Writing a business plan is definitely not about creative writing; it runs much deeper. An opportunity to evaluate another bunch of business plans in the coming week reminded me of this. In fact as I was reflecting on what I should use to evaluate business plans so that the Entrepreneur can benefit led me to the following parameters:
Does it solve a user need?
I can’t think of a more important question. The sad truth is that the Entrepreneur misses thinking about this and takes the answer for granted. At times I feel this question can be used by every Entrepreneur through the lifecycle of their business. While customers may not be able to express the need explicitly the need should necessarily exist.
Is it a sizable opportunity?
Though a subjective question, it is most useful for the Entrepreneur in taking the call to get into the business or not.
How easy is it for user to understand the solution?
This question is often confused with question number one. Just because a product or solution is addressing a need, it may not necessarily be assured of success. One of the key factors that catapult even a fairly well designed solution to stardom is communicating and helping the customer to see the benefit.
How competitive is the industry?
It is widely accepted that most Entrepreneurs don’t consider competition. While it may be of minimum impact in some cases, it does not do away the fact that the venture will belong to some industry. Understanding the industry dynamics and seeing how the business proposition stands in relation with other current/potential entities becomes critical.
What is the Entrepreneurial motivation?
If there is any other question that I would put almost as equal in importance to question number one it is this. It is extremely important for an Entrepreneur to decide for himself and be sure whether the business proposition fits his aspirations and motivation. There is no point in pursuing an opportunity just for monetary reasons, albeit monetary benefit is a must for every venture.
Is It Unique?
This is a highly debatable parameter for deciding business success. Number of surveys and empirical studies seem to indicate that most of the viable businesses which have been successfully running are based on non-unique ideas. Though uniqueness can aid in success, it cannot guarantee it!
Does it have delivery feasibility?
This question is often thought of only after a person has got into business. Ideally this could be a make or break parameter in even taking the decision to kick-start a venture. On a lighter note business plan competition survive only because this question is not answered!
Does it permit sustained profitability?
Conservative estimates on these can help increase confidence of the Entrepreneur. Since all numbers are only estimates the review of these should be taken with a pinch of salt. Inordinate amount of importance attached to these numbers may result in non-selection of good projects.
What is the depth of thinking?
It is one of the easier parameter to assess from a third person’s perspective. The effort that the Entrepreneur has put in to the work of B-plan preparation will reveal itself whether in writing or while pitching. It can provide an indication on the level of seriousness and perseverance of the Entrepreneur
Skin in the game
Any indication of the Entrepreneur taking risks or willing to take the plunge at his cost should be given adequate importance. Level of self investment, pilot studies, prototype, test marketing can contribute in showing how far the Entrepreneur will go in creating the business.
As I started writing these parameters, I realised that much of it is written from the Entrepreneur’s perspective than from one of the evaluator. With slight variation in the way the questions are asked the reviewers should be able to identify more business plans that will see the light of day. In many cases of business plan competitions, creativity of the business idea and/or the presentation receives far greater importance than business economics. It is then no surprise that many of the competition produce winners who never go on to start those businesses (in the real sense).
These are but a few parameters – if the reviewers and writers of business plans were to stop and take stock of what is the intent of the document they are producing – is it to reflect their thoughts of running a business or an outlet to their literary and creative skills, many more parameters could emerge that can make the exercise meaningful.
About the author:
Raj Shankar is a thinker, researcher, author and teacher of Strategy & Entrepreneurship. You can follow him @ichibanraj or read more at http://rajshankar.wordpress.com