So, are you thinking about writing a business plan for your startup? Looking to impress your investors and potential bankers with pages and pages of fancy graphs, ratios and financial analysis? That’s all bankers and investors care about, right?

So, are you thinking about pulling the trigger to buy that $499 software program that puts it all together? It’s the cost of doing business, right?

Okay — I have to admit it — Steve Terhaar and I are also guilty as charged. When we embarked on starting our own finance company, we spent over $500 on the latest and greatest Business Plan Software program. It truly was amazing. All we had to do is plug in the numbers and it would pump out pages and pages of numbers and graphs. It wasn’t long before we realized that the business plan wasn’t our own. We were adapting to the software as opposed to the software acting as a tool to help us. We ditched the software after two weeks of trying.

Ironically, we see hundreds of business plans each year. The funny thing is, the plans that come from software programs all look the same! They have the same verbiage graphs, charts, etc. In reality, they have hundreds of pages of content — but none of these plans actually tell me anything about why I should get excited about their company! Most of these plans fail to tell explain how they plan to hit their sales figures.

When submitting your business plan, don’t give us all of your assumptions on your overhead costs. Those expenses are fairly easy for bankers and financiers to understand. Instead, focus on how you will hit your sales numbers! If you are a restaurant, please don’t give me reams of macro economic data on what percentage of your community’s disposable income is spent on restaurants. Please share with me your assumptions! As your finance person, I need to know:

• How many people do you expect to have for breakfast, lunch and dinner?
• What is the average ticket (tab) for each meal?
• Are the crowds any different from Monday – Thursday as we compare them to the weekend crowds?
• What is the breakdown between food and beverage sales? Are your margins different between the two categories?

This kind of information speaks to the heart of how the business owner is thinking and gives us what we need as we evaluate your business plan. We also want to know about you. What is your experience? How are they transferable to your new endeavor? Can you demonstrate to me that you’ve made good business decisions in the past?

So, you’re not good at math? Talk with a book keeper, seek the assistance of a CPA, find a niece who’s good at spreadsheets! They can help.

I’d take a well thought-out three page business plan over a 40-page plan 10 out of 10 times. If I know about the person who’s approaching me and can buy into his or her assumptions, I’m in! If I understand your assumptions, following the math (accounting) will easily follow.

Questions about what I’ve just written? Send me an email or call me!

Mike