What do you look like at the paddock?

I get a lot of questions from people starting a business and about writing a business plan. Rightfully so, a business plan is a critical document for starting any business. It is the most important piece of communication for investors, your bank, early vendors and shareholders. It is important, though, to understand what a business plan is and is not. A business plan is a snapshot of your business or your intended business at it exists at the time of writing with a snapshot of its financial state (including needs) at that time. A business plan is not a marketing plan, an operational plan or a strategic plan, though it should reference these other plans liberally.

The biggest concern I get is which template should I use for my business plan? The answer is usually, if this is the template that your potential audience gave you, use it. The truth is that all business plan templates cover the same areas sometimes with different headings or in a different order, but essentially the same subject matter. The trap is, though, successful completion of a template is not writing a successful business plan. Too many would be entrepreneurs can't figure out why their business plan doesn't get the interest they expected; afterall, we filled in the template.

Look at it this way. Just because you brought a horse to the derby, doesn't mean that it'll win or that anyone will bet on it. A horse in a race has a standard template. It has four legs, a neck and a back on which is a jockey. Horses that don't meet the template are weeded out before the starting gate. There are no horses in the race with more or less than four legs, for instance. An educated bettor or investor is going to read their racing form - the industry analysis, apply their individual knowledge and experience and then head down to the paddock. There they will size up all the horses, all of which meet the standard template. But, which horse would they bet on? They're going to look for a horse with tight muscle tone, an air of contained power, anxious to run but not skittish. Then, they're going to look at the jockey, a history of winning, able to bring that horse in, knows when to urge the horse on and when to let him run on his own.

These are the things that beyond the standard template that make for a successful business plan. Business plan templates tend to encourage a generic response when you need to be showing more muscle tone. We tend to make business decisions based on theory and process and forget the human element. Don't forget the needs of your audience.

What makes you look good at the paddock?

1. A compelling need in the market place for your product or service.
2. A product or services that satisfys that need.
3. A product or services that can be quickly brought to market
4. An understanding of who your customer is and how you're going to reach him/her.
5. An operational plan that supports getting your product or service to that customer in the most efficient manner possible.
6. A management team that's got the pedigree to get the ball over the goal line.

Above all don't be shy to aggressively answer the number one question in any investor's mind: "If I write you a check, do you know what you're going to do with my money tomorrow morning to create value for me?"

That's how to look good at the paddock.