When I was a practicing stockbroker, one of the things I did was to screen business plans submitted by entrepreneurs seeking to raise money. Typically, the entrepreneurs either wanted to enter a new market or to expand their presence in an existing market.
As you might imagine, when you’re screening something, you’re screening against a set of standards. Business plans are no different. More on this later.
Business plans are usually presented in sections. When asked to review a business plan, amateurs go immediately to the financial section. They want to see all the numbers in the tables and spreadsheet projections. They figure that’s where the most important information is. Not so. To be sure, the numbers are important. After all, profit is measured in numbers. But, without proper context, those numbers are meaningless.
Sad to say, most plans had great numbers but were not well thought-out. In fact, fewer than 5% made the cut. Of the remaining 95%, most went directly to the trash can after the first screen, with some surviving a second screen before they ended up there.
It is legitimate to ask why so many business plans did not survive the first screen. The answer lies in the order in which the different sections of the plan were screened.
Where the amateur wants to jump right into the numbers, the pro starts with the marketing section because that’s where the real meat of the business plan is. If the marketing section doesn’t tell the right story, there is no need to look farther, the whole plan is chucked out.
As you might imagine, when you’re screening something, you’re screening against a set of standards. Business plans are no different. More on this later.
Business plans are usually presented in sections. When asked to review a business plan, amateurs go immediately to the financial section. They want to see all the numbers in the tables and spreadsheet projections. They figure that’s where the most important information is. Not so. To be sure, the numbers are important. After all, profit is measured in numbers. But, without proper context, those numbers are meaningless.
Sad to say, most plans had great numbers but were not well thought-out. In fact, fewer than 5% made the cut. Of the remaining 95%, most went directly to the trash can after the first screen, with some surviving a second screen before they ended up there.
It is legitimate to ask why so many business plans did not survive the first screen. The answer lies in the order in which the different sections of the plan were screened.
Where the amateur wants to jump right into the numbers, the pro starts with the marketing section because that’s where the real meat of the business plan is. If the marketing section doesn’t tell the right story, there is no need to look farther, the whole plan is chucked out.
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