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Keep Your Business Plan Simple to Get Funding

The other day I read the first page of a business plan and was really turned off. The frustrating thing was this: it was a solid company and business opportunity. So, why was I turned off? Because the business plan was written in too sophisticated a manner.

Let me explain. Most newspaper articles are written at a sixth-grade reading level. Even articles in The New York Times and The Wall Street Journal are only written at around a tenth-grade level (you can see the grade level of any text by entering it into the Flesch-Kincaid calculator here). But this business plan was written at a twenty-second grade level. Yes, that’s a post-doctorate degree level.

This meant that the business plan was very hard to read. It used too many big words, and it was way too verbose in explaining things. It was the classic case of a garbage man describing himself as a sanitation engineer.

Your goal in your business plan is not to impress the reader (most likely an investor) with your eloquent prose. But rather to impress them with your ability to concisely convey a message. And specifically, a message the explains why they should fund your company. Such an ability to concisely communicate will not only get you investors, but also customers, partners and other key constituents as you grow your venture.

Here are some tips to writing a business plan at the appropriate level:

1) State your industry.

Many entrepreneurs, when they are creating a new business, think they are operating in a new category. They’ll say, “we are a company that is creating a unique type of footwear that combines the ability to run with less pain while personalizing the look and feel.” Rather, the business plan should have started out with the following: “We are a running shoe company. What makes us unique is….”  This simpler, clearer presentation allows the reader to more quickly and easily understand what you do.

2) Ditch the flowery language.

Business plans that use too many adjectives and/or are superlatives tend to turn off investors and other readers. So, limit your use of words like leading, greatest, world-class, brilliant, amazing, etc., unless of course you can clearly back up each use of the word with facts.

3) You don’t need to tell the whole story.

Your business plan’s goal is to help get your foot in the door with an investor and show them you have fully thought through your venture and have a solid game plan. The investor will not write you a check solely based on your plan. They will want to meet you first. So, focus the plan on giving investors concise, key information about yourself and your company to get the meeting. At the meeting, you can fill in the untold details.

4) Use a proven business plan template to ensure your plan is formatted properly and you answer the right questions.

We’ve all seen a letter or page with so much text on it that we cringe at the thought of reading it. Investors do the same. Make sure your plan is formatted well so there’s lots of white space and it’s easy to read.

At the same time, make sure you answer each key question investors will have. This includes:

  1. Company Overview: What specifically does your business do?
  2. Unique Qualifications: Why is your company uniquely qualified to succeed?
  3. Company History: What has your business accomplished to date? Even if it’s just researching the market, that’s something. Show that action has already been taken.
  4. Industry Analysis: What is the size of your market and what trends are affecting it?
  5. Customer Analysis: Who are your customers? What are their demographic profiles? How many target customers exist in the market?
  6. Competitor Analysis: What are the strengths and weaknesses of your competitors and what is your competitive advantage?
  7. Marketing Plan: What does your marketing plan entail? What products and/or services will you offer? How will you promote your business? What price points will you use? How will you distribute your products?
  8. Operation Plan: What is your operational plan to grow your business? What milestones will you accomplish and when?
  9. Management Team: Who’s on your team? What are their backgrounds and accomplishments?
  10. Financial Model: What are your financial projections? How much capital do you need to grow? What are the expected returns for investors?

In summary, make sure your business plan is accessible to investors. Ensure that they can easily read and digest it, and it includes just the key information they need. Because if they struggle to comprehend your business in your plan, they’re not going to fund you.

Dave Lavinsky is a serial entrepreneur and the president and founder of Growthink. Growthink has written business plans for over 4,000 entrepreneurs, and our business plan template has been downloaded and used by over 100,000 others. Dave is also the founder of BusinessPlanTemplate.com which provides templates for specific niches ranging from restaurants to internet businesses.

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