Business Plan Reviews

I used to be involved in franchise sales and I reviewed countless business plans in that capacity to ensure that our potential franchisees understood not only what they were getting into but that they were properly capitalized so that they would have the best chance of success. I was recently asked about how to take a reality based approach to business planning.

- What sections are the most essential elements of the business plan?

 Income and expenses.  The main thing I would look for was whether the individual had allocated enough money for marketing purposes and whether or not their income and expenses looked realistic.

 - What story should the business plan tell?

Where does the money come from and how is the money going to be spent.  Everything else is fluff. Either the person understands how their proposed business makes money and what they need to do to realize that potential, or they don’t.

- What common business plan mistakes do you see the most?

Most people over-estimate their income and under-estimate their expenses. Business plans are a work of optimism. The problem is – they also need to be realistic. Understanding what is realistic is key.

- What is your advice for startups and entrepreneurs that are writing or refining their business plan for review?

Halve your income and double your expenses. 

- What is the most vital piece of information in the business plan? 

 How long until you realistically break even? Do you have enough capital to ensure that you can make it that far? Too often people over-estimate their income and under-estimate their expenses. Then, just as they are starting to gain traction, their money starts to run out so they cut expenses in the only place they can – which is their marketing. When that happens, they tend to die a slow death.   Understanding, realistically, what has to be invested and how long until you see a realistic return at your break even point – will help you avoid this fate.

- What is your #1 business plan advice?

Halve your income and double your expenses. If you still want to do this with your worst-case scenario numbers, take the leap.

- Anything else that you'd like to add - that relates to the composition of a business plan? 

Make sure you understand your motives for starting a business. Why is it you are doing this?  Without truly understanding your own motivations, you may not have the stick to-it-ness that will help you keep going when things get tough. And… they are going to get tough.

The best motivations are working to help other people. If all you want to do is make money, then you probably won’t stick it out when the going gets tough. If you want to help people, nothing will stop you.

To learn more about how to make better more realistic decisions, take my online course; Reality Based Decision Making for Effective Strategy Development.

If you want to learn more about humanistic management – take the short self-study problem – Principles of Humanistic Management