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If you are embarking on raising money for your business, then be under no illusion – it’s a long, long hard road. Its an even longer road if the venture is new or the business is entering new product areas or markets.

Lets look at an example from the world of television. When Paul Smith developed his idea for a format “Who wants to be a millionaire” he already had a successful track record as a TV producer and owned a video editing business in Covent Garden, London. Despite this it took him nearly 4 years to find a backer for the project. In the end, he had a lucky break with an introduction to a newly appointed head of entertainment at ITV, and this combined with him pledging “the farm”, saw the project come to fruition.

There are bucket loads of other examples of what we can see clearly with hindsight were “no-brainer” projects that were continually rejected by investors/backers – why do they get it so wrong and why is there this disconnect?

In part it is do with the fact that new ideas come from visionaries (eg Dyson) and their ideas are just too much for your average backer to relate to. However frequently the problem is one of communication – the creative mind is so passionately in love with their product, they have forgotten to put themselves in the financiers shoes and talk their language. A business plan set out as the money men like to see them will get you off to a great start.

Why do I need a business plan?

A business plan fulfils a number of important roles:

• The production of the plan should bring the management team together
• It helps focus the business on its objectives
• It provides a tool to monitor progress
• It is a document to help raise finance

Even if you are using your own finance, a business plan is still more than good practice – it will help prevent you throwing your money against the wall. It will also help you anticipate whats coming around the corner.

In particular if your business plan includes milestones (objectives with dates), this will really help you track and monitor progress.

Some common questions before we begin.

The following are some questions that are frequently asked.

Who should write it?

You should – no doubt about it. Only you can really capture the excitement of your vision. After all you will be the person not only charged with delivering it, but also talking about it in meetings with investors. The plan has to “speak” to you and for you.

There are some caveats to this. First I would follow one of the well established business plan layouts/section headings. Investors are used to this and these are set out below. It is often a good idea to get a professional to read through your plan to check for technicalities like spelling, use of the conservative word and of course that it makes sense to an “outsider”. There is always a danger that jargon can creep in which can confuse and at worst put readers off.

How long should it be?

The body of the plan should be limited to 20-30 pages with details “relegated” to annexes for example management CVs or detailed product information, results of market surveys etc. It is essential to have an index.

There also needs to be an executive summary which can be used as a stand alone document that tells the whole story. This should be no more than 6-7 pages.

How should I produce it?

The plan needs to look professional and today everyone’s expectations are much higher. So you will need to familiarise yourself with a Word Template that has an index, headers/footers, page numbers etc. Use colour selectively – maybe for main headings – anything that helps the reader. Be wary of pictures that make the document too big a document to email and can give it a superficial look.

As for binding – plastic comb binding can look cheap. Much better and not much dearer is a metal comb binder. One idea is to use a card cover for front and back and if you trim 75mm off the side of the front cover it will expose the page behind where you can put logo/title etc, and finish off with a sheet of clear acetate!

The plan will inevitably go through several versions, so ensure you have a method of identifying which document is the current version.

Should I email or post it?

Frequently a hard copy will generate more attention than an email version. There are no hard and fast rules – but don’t assume just because you do everything electronically that other people do. For sure they are being bombarded with as much email as you are – so a nicely prepared hard copy can often get to the top of the queue.

What should I do about confidentiality?

This is a real concern and at the same time a conundrum. The conundrum is this – to get real traction on your project people need to know what help you need, but the more people that know, the greater the risk that someone will try and rip off your idea.

You can protect yourself in the following ways.

• Mark every page on the plan “Private & Confidential”.
• Mark all correspondence as confidential.
• Only send plan to people that you have reason to believe are reputable
• Ensure that you take steps to register/patent any designs/IP
• Restrict circulation of confidential parts of plan until a Non-disclosure has been signed (but be realistic as these will offer little tangible protection)

But the best way is of course to move quickly because for sure somewhere in the world someone has also had the self same idea.

Next time in Part 2, we’ll go through why most plans don’t work. Please leave any questions or comments and I’ll do my best to answer them.