Conceptually, a business plan is two documents in one. The front end of the plan must be a sales document that motivates the reader to continue reading. Its purpose is to create desire and excitement. The remainder of the document is a PROOF document that backs up the claims made in the front end of the document.

Experienced investors, when given a plan to review, will:

1.    Read the Executive Summary

2.    Read the Financial Plan Summary

Once done, depending upon their impression, they will either:

 

1.    Pass it to a subordinate to perform due diligence if they like what they have read or...

2.    Smile nicely and say one version or another of “we’ll get back to you” if they are not impressed.

 

I write a business plan in the reverse order that it is read, beginning with the Financial Plan and ending with the Executive Summary. The rationale is that once we have drilled-down on the financials, we will uncover issues that need to be discussed in the Sales & Marketing Plan. In turn, thinking through the go-to-market plan will raise issues regarding hiring, compensation, infrastructure requirements, partnering, and channels -- all topics that require discussion in various sections of the business plan.

The Executive Summary is written last and is often no more than three pages. Having “ground” through the details of all other sections of the plan, I will have the big picture in mind. From there I will be able to create a concrete, compelling overview of the business proposition that motivates the reader to continue reading.

The components of a business plan are:

1.    Executive Summary

2.    The Company (Product/Service)

3.    Industry Background and Market Research

4.    Sales & Marketing Plan

5.    Management Bios

6.    Financial Plan