What’s going to bring you down?

We are all convinced of our own invulnerability, but what are the big risks for your business. Many business plans trivialise this section by asking rhetorically: “What will we do if sales are below forecast?”, to which a reply comes “We’ll take on more salespeople” or “We’ll do more advertising”. In fact, the key risks are more fundamental.

What will happen to the business if you go under the proverbial bus? What will happen if you, or one of your team, is critically ill for a long time? Is there any contingency plan? Is there any succession planning? Insurance might help in certain circumstances, but how much do you need, for whom and when?

In one public company recently the death of the founder preceded a fall in the value of the company by 75% or £300m. You may not have reached that level of liability yet, indeed you may not be too fussed about what happens if you are no longer around, but the other stakeholders in your business will want to know, and now is the time to think about it with them.

What other critical factors could destroy your business? Increasingly, technology is the issue. What provisions do you have for offsite backups? Do you have a business if your website cannot be accessed? How will technological change affect your business in the future? Can your website etc be transmitted across any platform including mobile?

Investors (and you) understand the nature of risk. Risk is inherent in business. What you and your stakeholders need to know is where that risk lies and how much of it is manageable with insurance or contingency plans. Ignoring any of these risks because they are unlikely to happen can be fatal.

…and finally - The Executive Summary

It's amazing the amount of people who write an Executive Summary first, presumably on the basis that it appears at the front of the plan. Would they write the index page before writing the book? A Summary does just that – it summarises what is in the rest of the plan, and so it would be hard to write it before all the other sections have been completed!

That’s not all, though. Too often, sentences are copied and pasted from other sections into the Summary. This misses the point completely. The Summary should be written in a different style from the rest of the plan. It should be designed to capture the reader’s attention. If it does not do so, you can be sure that the reader will give up at that point.

It should be punchy and succinct, never more than one or (maximum) two pages. The Summary should ideally capture the reader’s interest and imagination and persuade them to read on, convey a clear picture of what you’re trying to do, highlight the salient features of the business, establish management’s credentials at the outset and encapsulate the financial opportunity and key projections.

Many passionate entrepreneurs with exciting businesses find it in themselves to write the dullest business plans and the most unimaginative Summary. How does this disconnect occur? Generally because the entrepreneur is either short of time or too close to the subject matter. “I wrote a long plan because I didn’t have time to write a short one” is the norm.

So start soon, make the process of business plan writing a central piece of the management team’s activity on a regular basis, and invite external advisors to participate and review the output.