What might seem like a foolproof business plan in your head may not be in sync with reality, says Chinmaya Sharma.
The importance of having a well-written Business Plan before you embark on a new enterprise is well understood. Whether it is for your own planning and decision-making or for raising finance (via debt or equity), a 'B-Plan' is almost a pre-requisite.
A good B-Plan, as we all know, will at least have the following elements: Summary, team management, description of product/service, market, competition and financial projections. Additional elements like vision, marketing plan, go-to-market strategy, funding required, and parallels in other geographies are good to add too.
As you embark on writing your own B-Plan for the dream business that you have been meaning to start for a while, be cautious of the following mistakes.
Being overly optimistic in your financial projections
If you are saying "I am operating in such a niche I have no real competition" or that "This market is going to grow at 15 per cent year-on-year for the next 15 years" or that "We will gain 5 per cent share in this fragmented market in the next 3 years", you are most probably wrong. And way too optimistic.
Most investors have seen hundreds, if not thousands of Business Plans in their career. They are well-trained to sniff test how realistic a plan is. Be a dreamer, just not while drafting the B-Plan.
Making assumptions out of thin air
Research will save your day. Make sure any and all assumptions you make are backed by proper research and reasoning.
Something happening in China a certain way does not imply will happen in India too. Be detailed in your research and iron-clad in your reasoning. Not every assumption you make has to have a URL beside it cited as a source, but there needs to be depth in the explanation behind it.
Sending to investors fresh off the oven
Do not start writing the B-Plan over e-mail. It will almost certainly ruin your chances of crafting a balanced, credible and well-structured plan.
First write out the flow, draft each section, complete your research for each section, write it and then let it sit.
Take a break and come back to it in a couple of days to question yourself on whether things sound logical, assumptions make sense and analogies are contextual. Send it to 3 to 5 trusted (and experienced) people, and get their thoughts on it. Discuss their thoughts and incorporate the feedback bits that sound good.
Then, and only then is your B-Plan ready to be shared with external parties who are going to judge the business basis it.
Writing all that you know and knowing only all that you write
Yes, you are really attached to the idea. No, it does not mean that you write a really long and dense B-Plan that is essentially a download of everything you know and think about it.
Remember, most people who matter are busy and have a limited span of time within which your Plan has to get the job done. Show the best, and nothing but.
Also, in face-to-face meetings or calls, be prepared to talk about aspects that are not directly covered in the plan itself. The span of your knowledge should go way beyond the plan.
Writing it for funding only
Congrats if your Business Plan has helped you raise the money you wanted, via loan or equity funding. It is not time to pack away the plan and let it sit lonely in a nondescript folder on your laptop.
All your decisions need to be in sync with the plan. Keep reviewing, modifying and informing your decisions at least twice a month.
Remember, writing a Business Plan may at times feel time-consuming and almost boring. Do not worry; you are not alone in the feeling; it is almost meant to be that way. Stick it out for what's on the other side!
The author Chinmaya Sharma is the co-founder of BigStylist.com, a salon-at-home start-up. An aerospace engineer from the IIT Kharagpur, Chinmaya is an alumnus of IIM, Bangalore.
Lead image used for representational purposes only. Image: jarmoluk/Pixabay.com
