Brass Tacks

Q. I’ve prepared a business plan to help me get additional capital for my business. I followed the “how to” manuals and have produced a 200+ page document which I’m sure nobody has the time to read. What parts should I highlight to avoid overkill?

A. Every reader has pet interests. Consequently, the more you know about your intended “consumer,” the better your chances of structuring a presentation that will get read. Since all readers are different, you might have to produce several versions of your plan.

There are a few key components of a business plan that are on every reader’s “must see” list.

• Key proposition: A business plan should state clearly and succinctly what your company is proposing to do that makes it a worthwhile subject for the reader’s attention (e.g. renew a line of credit, secure a capital infusion, develop a new product or service, obtain an exclusive line or license, etc.). Denote the near-term target achievements you’ve established for your firm such as sales levels, facilities going on stream, markets to be captured and technology going on stream.

• Unique advantages: Most readers, especially investors and lenders, want to know what is truly different about a company. They want to know what it is about the firm that will give them a unique return for the effort they will expend and the risk they will accept. Highlight any exclusives you enjoy with respect to processes employed, source of supply, customer access, intellectual capital that you own, established brands, technology and employees with special talents.

• The numbers: Easy to read, logically organized, projected financials are essential. They illustrate the company’s direction and give an indication of management’s confidence, common sense and capability. Be sure to include the statements that show your firm’s bottom line and cash flow for the past three years. Also provide pro formas that project your anticipated profit or loss and cash dynamics for the next three years. Readers will also want to see your latest balance sheet to get a fix on the value of your assets, the extent of soft assets like goodwill and capitalized R&D, the liquidity of your firm, the magnitude and nature of current and planned debt and the book value of the enterprise.

• Key personnel: Readers want to know the folks who are running the show. Describe the founder of the business (if he or she is still involved), the key managers, sales personnel and technical people on the team. Outline their experience, special talents and track records. Also tell a bit about the outside talent that will be relied upon such as directors, accountants, attorneys and consultants.

• Sizzle: There is something glamorous about every business, so a business plan should strive to highlight the elements of appeal that will catch the reader’s fancy with a promise of something unique, something with potential. Fact-based salesmanship is essential if a business plan is to get past the audition stage. Too much pizzazz will ruin a plan’s credibility and put it on a direct vector to the circular file. Facts are vital; impressions are crucial.

• Equity premise: If you are seeking capital or outside investment in the form of debt or equity, your plan must describe the terms of the deal to include the estimated value of the company, percentage of the firm being offered and the price being asked for that part of the business. You should describe the structure of the offering, the type of security offered, the minimum/maximum dollars that are sought and the minimum/maximum number of investors who will be considered. Also, describe the effect that this offering will have on the percentage and value of the ownership held by the present owners, promoters and founders.

• Exit strategy: Capital providers don’t want to be caught in an enterprise for more than four to seven years. Give them the best indication you can of how they are eventually going to be “taken out” of the deal and how much money they are going to take with them when exit time comes.

Paul Willax is a professor of entrepreneurship and chairman of the Center for Business Ownership Inc., Amherst, N.Y. he also is the author of the book, “Brass Tacks Tips for Business Owners,” available at If you have a question or suggestion for his column, or to receive a free, weekly e-mail newsletter, “Brass Tacks Brainfood,” write to

Categories: News