Have you heard the one about …
A German, an American and an Englishman each needed to produce a business plan.
The German had invented a new gizmo for saving water. He took his idea to the
European Commission in Brussels and received a grant to conduct a feasibility study.
Three months and many tens of thousands of euros later, he had a multiple-volume
business plan prepared for him by one of the top international accounting firms.
The painstakingly detailed plan covered every aspect of the business – the
organisational structure, the management team, the competition, start-up activities,
manufacturing, licensing, marketing, distribution and sales. It set out the funding
requirements and operating budgets, and it included a detailed analysis of the risks.
He packed it into two large briefcases and hand-carried it to the Philippines where,
for various reasons, he had decided to locate his manufacturing plant. There he
would set about finding a joint-venture partner. At the end of a long flight, when
a local representative of the accounting firm greeted him, he was uncomfortably
aware that his forthcoming presentations of the plan were critical to getting his
business off the ground.
The American was the Vice-President of a large organisation in Silicon Valley.
She ran an important customer-support division and had to prepare the annual
business plan. She began with a series of meetings with department heads. Over
four weeks they conducted a thorough review of the year to date, up-dated their
competitor analysis, brainstormed ways to reduce response time and improve
customer satisfaction, and devised a strategy for increasing their efficiency.
The next month was spent refining the strategy into a detailed plan, costing it and
preparing budgets, and documenting this in the corporation’s house style. On a
bright October afternoon she walked into the Board Room. Carefully laid out on
the highly polished table were ten ring binders, each containing a copy of her 124-
page divisional business plan. This first presentation of the plan was critical to her
career and she was expecting tough questions.
The young English entrepreneur ran a successful advertising business. His first-ever
business plan had helped raise start-up funding from a specialist venture capital
provider. The next few annual plans steered him through the early difficulties and
successes. Now, five years from the day that he started, he needed a new plan to
support a request for a bank loan to fund an expansion programme. He knew exactly
what he wanted to achieve, both with the plan and when putting it into effect.
Over a two-week period he burnt the midnight oil preparing a slim 20-page plan
outlining the history of the business, detailing the expansion programme and
setting out in excruciating detail the financial numbers. He felt supremely confident
on the morning that he carried the slim volume into his bank manager’s office.
HAVE YOU HEARD THE ONE ABOUT … 3
4 CHAPTER 1 WHAT‘S IT ALL ABOUT?
Three business plans. Three very different levels of content and styles of presentation.
Three different audiences. Which plan succeeded? None at first. All three eventually. All
three business people achieved their objectives and won the required approvals, but not
before they each had to make some revisions to their plans.
It took over nine months from the moment that the German inventor arrived in Manila
to the day when he raised the required funding. During that time his accountants pro-
duced several modifications to the plan to reflect both changing market conditions and
differing expectations of prospective joint-venture partners. Of course, the accountants
were very happy to have to spend so much time making costly revisions to the plan.
The American divisional manager encountered some opposition from the people in
the engineering department because of the way that her proposals affected them. Also,
new budget constraints imposed from above forced her to make an unexpected cut in
her headcount. Nevertheless, compromises were found and after a round of amendments
the plan was accepted by the Board.
The English advertising professional thought that he had correctly gauged the needs
of his bankers. Indeed, they liked the proposal, but they required more work on the num-
bers. After working with venture capital providers who had been interested in clients,
concepts and marketing plans, he thought that the bankers seemed to place undue
importance on forecasts of future revenues that were, after all, largely guesswork.
The moral
There is no unique formula for preparing a business plan. There is no perfect
size or level of detail. There is no single magic list of contents. There is not even a
single, ideal way of ordering the content. However, by understanding the intended
audience for the plan, the expected uses and the overall objectives, it is possible for
any competent person to put together a very satisfactory business plan. This book
will guide you through the process.
The techniques described in this book apply equally to the old and new
economies. Whether your business is founded on bricks or clicks, the same
thought processes apply to the planning process. In fact, the analysis
described here is especially important for high-tech companies given the speed and
flexibility that the Internet gives to competitors, business partners and customers.
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