THINGS TO AVOID IN WRITING A BUSINESS PLAN: TIPS FOR IMPROVEMENT

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THINGS TO AVOID IN WRITING A BUSINESS PLAN
TIPS FOR IMPROVEMENT

• Michael W. Piczak
• March 2004

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WHY IT IS IMPORTANT TO AVOID ERRORS

• CREDIBILITY

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SOURCES OF CREDIBILITY

• REPORT ITSELF
• RESEARCH
• LANGUAGE USAGE
• YOUR APPEARANCE
• YOUR CONDUCT/PRESENCE
• YOUR EXPERIENCE
• THE IDEA ITSELF

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3 CATEGORIES OF MISTAKES

• CONTENT ISSUES
• STYLISTIC CONCERNS AND
• COMPUTER SKILLS DEFICIENCIES

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CONTENT ISSUES

• REFERS TO THE SUBSTANTIVE ASPECTS OF THE REPORT
• REPRESENTS THE HOMEWORK AND RESEARCH YOU HAVE
  DONE IN GATHERING YOUR THOUGHTS ABOUT THE BUSINESS

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STYLISTIC CONCERNS

• INCLUDE APPEARANCE, ORDER, QUALITY OF
  PRESENTATION, ENGLISH USAGE, QUALITY OF EXHIBITS,
  POOR CHOICE OF LANGUAGE, GRAMMAR, ETC.

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COMPUTER SKILLS DEFICIENCIES

• DETRACT FROM PERCEIVED QUALITY OF WORK
• CAN BE USED AS DEMONSTRATION OF COMPETENCE AND
  ABILITY TO LEARN
• CAN BE USED TO SAVE CONSIDERABLE SUMS OF MONEY IN
  GRAPHICS WORK

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CONTENT MISTAKES

• NO POSITIONING STATEMENT
• VALUES, VISION, MISSION STATEMENTS INCORRECT
• NO SWOT RESEARCH/CITATIONS
• MY MARKET IS ANYONE THAT EATS
• NO TARGET MARKET NUMBERS
• DIFFERENT 4Ps FOR EACH TARGET MARKET
• INCLUSION OF IMPRESSIONISTIC, UNSUBSTANTIATED AND
  GRATUITOUS STATEMENTS
• OPINING CONCLUSIONS WITHOUT EVIDENCE (the market
  is big how big? Really big! or and I
  believe)
• FINANCIALS MAKE LITTLE SENSE (e.g. sales of 100M
  in year 3 budgets in narrative must match
  financial statements variable costs in breakeven
  show .96 while all input costs are gt10/)
• FINANCIAL NARRATIVE REQUIRED WITH GRAPHS
• SECTIONS NEED PREFACING OR INTRODUCTION
• PAYING YOURSELF 0 OR 175,000 PER YEAR
• COMPETITION ANALYSIS IS DESCRIPTION ONLY
• NETWORKING AND PROMOTION BUDGETS MUST HAVE GOALS
  AND OBJECTIVES
• HAVE SHORT TERM AND LONG TERM GOALS
• PROPOSING TO WIN ON BASIS OF CUSTOMER SERVICE
  WITH WEAK CUSTOMER SERVICE PLAN
• CLAIMING TO BE NEW, UNIQUE, DIFFERENT, GREAT
  WITH NO EVIDENCE
• NO PROVISION FOR INSURANCE OR NUMBERS LOOK OUT OF
  WHACK
• DONT FORGET LICENSING ISSUES SIGNAGE LEASEHOLD
  IMPROVEMENTS

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IF THERE IS A PROBLEM, HAVE A PLAN

• During periods of low and negative cashflow, we
  will build inventory in preparation for the
  upcoming Xmas season
• Because a goodly number of my employees are part
  time, I am prepared to lay them off for
  particular periods
• We can do maintenance during quieter periods in
  the summer
• I will be promoting a number of breakeven
  activities for that low summer period to get us
  through
• The operation will simply close at the end of
  the fall
• We are developing complimentary products and
  services to keep us going when were in the
  business cycle trough
• All staff will learn the new POS system when our
  rush period comes to an end

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NEVER DECLARE

• I DONT LIKE CUSTOMERS
• I NEED 5000 PER MONTH TO LIVE

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GETTING FINANCIAL ESTIMATES RIGHT

• ESTIMATING STARTUP AND ONGOING COSTS IS LIKE
  VACATION BUDGET FOR ONE LEVEL AND SPEND ANOTHER
• OFTEN GET STICKER SHOCK AT HOW MUCH CAPITAL
  ASSETS COST
• DONT ALWAYS BUY NEW
• LOOK FOR LIQUIDATIONS, GOVERNMENT SURPLUS SALES,
  BUY USED, AUCTIONS TO KEEP COSTS DOWN
• DO YOUR HOMEWORK AND SHOP AROUND
• NEGOTIATE HARD

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WHAT GETS UNDERSTATED

• LICENSING/PERMITS (FIRE, CITY, VENDING)
• SIGNAGE
• CAPITAL EQUIPMENT
• LEASEHOLD IMPROVEMENTS
• TRUE LEASING COSTS
• COST OF EMPLOYEES BY 30

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WHAT IS TRULY NEW, UNIQUE, DIFFERENT

• RAINFOREST CAFÉ
• PIXAR ANIMATION STUDIOS
• DISNEYS IMAGINEERING
• JUNCTION TAVERN IN HAMILTON
• CIRQUE DE SOLEIL
• CONCORDE JET
• POST IT NOTES
• DISSOLVING STITCHES
• SO AND SO EXPERIENCE

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COMPETITION ANALYSIS

• MUST GO BEYOND DESCRIPTION TO CAREFULLY ASSESS
  WHAT YOU DO COMPARED TO THE COMPETITION
• LOOKING FOR
• KEY SUCCESS FACTORS (KSFs)
• SOURCES OF COMPETITIVE ADVANTAGE (CAs)
• FINDING ANY DISTINCTIVE COMPETENCIES (DCs)

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STYLISTIC MISTAKES

• LABEL/REFERENCE APPENDICES
• USE LOGO IN HEADER/FOOTER
• NAME OF COMPANY WRONG
• NAME OF OWNER WRONG
• WRITE IN 3RD PERSON
• NO IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII
  IIIIIIIIIIIIIIII
• REPORT OUT OF ORDER (FEASIBILITY TOO EARLY 4 Ps
  BEFORE TARGET MARKET DEFINITION OPS ISSUES IN
  MARKETING PLAN)
• SPELLCHECK
• GRAMMAR POOR
• APPENDICES NOT PARTITIONED AND NOT REFERENCED IN
  NARRATIVE
• 1 FONT SIZE AND TYPE
• DOUBLE SPACE
• USE PARAGRAPHS TO SEPARATE IDEAS
• POOR CHOICE OF WORDS
• CHOOSE PAPER TO BE CONSISTENT WITH PERSONALITY OF
  BUSINESS
• BIND PROPERLY AND PROFESSIONALLY
• FONTS, LOGOs, COMPANY NAME CONSISTENT THROUGHOUT

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SPEAKING TO FEASIBILITY

• FEASIBILITY
• The preceding report and analysis has
  demonstrated that
• Start up costs are low
• Breakeven is low
• The owner has considerable experience
• The owner is pledging a substantial proportion of
  the startup costs
• There are few periods of negative cashflow
• The market is very large and untapped
• Industry trends are in the desirable position
• Government grants are available and applied for
• Management team possesses considerable strengths
  (experience, ecducation, contacts, energy,
  creativity, financial resources)
• Competitors dont get it
• Market gap exists
• Proposed company enjoys competitive advantages
  and a distinctive competence
• Lease options obtained provide ideal location
  (e.g. Yorkdale Mall)
• Balance sheet and income statements strong after
  years 2 and 3 while conservatively presented

And therefore, I believe, a strong case has been
made that ABC Company is a feasible operation.
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POOR CHOICE OF WORDS IN A REPORT

• GREAT
• FANTASTIC
• AMAZING
• WOO
• GIG
• CHEAP
• DECENT
• MUG SHOTS
• NO HASSLE

• UNIQUE
• SUPERIOR
• EXCEPTIONAL
• PARTNER WITH OR CATER TO
• EVENT
• VALUE PRICED
• WELL CONSTRUCTED
• PASSPORT PHOTO
• WORRY FREE

AVOID THESE
TRY THESE
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LEARN

• ITS/ITS/THEIR
• THAN/THEN
• THERE/THEIR/THEYRE
• NO CONTRACTIONS WHEN WRITING
• TO FORGET SLANG (SMOKES, BOOZE, MUG SHOT,
  HASSLE)
• WRITING IN THIRD PERSON
• TO PROOFREAD

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COMPUTER SKILLS DEFICIENCIES

• NO STYLE TAGS
• NO COMPTER GENERATED T of C
• PAGE NUMBERING INCORRECT
• SEPARATORS FOR HEADERS/FOOTERS
• TABLES PLAIN (SHADE, SHADOW, OUTLINE, BOLD,
  HEADER ROW REPEAT)
• CORPORATE IMAGE PACKAGE INCOMPLETE (CIP)
• GAPS BETWEEN SECTIONS

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ELEMENTS OF CIP

• LETTERHEAD
• FAX COVER SHEET
• BROCHURE
• FLYER
• GRAND OPENING
• MENU
• TAKE OUT MENU
• ENVELOPE

• INVOICE
• QUOTE SHEET
• BUSINESS CARDS
• WEB SITE
• CORPORATE PIECES (CUPS, SHIRTS, CAPS, PENS, KEY
  CHAINS, CALENDARS)

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REMEMBER, ITS ALL ABOUT

• CREDIBILITY
• THE END