Writing a business plan is a daunting exercise. There are no true standards for substance or length, but the documents often run between 30 and 60 pages and include content related to all aspects of the business and industry. The business plan for The Virginia Beer Company clocks in at 51 pages, including the text, financials, and an appendix. We began researching business plans in early 2011 in advance of making the final decision to pursue a new brewery. The actual writing process didn't begin until September of 2012, but by that time we had a very good idea of what would be included. We believed that the main task would be the consolidation of existing notes and emails that Robby and I had been sending back and forth. When pen hit paper (or whatever the technological equivalent would be) we were definitely surprised by how much work actually remained!
The two distinct portions of a business plan are the text section and the financials (although a good business plan always references financial figures in the Executive Summary and various other places). I'm going to cover the creation of financial statements in a separate post due to the complexity of that process. The first order of business for us was coming up with a rough table of contents. We used various resources easily found on the internet, including sample documents available from the Service Corps of Retired Executives, or SCORE. Both editions of the Brewers Association's Guide to Starting Your Own Brewery were helpful as well. There have been many, many iterations of our plan, but the current table of contents has thirteen main section headers:
- Executive Summary
- Marketing Plan
- Competitive Analysis
- Operational Plan
- Management & Organization
- Professional & Advisory Support
- Risk Assessment
- Financial Analysis
- List of Competitors (Local/Regional/National)
- Sample of Potential On-Premise Accounts
- Sample of Potential Off-Premise Accounts
Once a rough table of contents has been developed, writing a business plan is all about old-fashioned hard work and independent research. You need to write, read, and edit over and over again until the plan concisely and accurately represents the type of business you want to build, the goals you want to achieve, and how you will go about achieving those goals. Everything needs to be backed up with facts, not simply opinions. Assumptions and projections used in planning should be noted so readers understand the risks associated with the business. It's common advice, but save the Executive Summary for last - you will know that you've written a good business plan if the content flows without a second thought. A few more random, unrelated suggestions:
- It's usually a good idea to add a disclaimer on the front page of a business plan stating that the document does not constitute an offer to sell or a solicitation of an offer to buy securities. Running afoul of securities law is never a good idea, and the disclaimer is one way to ensure that the document steers clear of what should be accomplished using a Term Sheet/Offering Circular, an Operating Agreement, and a Subscription Agreement. The document can clearly state the funding model of the business without specifically requesting those funds from the reader.
- Nothing will turn off a potential investor, or even a professional that you are hoping to hire, like poor syntax and diction. The many months spent on the content of a business plan should include multiple grammar and spelling reviews. A lack of attention to detail in your business plan will immediately signal the possibility of a lack of attention to detail while running your business.
- Business plans sometimes include a page asking each person who receives the plan to sign a confidentiality agreement. This is unnecessary and overly burdensome! A simple request for confidentiality when the document is delivered (whether electronically or in hard copy) will generally be respected. Track the distribution of the document to control the spread and maintain confidentiality.
- Some industries and ideas are more risky than others, but every new business comes with risk. It's a bad idea to downplay or ignore those risks when writing a business plan. The Risk Assessment is one of the most important sections of the plan and should be given appropriate consideration. A skilled writer and entrepreneur will recognize the risks associated with the venture and have thoughtful ideas and plans for risk mitigation.
As you've likely heard before, writing a complete business plan is the best way to learn about your business and the associated industry. It's much better to make your inevitable mistakes while writing a business plan than while operating an actual business. We discovered that many of the ideas we originally had were flawed, and that aspects of the craft beer industry we thought we understood were in fact much different than imagined. Writing the plan was one of the most worthwhile aspects of the startup process and has educated us in ways that continue to impress the investors and professionals we approach for funding or assistance.
It took us almost 15 months to complete a business plan that we felt was satisfactory. We continue to edit it each and every week! People (especially those interested in opening craft breweries) often ask us to share our full business plan. It might seem unkind, but we reject those requests out of hand. The plan is our intellectual property and can only represent our business; we would actually be doing the requesters a disservice if we gave them an easy way out of writing their own business plan. I can attest to the fact that the process of writing a business plan is not easy or simple, but it is most definitely necessary and valuable.
Coming soon...more information regarding the financial analysis section!