Strategic and Business Plan Writing
by Steve Mortensen
What's the difference between a Strategic Plan and a Business Plan?
Strategic Plans establish clear vision, and identify specific tactics and strategies that will be used internally to improve operations within a business. They address in detail discrete aspects of the business, such as marketing, sales, production, and fulfillment. A strategic plan may be created for a single department, or an entire company.
Return to Writing page Business Plans are used to bring capital into the business in the form of loans or investments. Business Plans that are used in support of securing conventional loans differ somewhat from those used to raise investment capital. Banks typically request more detailed "hard" financial data, both from the business and from the owner(s). Investors tend to consider more of the "soft issues" related to the potential of the business, and risk mitigation.
What kind of plans do I write?
I have written dozens of strategic and business plans to help companies in a wide range of industries improve performance and raise investment capital. Since early 2006, I have written many business plans for Capital Window (www.capitalwindow.com), a firm that specializes in packaging and advising small businesses on the capital raising process. Our clients have raised nearly $25 million in the past year using business plans and other documents I wrote.
What is the plan writing process?
I work with clients nationwide via telephone and email using a process that is very effective and efficient. The process begins with the creation of a comprehensive financial model covering a span of three years, month by month. Detailed revenue projections are estimated from the bottom up, followed by projections for COGS, personnel, SG&A, capital expenditures, cashflow, and capitalization. This financial model becomes the foundation for the strategic or business plan. It establishes the key metrics and performances for the venture. The strategic or business plan is then written to explain the how and why of the numbers, depending on the specific purpose of the plan.
The plan writing process includes a detailed exchange of information. I start with a fairly standard list of questions about the business. However, the answers in most every case shape the plan in significantly different ways. Each plan is thus a highly customized document, not a simple "fill in the blanks" (i.e. futile) exercise. Some clients have solid answers to most of the questions I ask. Many require business consulting to determine appropriate approaches, which I often provide as part of the process.
Some market research is needed, but this is an area that is often incorrectly approached in both strategic and business plans. I have read many plans written by clients (before they contacted me) that included pages and pages of industry statistics and background information in support of the plan. Sometimes enough to make my eyes bleed, as it were. I've found that a small amount of well-chosen background information and statistics is much more powerful. Done correctly, a paragraph or two can provide all the big picture background needed to clearly establish an opportunity.
The concise, focused approach also applies to the whole plan. Most of the time, 20-30 pages are all it takes to tell the most important parts of the story. Some strategic plans encompassing operations for different departments may be longer, but for investment capital raising purposes, this length is ideal. It is not too intimidating. When properly done, it shows a good balance between all important aspects of a business. It paints a clear picture of an opportunity, how it will be monetized, to what degree, at what cost, with what return, and by whom. It helps answer the most common questions raised about these issues.
A good plan acts not as an encyclopedic reference manual, but rather as a guide to focused discussions. The plans I write are meant to direct and support discussion. The process of completing the plan involves a depth of participation by business founders, managers, and me. The result is that the plan will often provide enough detail to communicate the ideas addressed, and the business founders and managers will then be able to speak at length on each of these subjects according to need. This approach is efficient and effective. It gives founders and managers the chance to build rapport and trust as they demonstrate their expertise, and engage in two-way dialog to address concerns and needs. In the case of investors, the single most important deciding factor that determines if they will write a check is - do they believe you and your team will deliver the promised results. This belief does not come from supporting documents - it comes from interaction. The documents must help you look your best, and help you present your opportunity in its best possible light.
These elements are all woven into my strategic and business plan writing approach.
Do I write business plans for the venture capitalist (VC) market?
Most of my clients are small businesses, too small to be appealing to most venture capital firms. In general, unless you have the "next big thing" that for a $5-10 million investment now can realistically generate $100 million in revenue within 3 years at 30% profit with an all-star management team, you'll be wasting your time knocking on VC doors. Instead, you'll spend more time talking to angel investors and small investment groups. This is what I can help prepare you for.
Will the business plans I write succeed in helping you raise capital?
Maybe. The business plan is only one factor in the capital raising process, which can be quite complex. There are no guarantees you will be able to raise any capital. Some of my clients have failed to raise capital, for various reasons. One major reason is that investors sometimes don't believe the principal(s) can deliver the results described in the business plan. This can be due to pie-in-the-sky assumptions, a weak business model, or the inability of principal(s) to gain the trust of investors, among other things. But the business plan development process I lead will prepare serious, professional business owners to present their opportunity in the best possible light to investors, preparing them to overcome many of the common hurdles to success. I have clients that have raised millions of dollars using my business plans, and some that have raised none. A few have given up or changed their minds about the business. But most raise some capital, and many are still working on it. Capital raising is usually a lengthy process, not a single event.
What kinds of businesses have I written plans for?
Auto racing Bodyboards
Ceramics Computer services
Custom signs Education
Electronics Entertainment
Environmental Finance
Fitness Food industry
Golf instruction Inorganic chemicals
Lifestyle Machinery
Manufacturing Natural products
Online directory Railroad
Real estate Rich media
Sports management Television
. . . and more.
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