3 Questions You Must Answer Before You Present Your Business Plan
This article originally appeared on Forbes by Mark Murphy, Founder of Leadership IQ
Whether you’re an entrepreneur, CEO or middle manager, virtually everyone has to create (and present) business plans. And while there are literally thousands of business plan templates available, they will all fail if you don’t answer these three critical questions (that you might have never heard before) when you’re creating and presenting your business plan.
Question #1: What’s the communication style of the people who will judge your business plan?
Ultimately your business plan is going to be presented to an audience, whether it’s a boss, a board, investors, employees or a group of your peers. At that means that you’ve got to have your business plan packaged in such a way that your audience is going to be swayed and inspired to invest, support or approve your plan. It would be nice if every audience was the same, but they’re not. Some audiences want a quick to-the-point overview, others want detailed timelines, some want a good story and still others want nitty-gritty calculations. Ideally a good business plan will address all these issues, but let’s be realistic; you’ve got limited time, resources and pages, so you need to write your business plan with your most important audience in mind.
More than 50,000 people have taken the online quiz “What's Your Communication Style?” and after analyzing the data, I can report that if you’re presenting your business plan to Finance executives, 32% of them are Analytical communicators. The Analytical Communicator likes hard data, real numbers, and tends to be
suspicious of people who aren’t in command of the facts and data. They typically like very specific language and dislike vague language.
By contrast, if you’re presenting your business plan to Marketing executives, 38% of them are Personal communicators. The Personal Communicator values emotional language and connection, and uses that as their mode of discovering what others are really thinking. They find value in assessing not just how people think, but how they feel.
The lesson here is that your business plan could be a home run for one audience and completely bomb with a different group. So even though it’s extra work, it will definitely be worth your time to research your audience and find out what has (and hasn’t) worked for these folks in the past.
Question #2: What are you going to stop doing?
By their very nature, business plans have a tendency to describe all the cool new things you’re going to do in order to generate a wonderful return on investment. The problem is that most business plans don’t fail because they didn’t describe enough new activities; in fact, the opposite is true. Most business plans fail because they add on way too many new activities without recognizing that we’ve got limited time, and if you’re going to start something new, you better be prepared to stop doing something else.
It’s easy to describe a dozen new activities that we’re going to undertake next year, but it’s way harder to outline all the low-value activities you’re going to stop in order to free-up the time to pursue the new activities. But even though it’s harder, it’s arguably more important.
Now, you could potentially write a business plan and get it approved without ever answering this question. But the savvy executives and investors know that your plan is likely to fail if you haven’t identified your "stop" activities. So, in the interest of creating a plan that will actually succeed, you should really think long and hard about what you need to stop doing in order to free-up enough time to work on these new activities. And if you can’t stop doing anything because the work you’re currently doing is more valuable than the proposed new activities, you’ve just learned something very important about the true value of your business plan.
Question #3: Why hasn't this been implemented thus far?
Assuming you’ve created a brilliant business plan with a high probability of success, the final question that seasoned judges will ask is "why haven’t you implemented this great plan before now?" There are absolutely legitimate answers to that question; the technology didn’t exist before now, we need an additional $200,000 of investment, or whatever. But this question is really effective in identifying what can be called "magical thinking."
Sometimes you’ll see a business plan that hinges on salespeople being more focused, or leaders more effectively managing employee performance, or a division having better processes. And in those cases, it’s a good idea to wonder how that magical change is going to take place. If I’m the executive who’s being asked to approve this plan, I might completely agree that our salespeople need to be more focused and stop pursuing low-value opportunities. But how is this plan going to effect that change? Are we just expecting that by virtue of having a new plan our salespeople are going to magically start pursuing better leads? Because in the real world, we all know that having a fancy new plan is no guarantee that human behavior is going to change.
The next time you’re preparing a business plan, after you’ve gone through all the typical questions, take an hour and force yourself to take a hard look at your plan and answer these three questions. It won’t be fun or easy, but you’ll ultimately be much more successful if you ask yourself these questions before an executive or investor starts hammering you on these issues.
Mark Murphy is author of Hundred Percenters: Challenge Your Employees to Give It Their All, and They'll Give You Even More