When you want to raise some money (from the bank, your long suffering business associates or unsuspecting friends) for your next engineering or technology venture – no matter how big or small - there are some items you should remember when composing your inevitable business plan. I am not arrogant enough to suggest that I can summarise the great flood of articles and books on writing business plans in a few words but there are a few useful suggestions below.
Many of the business plans I have looked at over the years, seem to be overwhelmed with spreadsheets of figures and quantitative data which all lead hopefully to the Holy Grail of enormous riches. As many of us bruised investors know – most tend to end in tears and despair. Herewith a few suggestions on avoiding this fate – whether you are writing a business plan or an investor contemplating one.
The Four Key Factors
William Salman, an accomplished professor (at where else but Harvard?) gives a few valid suggestions on giving emphasis to four key factors in your business plan:
- The People
- The Opportunity
- The Context
- Risk and Reward
The People section should answer the simple questions of what they know, whom do they know and how well are they known in the industry. Do they have a track record in successful businesses or are they optimistic newbies?
Is the Opportunity market at hand large or rapidly growing and is the opportunity presented able to be tackled with some logical method (i.e. it is not a war zone or an area crippled by over regulation)?
Laying out Context is useful but also to understand what happens when there are subtle shifts in the context over time which may change the opportunity dramatically.
Finally, absolute transparency and honesty in the Risks and Rewards part is essential. The optimistic she-will-be-right-mate dissertation never fills one with much confidence and destroys the integrity of the business plan. A hard headed assessment of when the rewards will be arriving and their scale is useful but a considered look at what happens when things don’t quite go to plan are also critical.
With these suggestions built into your next business plan; you will certainly have a document with considerably more integrity.
Thanks to William A. Sahlman who wrote a thoughtful article on How to Write a Great Business Plan from Harvard Business Review.
When it comes to creating the next engineering company, this is so true from John Dykstra: I like engineering, but I love the creative input.
Yours in engineering learning
Mackay’s Musings – 14th March’17 #643
125, 273 readers – www.eit.edu.au/cms/news/blog-steve-mackay