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Business Plans That Drive Transactions

Doug Schmidt | Posted on March 22, 2013

Most companies view business planning as a necessary evil. Senior executives would rather be building new technology or talking to customers. For early and growth stage companies, the goal of business planning is to obtain funding to start or expand the business. For more mature companies, the main goal is usually to drive either an acquisition by a larger player or faster growth and profitability. In reality, the major goal of business planning is to outline the structure and execution steps to create the best possible business. Over the past seven years, I have written dozens of business and operating plans that have driven transactions, and I have read hundreds more – many for companies that could have been market contenders if they had been more diligent about plotting out their future. My view is:

Therefore, for the smart entrepreneur, business planning is the process of planning ahead, organizing your company for success, and then executing on that plan – it is continuous, rigorous, and most definitely not a one shot deal . Once you create your first business plan, you update it every month or quarter. It is your roadmap for success, and, aside from your customers, products, shareholders and employees, it is your most valuable asset.

Where You Are Now

You are going full speed running your company. You have an operating business, a simple business plan, and some sales presentations and literature. As you continue to trudge on without growth funding, operating your business gets harder and harder. You believe in your market, and you think you have some customer validation, because your product is installed at a couple of companies. Investors may follow your company, but you can’t get past the “feel good ” first meeting or phone call. You need capital to grow, so that you can:

You know you need a real business plan, so that more people can understand and fund your growth, but operating your company always gets in the way.

Where You Want to Be

Business planning is hard; however, a t the end of the day, there is a simple way to approach it. To create a great business plan, an entrepreneur must answer three questions:


To answer these questions, an entrepreneur and his team must go through an iterative, intense process. Creating a great business plan has four, key steps:


Finally, there is a saying that the favorite beverage of entrepreneurs is Kool-Aid, because entrepreneurs drink their own Kool-Aid constantly and many companies don’t live to tell their story as a result. It’s essential that you expose your ideas and thinking to intense criticism and listen to contrary points of view from outside the company. Here are the rules for outside review:


How do you know you’re getting good advice? Well, the favorite beverage of a good outside advisor is crisp, cold water. The advisor doesn’t drink it; he throws it in your face to make sure you’re listening.

Before we get into what needs to be in your business plan, presentation, executive summary, and operating plan, let me just add one thing: Good business plans aren’t built over a weekend. It almost always takes 45 to 90 days to give birth to of a business plan and accompanying presentation on paper.

What Documents to Create and What to Include

Solid planning produces several documents that describe your business; each document serves a different purpose in the funding process. Here is the optimal set of documents that you need to produce:




Primary Use


Executive Summary 2-5 pages giving the highlights of your business opportunity and expected results
  • Investors
  • Management candidates
  • Partner candidates
  • Overview of business concept; designed to get the first meeting
  • Write this last, after you have completed the business plan
  • Generally extracted from the business plan
Investor Presentation 15-25 page PowerPoint overview of business and business strategy
  • Investors
  • Management candidates
  • Overview of the business, markets, and operational strategy
  • Focus on markets, products, sales, competition, expected financial results, and management team.
Written Business Plan/Private Placement Memorandum (PPM) 35-50 pages describing all elements of the business and business strategy; PPM additionally includes legal/financial introduction and sometimes risk factors
  • Investors
  • Senior Management
  • Board of Directors
  • Detailed description of the company – idea/product, markets, business and operations strategy, and expected financial results
  • Good, clear writing and passion are very important.
  • Must show the ability to successfully operate and grow a business
Operating Plan (not required, but highly recommended) 60-80 page plan in PowerPoint for operating the business over a 24 to 36 month period
  • Investors
  • Senior Management
  • Board of Directors
  • Employees
  • Chart the course of the company in detail, including key milestones in all major business functions
  • Serves as the guidebook for investor due diligence
  • Provides an internal plan for senior management and Board for execution
  • Update every quarter

Generally speaking, you create your set of planning documents in the reverse order of their use – beginning with the optional operating plan and ending with the executive summary. Every document should contain some version of these seven sections in increasing levels of detail depending on the length and purpose of the document:

  1. Executive Summary– 2 to 5 business plan pages – provides a succinct and compelling description of your company. It should include a discussion of the key takeaways in all key areas of your business. The first paragraph or two should say clearly what you do, why it is compelling, and why your company wins in the market. The subsequent content on your market, products, current and target customers, competitive position, management team, and financials should factually support and amplify the beginning of the summary. If you have the time to build on your business plan before going to the transaction markets with a summary, I would strongly suggest that you create the executive summary last – after you have documented the rest of your business – so that you have maximum knowledge of all key functions in your business.
Business Plan Table of Contents

  • Executive Summary
  • Market Overview
  • Products & Services
  • Go-to-Market Strategy
  • Competition
  • Operations & Management
  • Financials & Use of Funds
  1. Market Overview– 5 to 8 pages – describes the market opportunity, the landscape you compete in, and the market drivers that speed adoption of your products. You need to cite third party sources that support your description of the market opportunity and provide market forecasts that support your predictions of a high-growth market. Sources can include industry analysts (Gartner, Forrester, and IDC), financial analysts (Wall Street brokerage research), and academic and association studies focus ed o In describing the market You need to relate these market drivers to product capabilities you offer and activities you are actually seeing in the market. Finally, be sure to document the barriers to entry that will prevent your competitors – large and small – from devouring your company as a luscious but light, mid-afternoon snack.
  1. Products & Services – 8 to 12 pages – is where the rubber really meets the road. Customers buy products, analysts track products, and investors and acquirers bet on products. Therefore, you absolutely and completely have to describe your products clearly and succinctly. Here is what you need to cover:
    • A clear and short overview of your products that articulates what the product does, the value it brings to customers, and why it is unique in the market
    • A description of the major components, capabilities, and benefits of the product or service
    • Your unique intellectual property:
      • How the technology is different from and similar to existing technologies?
      • How hard is it replicate?
      • Could it become “the standard” for the market? If so, how?
    • The status of product or service development, including the release date of the next (or first) version of the product or service (or key products if you work for a larger company)
    • How the product will evolve over time, including a brief description of the features that will be available in subsequent releases
    • If partners are required to deliver the product or service, the type of partners that are required and briefly provide examples of potential partnership candidates
    • An overview of how you currently – or will – implement your product for customers. For software products, this usually means building a professional services organization that follows specific implementation procedures.
    • How your product is positioned and priced in the market
    • Sample case studies – if you have them – that describe the benefits of your products in real-world use

    Most entrepreneurs love to rave on endlessly about their products and technology. It becomes tempting to build a 20 page business plan section – or 10 slides in an investor presentation – to really make sure that an investor or acquirer “gets it”; however, it’s better to make it crisp, clear, and concise. Remember that Products & Services is only one section out of seven

  2. Go-to-Market Strategy – 4 to 8 pages – describes how you get your products in the hands of customers. You must prove that your company has the ability to grow its customer base and that you know how to put together an effective go-to-market team. You should cover:
    • The Company’s performance to date, including notable selling, partnership, and marketing highlights over the last 6 to 9 months
    • The sales strategy going forward, including the use of direct and indirect channels as appropriate
    • Sales goals by channel for the next 12 to 24 months
    • How you currently organize your selling efforts and how this will change in the future
    • The types of people you have on staff – and will recruit – to execute your go-to-market strategy
    • How you use – or will use – indirect channels to bring your products to market
    • The marketing programs you expect to execute to help acquire new customers and influence the market

    For technically-oriented entrepreneurs, this section can seem particularly daunting, because, as everyone knows, great technology sells itself. If you don’t know how to organize a go-to-market strategy, go seek out expert advice. As a leader – who happens to be a technical genius – you are expected to be able to put together a logical, metrics-based go-to-market strategy and build the right team.

  3. Competition – 3 to 6 pages – takes the market you described in the Market Overview and paints it from a competitive point of view. This section describes:

It is very tempting to trash your competitors large and small alike; after all, your offerings and approach are obviously better. It’s also tempting to describe them in such excruciating detail that investors and buyers run screaming in terror. The best approach is to create a high level, SWOT-oriented view based on more on facts and realism than passion for your product. Here are the rules you should follow: