For the last 7 years I have been evaluating business plans as a juror / coach for the Bavarian business plan competition. That’s about 25 – 30 business plan per year – across all industries: from engineering to pharmaceutical, IT, Apps, services, social entrepreneur… you name it.
I have collected points that I always tend to criticize. In the next 3 articles, I will exactly explain what I am missing and what I expect to see/ read in an excellent business plan.
The outline of a business plan is clearly defined in the competition guidelines and so are the evaluation criteria. If you miss a chapter or a section, you will get no points. Very simple. I always read the business plan with the hat of an investor:
“Would I give you my money? Will I get it back and how high are the risks and my return on this investment?”.
The first article will focus on the SWOT Analysis, the second on Financial Planning, and the last one Value Proposition, facts, figures and general comments.
In about 10% of the business plans, the SWOT (strengths & weaknesses / opportunities & threats) Analysis is excellent. The rest delivers a list of bullet points for strengths and weaknesses. So, what is the difficulty of a SWOT analysis? What do I expect?
As a juror, I’m interested in your strategies.
So, what , does that mean to your business?” is always the key question.
- I expect you to do an analysis of your strengths, weaknesses – compared to your competitors and an analysis of your external opportunities and threats. That means, you need to analyze your key competitors and their value proposition for the customers. In addition, you need to analyze the external environment including trends and changes that might affect your business.
- Then I expect you to map the strengths with the opportunities and also with the threats and do the same with the weaknesses. Basically, you get a matrix.
- In the third steps, and this is what I expect to read in the plan, you develop strategies when your
- strengths encounter your opportunities
- your weaknesses encounter your opportunities
- your strengths encounter your threats
- your weaknesses encounter your threats.
The strategies should be more detailed than stating “we will follow a diversification strategy”.
S0 what does the (diversification) strategy mean to your business? How are you going to implement it?
Tell me as precise as possible. In some business plans, predominantly written from students, the strategy definitions according to Porter, Kotler, Hamel, Prahalad… are explained in detail. To be honest, I know them and I am not interested in the general definition.
I am interested in your application of the strategies for your business.
You may not know all the answers yet of how you will react when a threat will materialize. That is perfectly fine. State it and describe, how you will manage this situation. It could be, that you have a coach, a board of advisors, a network… who you will contact.
I need to see, that you are aware of the risks and that you are able to manage them. A structured business plan will make you think about your business as holistic and as critical as possible. And then, life kicks in and tells you a completely different story.