Business plans: more than just paperwork

A business plan isn't just a formality - it’s your roadmap to success. It forces you to critically assess your idea, prepare for challenges, and convince investors. This guide helps you write a solid plan that sets your startup up for growth.

Writing a business plan

As we have seen in previous chapters, there are many aspects to starting a new business. It would be far too easy to say that all you need to do is make a simple checklist.  Nevertheless SO Kwadraat has created such a checklist, based on our experience in guiding many start-ups.

To be able to form an objective opinion about the candidate's preparation for the start-up, we like to run through the list with him or her. It is a reality check and it often accurately shows where there is still some work to be done. It might also reveal that the start-up is ready to go. We have included the check­ list at the end of this chapter.

The different steps you have to take in one way or another still include the information you need to draw up your business plan. This business plan is a MUST. It is not just a piece of paper nor is it merely a necessary evil. It forces you to consider the many different aspects of your start-up. Only when all of the elements are positive will your project be viable. The main reason a company succeeds is adequate preparation.

“Writing a full business plan forces you to think deeply: Who are your customers? How will you generate revenue? How much money do you need? Unlike a pitch deck, it requires detail and clear answers - something that can make all the difference with investors.” Vanessa Vankerckhoven — co-founder and CEO of Idevax

Confidentiality

Your business plan is not a public document. It contains lots of knowledge you have concerning the market, products and services you want to provide, and how you wish to solve certain challenges. This document will convince investors to invest in your business. It is a valuable document and you need to protect it!

That is why we always warn starting entrepreneurs that there should be a signed confidentiality agreement before you show your plan to third parties. A serious investor will never have any objection to this procedure.

If the other party wants you to sign its own confidentiality agreement, make sure to have it checked by someone who is well versed in these matters. The rights and obligations of both parties must be identical. Such an agreement is also called a Non Disclosure Agreement or NOA.

A critical look

Before you apply yourself to writing a smart business plan, you will have to take a long hard, critical look at your plan.

• Your first draft is NOT about convincing others of your bright idea. It is about convincing yourself that, despite the challenges and difficulties, you are dealing with a concrete and viable business opportunity.

• This first draft encourages you, your family and your friends to make some initial reflections.

Look for the weaknesses in your idea. The experienced SO Kwadraat managers will assist you. Also make a list of the strengths and the advantages for the customer. Your own and your team's motivation is important, but so are the attitudes of those in your immediate surroundings.

• Does your partner support your idea?

• Did you talk about the consequences?

• Did you discuss the financial aspects?

• Does everybody understand that starting up a business will probably take a lot of your time: late hours, travelling, working on weekends and holidays, ...? Try to make people understand.

• Is there moral support for your idea?

  
  

“Many aspiring founders expect to earn a good salary right away. We paid ourselves just €1,000 a month for three years. It was tough, but it allowed us to grow the company, keep our shares, and ultimately reap the rewards.” Bram de Meur - co-founder and CEO of ICsense

Convincing candidate investors

Your business plan addresses the questions your candidate investor will like to see answered. It therefore is up to you to make these answers as accurate and comprehensive as possible. If the investor is not convinced, he might choose not to invest.

Be honest, articulate, positive, but get to the point. The investor only has limited time to read your plan. Keep it simple and stupid. Clearly indicate why you have a good case that is well worth financing.

An investor-proof business plan:

• Contains an executive summary (up to two pages) which hits the nail on the head.

• Is business-like: everything the investor wants to know must be in the file.

• Is succinct: investors like to get to the point quickly. Make sure your file is no longer than 50 pages.

• Must have a clear structure.

• Is easy to read and written in clear language.

• Is simple and contains easily comprehended graphics on the condition that they clarify the text.

Once the business plan is written, do not toss it aside. You have given this document some serious consideration and it may help you focus on the new business. You can also uses it to measure how successfully you subsequently adhere to your plan. You may rest assured that your investor will do the same. The business plan is often attached to the shareholders' agreement.

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