I do not know what his business is or what he is talking about, I reject it and move on to the next business plan.  A writer has to write his business plan in a way that is easily understood and is simply written.  If you are an engineer and cannot relate your business in simple terms, then get someone else to write it.  There is no excuse.

I also look at the sentence construction, grammar and spelling.  If there are spelling mistakes or grammatical errors, it indicates to me that the writer has exhibited a level of care which is not conducive to managing and growing a company.  He is neglectful and pays no attention to detail.  If you have a shot at having a professional investor look at your plan, then by all means make sure that you have done your research accurately, use proper grammar and your financial information is added correctly.

When I have a business plan to evaluate I look at its presentation.  Is it neat and attractively done so that it would make you want to open it up and begin reading it?  Does it indicate what the business is and what the product is, how you are going to make money and what your profit will be?  Is what you say in the first section of the plan supported by the financial information in the second section of the plan? Are your profit margins, return on investment, and return on equity comparable with similar companies in your industry?

When you are constructing your business plan, heed the above and you will be sure to generate interest in an investor to read your plan.

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