While many books and articles cover the contents of a business plan, there are three points of a business plan that cannot be ignored:

1. Objective of a business plan

A business plan can have:

a. Internal purpose - strategy, vision and organization
b. External purpose - to convince investors to participate
c. E-marketing, PR materials

In all cases, a business plan is too important to be delegated. On the contrary, the development of a business plan is the opportunity for the management of a company to develop a common thinking and guidelines for company evolution and growth.

At its creation in 1918, Panasonic’s founder Konosuke Matsushita set up a 250-year-business plan – and Panasonic is still following it.

2. Questions to answer

A good business plan answers eight questions:
a. What is the purpose of the company?
b. What are the vision and the long-term objectives?
c. In which markets does the company want to operate?
d. How does the company differentiate itself from current and potential customers and competitors, both now and in the future?
e. What investment is necessary and what return can be expected?
f. What are the chances and risks?
g. Who will be responsible for the company’s development and what is their motivation?
h. Why should a backer invest in the company or, respectively, in the management team?

Moreover, the answers should build a compelling story injecting emotion, it should not be just a sequence of facts.

3. Mistakes

Based on an analysis of 500 business plans by Market Lab, the most common mistakes are:

a. Insufficient market analysis
b. Lack of customer focus
c. Over-confidence
d. Being first but not best
e. Unrealistic SWOT analysis
f. Wrong focus
g. Only a good idea
h. Formal mistakes
i. Inconsistent numbers
j. Insufficient management team

An even more crucial mistake – and the impact here is sometimes delayed - is to under-fund the company, thereby not allowing the achievement of the next milestone.

When writing a business plan, the primary goal should be to gain/ build up credibility and to learn from feedback. As Arie de Geus, author of The Living Company, said, “The only real source of competitive advantage may be the capacity to learn.” From this perspective, a business plan is not a once-in-a-lifetime exercise, but a continuous process. Enjoy the journey!

Christoph Burger
Head of Practice Group
ESMT Customized Solutions