Investor Preferences in the Business Plan

So what is that investors look for in your business plan? The may be a number of opinions on what a investable business plan is. Depending on the investor I'm talking to their is normally a range if different responses. Everything from "as long as the opportunity is clear' to 'I really invest in the person behind the business more than the opportunity itself' Truth be told it probably a combination of the previous two for me, but in the table below I tried my best to summarize the key issues in the business plan that needs to be included to ensure you are really communicating what the investor is looking for.

Too many entrepreneurs limit their opportunities by writing weak business plans. Great ideas are common; much rarer are businesses with the people and products to enter a market and take share or dominate. Only 1 % to 2% of all business plans presented to angels or VCs receive funding. 

Companies don’t build themselves. People build companies. Ultimately, an angel investor is selecting a management team. A great team can make even a mediocre company achieve reasonable success, whereas a company with the best technology will not be successful with a mediocre management team. 

Some of the key factors of a business plan that improve the success potential of a startup are shown below.

Success Factors 

Factor	Description
Management	• Years of operational experience in a similar industry  • Startup experience with a similar business model that led to a successful exit  • Willing to be coached
Market	• Addressable market that is fragmented and growing  • Customers already lined up
Technology	• Patent protected  • Creates strategically defensible position
Competition	• Shows that company has some competition, regardless of product or service  • Clearly summarizes competitors and key threats
Business model	• Similar to one or more used by successful companies  • Demonstrates that customers have real pain that product or service solves (“must have” vs. “nice to have”)
Exit strategy	• Identifies target acquirers  • Shows deal history of acquisitions and IPOs with key financial multiples and ratios
Risks	• Objectively assesses risks and describes actions to reduce, mitigate or eliminate them
Financial projections	• Shows conservative, expected and targeted figures with assumptions for each  • Focuses on cash flow and profitability
Capital structure	• Detailed  • Preferrably shows ownership by founders and only small numbers of unprofessional or inexperienced investors
Investment desired	• Places an offer on the table - indicates valuation  • Shows uses of funds in detail  • Details expected future rounds and uses of funds from each round

Who reads your business plan?

So much is written about writing the business plan, what to include, how much of this and which specifics of that, that we often forget about one of the most important considerations of the business plan, who will read it. For you as the entrepreneur, we also have to remember that the - Who will read it question is really crucial.

The saying goes that beauty is in the eye of the beholder and that is as true here as anywhere else. What is the reader looking for, what do the they notice and what does not really matter? At a recent business plan competition where a number of the judges were not from a business finance background, I was astounded at what they were looking at and seeing as important. Points of view were often very different and what one appreciated as a job well done, others over looked completely in favor of something else.

Nine times out of ten when I’m looking at a new business plan I’m rushed and my aim is to quickly work out whether it makes sense to meet the company behind the plan or whether we should politely let them know we are not interested, with a brief explanation as to why. As you would expect, we review many more business plans than we take meetings – I have never run the numbers but a back of the envelope estimate suggests that excluding plans from entrepreneurs who are well known to us the ratio of meetings to business plans received is in the region of 1:10, and lower still from entrepreneurs we have no connection with. With these sorts of ratios it is important for our productivity that we get to a decision quickly.

From the entrepreneur’s perspective situation is very different. The business plan and accompanying email is an important document, the one shot to impress a potential investor and try to get a meeting. Hence a lot of work goes into the business plan, and a lot of hope can be invested in it.

Clearly there is an undesirable asymmetry here – entrepreneur spends a long time creating the business plan, investor reads it quickly. I am writing this post to address that issue.

I am not anti-writing business plans by any means, and I think they serve important purposes beyond getting a first meeting with investors:

* writing a business plan typically helps to clarify and enhance thoughts and plans about the business
* investors will look to the business plan for information at later points in the process (hopefully including a more thorough read prior to the first meeting, assuming there is one)

However, I thought it might be helpful to highlight the parts of business plans I zoom in on when deciding whether to go for that first meeting:

* Summary of product
* Evidence of momentum – e.g. user traction or customers
* Summary financials
* Evidence of ambition
* Maybe a description of the market dynamics (often I feel comfortable enough with the market already)

The astute amongst may have noticed that despite the fact VCs always harp on about the importance of ‘team’ it isn’t on this list. That’s because we form our opinion on people from meeting them much more than from reading about their history.

The key issues is to perhaps include the most important elements of your plan in both he Executive summary, boude and conclusion for the reader not to overlook it.

Business Plan Outline

When drawing up a business plan it is important to take into consideration what information you wish to make known to your business investors and financiers in order to gain favour with them. A clear-cut business plan is of utmost important and will also help and guide you as your grow your new business.

What information needs to be in your business plan? What is the order of information that will make the most sense to lenders and investors? You can answer these questions with the business plan outlines provided below.

What are the standard elements of a business plan? If you do need a standard business plan to seek funding — as opposed to a plan-as-you-go approach for running your business, which I describe below — there are predictable contents of a standard business plan outline.

For example, a business plan normally starts with an Executive Summary, which should be concise and interesting. People almost always expect to see sections covering the Company, the Market, the Product, the Management Team, Strategy, Implementation, and Financial Analysis. The precise business plan format can vary.

Is the order important? If you have the main components, the order doesn’t matter that much, but here’s the sequence I suggest for a business plan. I have provided two outlines, one simple and the other more detailed.

Simple business plan outline
1. Executive Summary: Write this last. It’s just a page or two of highlights.
2. Company Description: Legal establishment, history, start-up plans, etc.
3. Product or Service: Describe what you’re selling. Focus on customer benefits.
4. Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.
5. Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results.
6. Web Plan Summary: For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies.
7. Management Team: Describe the organization and the key management team members.
8. Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash Flow tables.
Build your plan, then organize it. I don’t recommend developing the plan in the same order you present it as a finished document. For example, although the Executive Summary obviously comes as the first section of a business plan, I recommend writing it after everything else is done. It will appear first, but you write it last.
Tim Berry mentions a number of these issues in his business planning blog

A business plan may change with time and one must always leave room to grow and expand the original vision and direction that the business is taking when starting up your new business venture. As an entrepreneur, seeking mentors and angel networks to help you along, constantly refer back to your original plan, but be open to change and expansion in accordance with what you current economic situation in your country may be experiencing at the time. You may need to add more products, or discontinue some, and recreate your plan, purpose and vision.

Tips for business plan writers

Starting a new business venture requires some research and investigation into the market into which you desire to go into. Whether starting a business online or not, a good business plan and a profile is a requirement , when applying for a small business loan from any financial institution in South Africa. In a recent article about Business Plan Writing, a few important factors were mentioned to help improve your chances of requiring financial assistance. Business planning is of utmost important when persuing your new venture. It is important to go into a business venture with a clear direction and knowlege of your targeted market. It is important to familiarise yourself with what business plan software is available on the market. Writing your own business plan is not that difficult and can be done without having to lay out excessive amounts of money on a professional business plan.

Why you need a business plan in South Africa
Whether you’re starting a new business or looking to expand your existing business, it is crucial to have a business plan in South Africa. If you need a bank loan or investment from outsiders, you need to have a business plan to show for this investment of capital. A business plan is your key to success
Writing a business plan is something that many small businesses fail to do although it is a necessary step in preparing for obstacles in the future. When you write a business plan, it forces you to start thinking about problems and solutions in your business and industry.

The first step to writing a business plan would be to do research into the feasibility and profitability of your new business. Investors and banks have to see that you have the resources and experience to make your business work and a business plan is the blueprint for what you plan to do for the future.

Your business plan should include the following elements:
• An introduction that explains what your business is and what your objectives are.
• A marketing analysis about the industry your business will be operating in and how you fit into it.
• A marketing plan (which is basically your marketing strategy)
• A management plan about how where you are going to set up your business, where your business will be located and the regulations and restrictions about your business.
• A financial plan that clearly describes how you are going to finance your business and what your financial projections are.
• An executive summary which is a one page overview about your business that you should write after you have finalised your business plan. Advice for writing a business plan.

Advice for writing a business plan
When you write a business plan, a good piece of advice is to break it up into smaller tasks. Don’t try to write the whole plan in one day. Start writing section you are most comfortable with – if you have marketing experience start off with the marketing plan. Another tip for writing your business plan is to spend quality time when you are writing it and don’t put it off so that it is a rushed job.

Business continuity plans for your business in South Africa
A business continuity plan is a series of documents that describes the priorities and actions that a business should take in the event of a disaster or system’s failure. A business continuity plan is as important as your initial business plan because it addresses the often overwhelming task of creating plans so that your business runs smoothly.

In conclusion, the internet is full of resources and help such as the article above. Once you have searched for a bussiness plan that best suits your industry, you will be well on your way to having a clear direction as to where u see your business in the next five years and beyond. Help and advice is only a click away through all major search engines!

Find out more about business continuity plans in South Africa
Source: http://www.continuitysa.co.za/news-room/writing-business-plans.html

Implementing a Feedback Strategy for Your Business Plan

Ask any business owner or manager an they will quickly tell you that at any business level feedback is a crucial element of business imporovement. The feedback process is not only important for existing bsuiensses but similarly so for the entrepreneur writing a business plan or just starting. Whether you are using the snail method of writing your plan or using the latest in business plan software technology with feedback options build in, you need to keep in mind that your business plan will be updated on a regular basis. Where does the feedback come from? Well that is exactly what we are looking at in this article.


Online surveys can improve the efficiency, effectiveness and profitability of your business. To make it easier, we’ve developed templates on each of the survey types below, using proven market research techniques. These templates will give you an edge, and the right data, as you look for feedback on new ideas for your business.

Get Customer Feedback
One of the most popular uses of surveys is as a yardstick for customer satisfaction. Annual, semiannual or quarterly surveys serve as a barometer of your business’ health and allow you to monitor your performance over time. In addition, many businesses send out satisfaction surveys after each customer transaction, using the survey as a way to judge the effectiveness of individual employees and the product itself.

Test the Concept
Expanding your audience to include prospects allows you to check the receptivity of the market to a
product enhancement or a new offering. Sending a survey to two segments – a portion of your customers and a portion of your prospects – provides visibility into whether prospects require different messaging or education than was required to win your current set of customers.

Check Your Vendors
Surveys can help evaluate which vendors are best equipped to deliver the raw materials required to fulfill your product plan. You can send out a survey asking about their shortest lead-time, their standard shipping terms, etc. By downloading their answers into a spreadsheet, you can sort your vendors by those most capable of meeting your new requirements for faster shipping or expanded capacity.

Plan and Evaluate Your Event
A survey is an easy way to collect multiple data points from a large group of people.
Zoomerang users in the marketing and event planning departments have deployed surveys to ask representatives about their arrival times to a trade show, their requested shifts, etc. and have used that information to plan their event. Afterward, they deployed a separate survey to ask the representatives for their opinion on the value of the tradeshow, the number of sales attributed to it, and whether they plan to attend next year.

Gauge Employee Satisfaction
Online surveys are an ideal mechanism for soliciting employee feedback since they provide the
anonymity that is essential to candid feedback. Many companies use surveys to conduct
management evaluations and to ensure privacy Zoomerang can even deploy the survey for you.

Share Best Practices
Guidance is golden and Zoomerang users within associations or even loose groups of vendors are finding surveys an effective way to gather wisdom that they can’t find elsewhere. A quick survey on a how to handle a difficult business question generates responses that can be directly put into practice.

Get It On Your Calendar
Give yourself enough lead time to really learn what the survey reveals: too frequently surveys are
done at the last minute, which makes it impossible to act on the insight. In addition to a quarterly
customer satisfaction survey, consider sending surveys using this rotation:
Operational surveys after each transaction
Prior to regularly scheduled tradeshows and events
Marketing concept tests as product development dictates
Quarterly employee reviews
Quarterly vendor surveys
Semi-annual product releases
Annual employee satisfaction surveys
Benefit queries before changes in annual plans

Survey Deployment

There are several ways to deploy your surveys and each method has its own advantages. A one-time email broadcast to your entire customer or prospect base is a thorough way to communicate. If you
host your survey on your Website, you send a signal to prospects, customers and vendors that you
are constantly listening to them and receptive to feedback.

Building a real-time feedback loop into a number of sections of your annual business plan can
provide you with a way to be nimble – and knowledgeable – in your operations. Examine your calendar and your plan and ask yourself: would it help to test this concept or gather more information?

We acknowledge the guys at “http://www.articlesbase.com/ for contributing to some aspects of this article.

A Business Plan for Business Finance

The business plan is increasingly playing a crucial role when it comes to securing small business finance. Not only with banks, where it is now mostly compulsory to have a business plan if you are hoping to apply for business finance, but also with venture capital firms and angel investors.

Today in order to get your new business going, your business plans are essential at this stage of setting up your business. In it you will already have scoped out what your money needs are and how you plan to raise the startup capital, and you'll be using it to persuade potential investors and lenders of the benefits of funding your new business.

Your financial calculations in your business plans therefore need to be thorough and accurate and presented with confidence. Everyone expects that they'll be able to stick to their business plans and only need to borrow the absolute minimum, but more often than not something unexpected crops up to throw a wrench in the works. It therefore makes good business sense to include a contingency element in the amount of startup capital you request. It's better to do that now and have the extra cash as a safeguard than it is to have to return to your lender or investor not far down the line to ask for more money.

If it wasn't in your original business plans they are likely to be concerned about your financial ability and your request may be rejected. Many people wonder how much startup capital they should request. You want to keep costs to a minimum and invest your money wisely in your new business, while still having the security of a little extra for backup if required. What startup capital you borrow should give you a realistic challenge for your new business but should not be too risky. And back up your calculation with evidence in your business plans, since it has to be credible.

With numerous organisations in South Africa now supporting the use of business plan software in order to get the business plan right, the issue is hard to ignore. Organisations such as Investors Network and the SA Venture Capital Association are all throwing their weight behind effectively constructed and well researched business plans to ensure that not only the business is successful in finding the finance it needs but also that it is able to start successfully.

A cycle for business planning

The business planning cycle is concerned with reassessing the overall strategies and efficiency of the business achieving it's main objective, after all a "business plan" is essentially a living document where revisions through its are inevitably necessary. Furthermore, a business planning cycle typically occurs annually, as this is ideal in determining what objective is to be realized through following fiscal year.

There are five main components involved in a business planning cycle: strategic planning, consultation-and-scrutiny, financial planning, employee appraisal, and a decision making criteria.

Strategic Planning
Strategic planning is concerned with maintaining: objectivity when performing risks assessments, assessing the current economical climate impacting the business's mission, clarifying or revisiting a companies main objective, and formulating a step-by-step action strategy specific to the unique benefits and challenges predicted for the next fiscal year. Simply put, a business's planning cycle implements a strategy concerned with creating a hierarchy list of priorities required for the business to achieve its goals.

Financial Planning
Financial planning is concerned with the total costs involved in the business’s operations and ultimately all financial commitments in achieving its main goal. Moreover, a business planning cycle involves revisiting the business’s financial plan by objectively assessing significant changes in the industry, and the economy itself prompting any reversions to the financial strategy needing to be made. Lastly, financial planning includes three main components: a cash flow statement, income statement, and balance sheet.

Employee Appraisal
A business planning cycle is typically preformed annually invoking an extensively reassessment of the the performance of its employees. Often called an employee appraisal. An employee appraisal is concerned with objectively evaluating the performance of an employee's talent, quality, and time-cost. Also, during an employees appraisal, employees themselves may also provide feedback to the managers, assisting mangers with gauging workplace morale and the competences level of the management team.

Consultation and Scrutiny
Consultation and scrutiny is a procedure concerned with reviewing and critiquing specific hindrances and benefits related to the business achieving its goals: competitive analysis, business environment analysis, and acquisition planning are some examples of what's reviewed . Furthermore, consultation-and-scrutiny may involve having a third party (consultation firm) objectivity evaluate the overall performance of the business and necessary expectations pertaining to its mission statement.

Decision Making Criteria
A balanced scorecard involves measuring if the business activities and operational costs corresponds to the ultimate vision, mission, and agenda of the business; this is part of establishing a decision making criteria. A decision making criteria is an essential component of an annual business planning cycle guiding the business specific to its mission statement. Other examples involved in a decision making criteria are: a break even analysis, internal rate of return, and a net present value; this are all terms involved in gathering business data vastly contributing to the decision making process.

Sourced from http://hubpages.com

How to Write a Business Plan

The purpose of a business plan is to recognize and define a business opportunity, describe how that opportunity will be seized by the management team, and to demonstrate that the business is feasible and worth the effort.  The use of business plan services can of course greatly help with this. Where implementation of the business plan requires participation of lenders and/or investors, the plan must also clearly and convincingly communicate the financial proposal to the prospective stakeholders: how much you need from them, what kind of return they can expect, and how they can be paid back.

Many entrepreneurs insist that their business concept is so clear in their heads that the written plan can be produced after start-up; this attitude "short-circuits" one of the major benefits of producing  the plan.  "A realistic business plan might save you from yourself by persuading you to abandon a bad idea while your mistakes are still on paper," says Ben Botes from Caban Investments in the UK

Do many people need to be saved from themselves?  Are many entrepreneurs so determined to go into business that they overlook or underestimate the potential pitfalls?  Is that all bad?  Can many business proposals stand the harsh light of skepticism?

Let us say we worked out the numbers on paper, and are convinced that we do not need to be saved from ourselves.  Do we still need to write the plan?  The discipline of writing a plan forces us to think through the steps we must take to get the business started, and, to "flesh out ideas, to look for weak spots and vulnerabilities," according to business consultant Eric Siegel.  A well-conceived business plan can serve as a management tool to settle major policy issues, identify "keys to success," establish goals and check-points, and consider long-term prospects.

Who is the audience for it?  Certainly, the plan is very useful if we are looking for investors or lenders.  It is the primary tool used to convince prospective stakeholders that the idea is promising, the market is accessible, the firm's management is capable, serious and disciplined, and that the return on investment is attractive.  But even if we can finance the venture ourselves, these are useful issues to address.

What are the elements of a good business plan, and how does it differ from a bad one? The appearance of the plan says something about its preparers.  It should be professional, though not lavish, so as not to distract from its contents.

While the formats of business plans can be as varied as the businesses themselves, there are components that should appear in all plans.  These include an executive summary, elements which describe the opportunity, elements which specify how the business will operate, an analysis of financial expectations, a closing summary, and any supporting documentation.

Let us discuss each of these in a little more detail, with an audience assumed to be a reader who might be a prospective investor or lender, a trusted professional advisor, or a friend whose business judgment we value.

The cover and title page should contain company name, address, phone number, primary contacts, and the month and year of issue.  Often, the issuers include a copy number to control circulation.

The executive summary introduces the opportunity, and contains highlights of the substantive sections.  It should concisely explain the current status of the company, its products and/or services, benefits to customers, and summary financial performance data.  Where investment is being solicited, it should also include the amount of financing needed, and how investors will benefit and harvest their gains.  With all this information, this summary should still be held to two pages, to insure its being read, and must generate enthusiasm about the proposal to entice the reader to consider the entire plan.

The business plan conclusion is a shorter summary, more directed to what is being asked of the reader.  Supporting documentation includes relevant marketing research, and financial details and statements behind the financial proposal.

Business planning - case evidence and examples

Business plans are certainly not a one size fits all. If you are a serial entrepreneur like myself you may have learned this along the way. Whether you have used strategic planning in the organizational context, perhaps through using a business plan template or two to ensure you get the finer details spot on, a formal business plan when seeking business finance from a bank or investor - perhaps using the least business plan software to ensure you cover the requirements of said investors or banks, a very flexible and practical plan to support you with your small business or simply a to do list for your day to day running of the business, perhaps with a few mind maps and strategies with which to cope. BUsiness planning however you see it really needs to be seen as a crucial aspect of achieving dreams goals or objectives. This is perhaps better shown in tow simple cases, looking at just how business planning can be used.


Case Study #1: Skip the formal document
Reece Pacheco and his fellow co-founders started the game-film editing and sharing service Homefield in 2007. When they started to court investors, they were regularly told to send their business plan. Reece spent a lot of time and energy creating a traditional one. It was difficult because, as he says, "early on, we didn't know everything we needed to know." In two weeks what he'd written was no longer relevant. He also found that the investors and partners most intrigued by Homefield didn't care about the plan. They just wanted to hear his story and why he was passionate about the business. In fact, those that were less interested were more likely to request a plan.

Reece decided that a traditional plan wasn't practical. "The web moves too fast. Most businesses move too fast he explains. "Investors' attention spans have gotten shorter and shorter." And the customers Homefield has secured are much better proof of their company's viability than any five-year projections. So Reece now uses a six-page PowerPoint deck that is flexible and easy to update. The aim is to "build relationships," to convince partners and investors that he and his colleagues are the right people to execute on their unique idea. And so far, it's worked.

Case Study #2: Tell a compelling story
Jenny Machida joined the founding team of Sevident in December 2009 as the Chief Business Officer. Sevident is a start-up focused on developing a rapid diagnostic platform for infectious disease. Like many other businesses, their value lies in the flexibility of the technology they offer, so it's critical to convey its various applications. The challenge is to show that in a business plan without sounding unfocused.

The team started off by describing the business in presentation form. They had PowerPoint decks and one- and two-page executive summaries but hadn't developed a formal business plan because no potential partners, customers, or funders had asked for one. "You don't need a plan until you have an audience for it," Jenny says.

But, they decided to create a formal plan because they assumed potential funders would need one further along in the process. The document they use now, which is roughly 30 pages including data and financials, extends directly from the earlier presentation materials and is regularly updated as the business evolves.

Rather than explaining all the potential applications of their technology, they now tell a concrete story about how they will use the first application. The plan is still flexible in the way it describes the company's operations and how they will play in various markets. "We've made a deliberate choice to foreground the capability of the technology itself," Jenny explained, rather than focus exclusively on a specific market opportunity. The plan demonstrates that they have thought of all of the various options for how the business may develop without laying out exhaustive and low-probability contingency plans. "Everyone knows that there's uncertainty to a new business but you still need to tell a compelling story of how you're going to knock down risk," Jenny says. Sevident is now in active diligence with several venture capital firms.

Both cases show some of the varied uses and options for the business plan, not just the must do and wish I did not have to versions. This really can and should be a key element of succeeding with your business.

Scenario planning for start-ups

With start-up companies especially often seeing business planning more as a chore, large organizations around the world recognize it as a key tool thought which to prepare them selves for the opportunity and challenges that the future may hold. A business plan strategy that has been used with varied success for decades now is that of scenario planning.The scenarios relate closely to key elements of the strategy such as the competition,technology, or geography. The approach is then to develop a “resilient” strategy that can deal with wide variations in business conditions.For instance, each scenario is analysed to determine the optimal setting for each element (What would be the best marketing strategy for Scenario A? For B?) The most resilient option for each strategy element is chosen for each of the scenario-specific settings. 

The resilient options are integrated into an overall, co-ordinated business strategy, takeing all scenarios at face value without judging probabilities.This approach makes maximum use of scenarios in strategy development. It provides management with the maximum feasible range of choice and forces careful evaluation of these options against differing assumptions about the future. But it requires effort and patience; and it works best when the decisions -makers participate directly in the scenario process. An example of this approach is the work that United Distillers (now Diageo) has carried out a number of scenario development exercises to assess the future of markets such as India,

South Africa and Turkey and hence the potential for and possible direction of business.

Scenario planning is regularly used at US-based clothing specialist Levi-Strauss by senior management who sit on cross-functional committees at headquarters level. Scenarios have been used to heighten awareness of the challenges facing the business, and to develop strategy in relevant areas such as the environment. They have been used to help thinking in the context of challenges, such as what would happen if cotton no longer existed, or what would be the impact of the deregulation of the cotton industry in the US.Erste Allgemeine Versicherung, an insurance company based in Austria, first used scenarios in 1988. The main areas considered were politics, economics, the insurance industry structure and changes, technology and demographics. The objective was to look at the business environment and how other competitors might develop. As a result of the scenario process, the company anticipated the fall of the Berlin Wall and the opening up of Eastern Europe before it happened. This was identified as part of one of the scenarios in 1988. This enabled the company to be ready to move into Eastern Europe and therefore be one of the first companies to set up in Hungary. Companies were also founded in the Czech Republic,Slovakia and Slovenia.

BA used this approach to develop strategy, taking each scenario through to a full numerical plan. With hindsight, they thought that the last stage – the full numerical plan - had been more work than warranted by the benefit. This seems to be a consensus, that the best use is staying at the descriptive level, to avoid a focus on the detail of the model rather than exploring the underlying assumptions.Strategy Evaluation This method of connecting scenarios to planning uses scenarios as ”test beds” to evaluate the viability of an existing strategy or compare proposed strategies. It is often the best first use of scenarios in a company’s strategic-planning system. The strategy may have derived from a set of implicit or default assumptions or a single- point forecast – the approach identifies quickly “bottom-line” issues and provides senior managers with immediate evidence of scenarios’ utility.It is often used in “management game” mode, where a business unit is played against a competitor under each scenario. This allows the management to assess the likely success of the business in the diverse conditions of the scenarios. In particular, it homes in on opportunities that the strategy addresses and those that it misses, threats/risks that the analysis has foreseen or overlooked, and factors affecting competitive success or failure. This approach normally highlights the options for changes in strategy and the need for contingency planning.For instance, in 1995, ICL’s manufacturing division had been trading as D2D for several years and increasing the amount of work done by the division for organisations outside ICL. D2D’s business plans needed to cover a range of external business conditions and customers. We applied the test bed of our IT industry scenarios to the plans, and realised that the plans were based on a set of default assumptions closely aligned to one scenario. When we ran the plans through the wind test of the other scenario, we found that a number of the operational and business characteristics that D2D had assumed to have very high value were of less interest to the customers in this scenario. The analysis helped us to decide to sell D2D to Celestica, a global contract manufacturing company, in December 1996.Sensitivity/Risk Assessment   Scenarios can be used in two rather different ways to assess risk. One way is to Identify key

conditions in the future market/industry environment (such as size/growth of market, changes in regulatory climate, or a technological breakthrough) that would be necessary for a “go” decision on a particular project. The other is or to apply scenarios to a portfolio of projects and to use a technique such as a Market Attractiveness/Capabilities matrix to evaluate the comparative risk of the projects or businesses.Using scenarios to evaluate a specific decision (such as a major plant investment or new business development) is very useful if there is a very clear and specific “decision focus” that lends itself to a “go/no go” decision. For instance, a construction company uses the technique

for “back of the envelope” examinations of business propositions, and as part of its project portfolio management. In more complex cases, computer modelling (with scenarios providing assumptions) can be used to evaluate the strategy’s resilience or vulnerability to differences

in business conditions. So for instance 3M Telecommunications Systems Division has used scenarios, linked to payoff and risk assessment, to implement new strategies following deregulation.Hedging or contingency Planning

This fourth method starts with one particular view of the world – this may be the assumptions behind the current plan, or “the most probable” of several separately developed scenarios. Then a strategy and plan is developed to fit this scenario, maybe using a SWOT (strengths, weakness, opportunities, threats) analysis.The strategies & plans developed for one scenario are then tested against other scenarios to assess resilience and the need for modification, “hedging”, and contingency planning. In its step-by-step process, this addresses many key questions that scenario-based strategy should ask, and avoids the pitfall of focusing on only one scenario.Using probabilities attached to scenarios has been extensively used in France, with Michel Godet’s guidance, as described in (5). Probabilities are also part of the Batelle approach, and the CSM (Comprehensive Situation Mapping) tool, which has been used for instance to model

new banking competitors.Perhaps the issue is that large corporations have more at stake, or perhaps its more a case that these corporations realize what is at steak because of what they have achieved. Entrepreneurs to need to take the issue of planning more seriously. Yes of course we need to be flexible and responsive to what clients, the environment and competitors through at us and having a number of well researched and resourced options to our disposal is half the battle won.

Plan and allocate business resources effectively

The business plan plays a key role in allocating resources throughout a business so that the objectives set in the plan can be met. A good business plan software program will almost certainly help you to do this so if your strengths lye elsewhere, it should not be a barrier to your success.

Once you have reviewed your progress to date and identified your strategy for growth, your existing business plan may look dated and may no longer reflect your business' position and future direction.

When you are reviewing your business plan to cover the next stages, it's important to be clear on how you will allocate your resources to make your strategy work.

For example, if a particular business unit or department has been given a target, the business plan should allocate sufficient resources to achieve it. These resources may already be available within the business or may be generated by future activity.

In practice this could mean recruiting more office staff, spending more on marketing or buying more supplies or equipment. You may want to provide funds through current cashflow, generating more profit or seeking external funding. In general, it is always better to fund future growth through revenue generation.

However, you should do some precise budgeting to decide on the right level of resourcing for a particular unit or department. It's important that resources are prioritised, so that areas of a business which are key to delivering the overall aims and objectives are adequately funded. If funding isn't available this may involve making cutbacks in other areas.

Compiling a more sophisticated business plan

Drawing up a more sophisticated business plan may be more time consuming but well worth while. Using the latest in business plan software technology may also be a a great way to ensure that your business plan is indeed a step ahead.

If your business has grown to encompass a series of departments or divisions, each with its own targets and objectives, you may need to draw up a more sophisticated business plan.

The individual business plans of the departments and separate business units will need to be integrated into a single strategy document for the entire organisation. This can be a complex exercise but it's vital if each business unit is to tread a consistent path and not conflict with the overall strategy.

This is not just an issue for large enterprises - many small firms consist of separate business units pursuing different strategies.

To draw up a business plan that unites all the separate areas of an organisation requires a degree of co-ordination. It may seem obvious, but make sure all departments are using the same planning template.

Objectives for individual departments

It's important for each department to feel that they are a stakeholder in the plan. Typically, each department head will draft the unit's business plan and then agree its final form in conjunction with other departments.

Each unit's budgets and priorities must be set so that they fit in with those of the entire organisation. Generally, individual unit plans are required to be more specific and precisely defined than the overall business plan. It's important that the objectives set for business units are realistic and deliverable.

However complex it turns out to be, the individual business plan needs to be easily understood by the people whose job it is to make it work. They also need to be clear on how their plan fits in with that of the wider organisation.