Beware of the Cookie Cutter Business Plan Part 4 By Dean Craven
May 7, 2021 - May 7, 2021
A (Business) Plan for all Seasons
(apologies to Robert Bolt)
For many decades the three phases of business planning have been stated as:
- Where are we now? [Discovery]
- Where do we want to be? [Strategy]
- How do we get there? [Execution]
The first three articles in this series discussed these Discovery, Strategy and Execution phases.
In this final article I will look at the different formats of a Business Plan and how they are used, from keeping yourself accountable to meet your targets to pitching for investment funds.
‘Business Plan’ is a term that has a number of interpretations, dependent on its purpose and format.
The Business Plan (in whichever format) articulates:
- What objectives a business sets out to achieve in a given timeframe
- The elements of the business that will need to improve or change if the objectives are to be met
- Who will be involved
- When things will happen and
- When will I know we can celebrate success!
Choosing the right format to meet your purpose is important for its effectiveness.
You have completed the Discovery, Strategy and Execution phases of planning and so have all the detail you need for any one of the formats.
The exercise ahead of you now is to determine when that information needs to be summarised and when the detail is required…and what to leave out to remain concise.
I like to break this down into a decision-making process.
To get the right result you need to ask the right questions; and here are my suggestions for the questions to ask:
A. What am I trying to achieve by documenting my plan?
- To know what my to-do list looks like for the next 90 days?
- To set KPIs / measured objectives for myself and my team?
- To communicate to my team and supporters what the future of the business looks like?
- To satisfy my bank that we have a plan and that we’re hitting our objectives (and maybe ask for a larger overdraft?)
- To convince potential investors that my business is the one to invest in?
[NOTE: If you are at the stage of looking for external investment it is entirely likely that you will need four or five versions of your plan, as you will see below]
Having answered the first question…. Move on to:
B. What is important for my audience to understand, so that I can clearly describe it?
Speaking to the point about summarised versus detailed information.
C. Do I have the skills and experience to write the Business Plan myself?
A Business Plan is very much like advertising. It has two main purposes… to inform and to influence.
[KEY POINT 1: Your Business Plan is telling a story.. and you are providing the evidence to make the story real for your audience… detailed financial forecasts, details of sales and profit already made, trademarks and patents already owned, orders in the pipeline, designs, tooling or patterns in process.]
[KEY POINT 2: Your Business Plan should provide enough detail to get the job done, but be as succinct as possible.]
The audiences will be either:
- a) Internal (yourself, your team and your supporters) OR
- b) Internal and External (including bankers, tax authorities, and potential investors).
Having answered these questions you can select the right format to wow your audience. You want them to help you achieve your objectives, so you need to make it as easy as possible for them to make the right decisions.
You are looking for Investment.
Investors need to be convinced that your proposition is worth considering in preference to the several hundred others that they are likely to have on their desks.
In this case you will need a format for the plan that can articulate the following key points:
- What is the Problem that your business is solving?
- What makes your solution special?
- How big is the problem, and who cares about it?
- What does your customer look like and how will you sell to them?
- What is your model for making money whilst solving the problem?
- What is so great about your team?
- Who are your competitors?
- Why would we invest in you rather than your competitors?
- What milestones have you achieved so far? What successes can you point to?
- What are the numbers ? (Number of potential customers, Price points, Revenue targets, Margins, comparative numbers with customers or industry)
- How much investment do you want? How will you use it to grow your business?
This is a comprehensive, under the bonnet, look at your business and its aspirations. It is the driver for that 20-40 page Business Plan…. The COOKIE CUTTER.
It tends to have a typical format such as:
- Executive summary
- Business description and brief history
- Milestones previously set and achieved
- Market strategies
- Product strategies
- Competitive analysis
- Design and development plan
- Operations and management plan – with milestones
- Financial forecasts – Revenue, Profit and Cash for the next 3 years
plus an associated pitch deck.
Your job is to wordsmith the COOKIE CUTTER format to articulate the key points in a refreshing and compelling story (not fiction!) with detailed evidence to convince the investor to take you seriously.
The order in which the sections are presented is less important than the flow of the story; so don’t feel tied by standard the COOKIE CUTTER contents page.
An attractive and compelling pitch deck will be a key weapon for you. It re-iterates and strengthens the messages in the Executive Summary to re-enforce your story in a more interactive, thought provoking and entertaining format.
Unless you are a wiz graphic designer, it would be worth investing in a professional to help you with that.
There are many, many examples of pitch decks on the interwebs.
You might want to research some different formats; finding one that seems to resonate with your style, before you engage your designer.
You will have to speak to it – so you should love it when it’s ready to go!
Your Banker Update.
Bankers have a more conservative nature, plus you may well already have a relationship with your banker, and so they may already know much about your business.
When presenting our plans to them you will be highlighting what you are expecting to change; such as growth plans, pressure on day-to-day cash flow and the need for some loans.
Bankers look for confidence that you are fully in control of your business; that you can pay your bills, you can pay the bank interest and that your business continues to be a safe bet into the future.
It is worth building this level of confidence with your banks even if you do not immediately need more money from them. Bankers love a solid, reliable track-record of performance that can give them confidence to move forward with you with further funding.
It wouldn’t be a good look if you only contacted them when you needed more funds, and presented them with a plan where the ink was still wet.
With this in mind, the full COOKIE CUTTER would not be the right tool. Bankers still need a bit of a ‘sell’ but are more interested in the nuts and bolts of your operations and finances than your big-picture vision for the future.
The same information should be used but the story will focus on metrics, KPIs, finances, margins, cash flow and funding requirements. The report would be much shorter – maybe 5-10 pages as a maximum.
The investor pack might focus heavily on your Business Blueprint (See article #1) and a summary of your If this then …. exercise (See article #2) and evidence of hitting milestones to this point.
The banker pack will have a different focus. They want to know much more about the mechanics of your business and decision making. Delving into the If this then …. detail. The execution plan will give them confidence that you have the team and the systems in place to take your business into this new future, at a predicted level of performance.
A typical banker pack might look like:
- Executive summary
- Market strategies (Summarised)
- Product strategies (Summarised)
- Competitive analysis (High level)
- Operations and management plan
- Financial forecasts – Revenue, Profit and Cash for the next 3 years
- Execution plan
Your Team and Supporters will be looking for your leadership and to feel included in your plans for the future.
Again, you have all the necessary information because you have gone through the Discovery, Strategy and Execution phases. The format for this purpose is way different than the COOKIE CUTTER format.
A company is an organisation that needs something else to hold it together; to give cohesion to this group of people who have been assembled for a business need.
The purpose of the internal business plan is to give everyone a clear understanding of whether they’ve won or lost, met or missed their goals; where the business has grown or stagnated, and where-to-next.
Often these key people for you and your business are looking for the big picture to be painted, the roadmap of how you will get there, and (importantly) what it will mean for them.
A favourite format for this style of Business Plan is the P.O.A.P. (Plan on a Page). It is often seen as a graphical or table representation of the summary information that you would have put into the Executive Summary of the COOKIE CUTTER.
It is still part story-telling and part information sharing. With your team you will be looking to enthuse and motivate them, and get their support for your plans. It’s all in the messaging!
The P.O.A.P. would cover all the major aspects of your business at a high level such as:
- Plans for product and market development,
- Timescales and milestones to achieve them.
- Who will be involved
- Customers to focus on
- Sales targets and achievements
- Profit forecasts
- Key projects
- Key changes in the business …. Staff, locations,
- Celebrating successes
Of course, your full Business Plan may include some detailed and sensitive information that you wouldn’t want to share on the P.O.A.P. It is entirely necessary to mould the level on information on these reports to the audience, and their needs to support you.
For presentation of the P.O.A.P. I personally like to use a dashboard format for describing and tracking the KPIs and targets – whether they are financial or operational – such as production figures, or new customers, or quality control results. These dashboards can be designed to update in real time and so the team can instantly see the overall performance and feel they are part of it too.
Of course, the KPIs and targets you are setting in your reports or dashboard should come straight out of your Execution Plan. And so, again, the hard work in analysing and setting the targets in the execution phase (see article #3) have a variety of uses for reporting.
For yourself, (and your co-founders).
There is a real tendency for smaller business owners to get caught up in the day-to-day operational activities of their business. This is only right and proper, but if no attention is paid to the business plan activities as laid out in front of the Investors, the Bankers, and your Team, then progress may be slower than planned and confidence may be eroded over time.
The P.O.A.P will be the starting point but you will need the detail in the depth of your action plan to keep you on track.
It is important to allocate time to step away from the day-to-day operations and focus on completing your growth activities – as laid out in that action plan. Keeping on top of these actions will allow you to hit your targets and KPIs and …Happy Days!
I find the best way of keeping accountable to the action plan and hitting those KPIs is to have a dashboard that Identifies to me what needs to be done, by who, and when.
I try to remind myself that a small step, taken every day, will help me progress a long way over a year.
The dashboard doesn’t do the tasks for me, unfortunately. But it does make me feel guilty if I miss my KPIs because I didn’t complete a task.
You can see how the effort you put into the Discovery, Strategy and Execution phases can be used in very many ways, to communicate to many audiences relevant to their needs…. or your needs of them.
Importantly, because you did it as a single project of business planning, there is a single source of truth for you to refer to.
You can be sure that the message you are conveying to all the different stakeholders in your business… team, employees, bankers, supporters, and investors ….. all have the same, cohesive story.
Keep it fresh, keep it real and keep your plan relevant to today.
“A dream written down with a date becomes a goal.
A goal broken down into steps becomes a plan.
A plan backed by action makes your dreams come true.”
― Greg Reid