It’s not clear to me why business plans are the way they are, but they’re often misused to obfuscate, bore, and show an ability to comply with expectations. If I want the truth about a business and where it’s going, I’d rather see a more useful document. I’d divide the modern business plan into five sections:
The truth section describes the world as it is. Footnote if you want to, but tell me about the market you are entering, the needs that exist, the competitors in your space, technology standards, and how others have succeeded and failed in the past. The more specific, the better. The more ground knowledge, the better. The more visceral the stories, the better. The point of this section is to be sure that you’re clear about how you see the world, and that you and I agree on your assumptions. This section isn’t partisan—it takes no positions; it just states how things are. Truth can take as long as you need to tell it. It can include spreadsheets, market share analysis, and anything else I need to know about how the world works.
The assertions section is your chance to describe how you’re going to change things. We will do X, and then Y will happen. We will build Z with this much money in this much time. We will present Q to the market, and the market will respond by taking this action.
You’re creating tension by telling stories. You’re serving a specific market. You’re expecting something to happen because of your arrival. What?”
This is the heart of the modern business plan. The only reason to launch a project is to make change, to make things better, and we want to know what you’re going to do and what impact it’s going to have.
Of course, this section will be inaccurate. You will make assertions that won’t pan out. You’ll miss budgets and deadlines and sales.
So, the alternatives section tells me what you’ll do if that happens. How much flexibility does your product or team have? If your assertions don’t pan out, is it over?
The people section rightly highlights the key element: Who is on your team, and who is going to join your team. “Who” doesn’t mean their resumes; it means their attitudes and abilities and track record in shipping.
You can go further here. Who are the people you’re serving? Who are the champions? What do they believe about status? What worldview do they have?
The last section is all about money. How much you need, how you will spend it, what cash flow looks like, profit and loss, balance sheets, margins, and exit strategies. Your local VC might not like this format, but I’m betting it will help your team think through the hard issues more clearly.
This post is an excerpt from This is Marketing by Seth Godin