Why do we need Business Plans? Ans: Communicating the Right Message

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Writing a business plan is a time consuming and challenging effort and takes significant management bandwidth. Though there are a number of excellent resources/templates/articles on “how” to write a business plan, many times, people who are writing it for the first time get too involved in the “process” of writing and as such may not effectively communicate the core “message” intended.

While the process (in terms of structure/presentation etc) is important, communicating the message/conclusion is far more important. Many first time entrepreneurs lose their way in fitting their business plan into the generally accepted/recommended templates (ranging from size of the plan, number of pages etc). What may help first time business plan writers is to actually start with the conclusion/core message and then collect/present data in support of such conclusions/hypothesis.

Business Plan basics/sections

While there is no one size fits all kind of framework, in general most business plans are expected to provide evidence/facts/data in support of the following conclusions/hypothesis

Hypothesis 1: The Idea is validated in the marketplace and there are a large number of reachable, ready, able and willing customers for the company’s offering.

Hypothesis 2: Team (founding/extended team) has the required relevant experience, competencies and skill sets to design, architect, build, innovate/enhance, sell, service products/solutions proposed to be offered by them

Hypothesis 3: Relative to the existing available solutions/competition, the solutions offered by the company provides “better value” to customers (that is both significant and tangible)

Hypothesis 4: Company has a credible roadmap to continue to offer better value to customers and defend its market share

Hypothesis 5: Company can acquire, service and grow customer base in a cost-effective/timely manner and sell its solutions at price points that contribute to significant margins/profitability on a sustainable basis

Hypothesis 6: Company has/is building the required processes/systems /learning mechanisms to support delivering value to its customer’s on a consistent, repeatable and scalable basis

Hypothesis 7: Company can create significant value for all its stakeholders (founders, management team and investors) in a reasonable time-frame

Finding answers/data to support the above hypothesis may help first time business plan writers to stay focused on the primary objective behind the business plan and not lose themselves in the process of business plan writing. Once the core issues are nailed down, then onwards it really does not matter what format/template is used.

[Guest article by Pavan Krishnamurthy, Partner at Ojas Venture Partners.]