1.2. How to make a business plan convincing?

1.2.1. Basic and Optical Requirements

The business plan must describe the way to achieve the goals. It must indicate how the business goals can be led to success. The "what" must be defined. The "how" must be described. It must become apparent how the hurdles will be overcome and how the business concept can hold its own in competition. The most important goal of a business plan is to present in writing how a business can be realised in reality. The criteria of the assessment will have to be measured against this reality.

First, the business plan should be visually appealing. It should be written in such a way that it appeals to a third party (managing director, investor, loan officer, business promoter or assessor) in its presentation and form. Basically, the business plan is an application. It is about a business that is to be developed and marketed. Self-marketing starts with the concept. Therefore, the logo or signet, the company name or a concise slogan as the title page of the business plan are the ticket to success.

When it comes to self-promotion, self-presentation and appearance have a high charisma. They have an emotional effect and engage the evaluator positively - or negatively. The first impression with a business plan makes a profound impression, psychologically speaking. A picture often says more than a thousand words can describe.

1.2.2. Conceptual Requirements

The business plan must be conceptually convincing and technically correct. The concept is a formulated, intellectual construct that attempts to capture the opportunities and risks of a business idea. The business concept as a whole must therefore show a common thread. Every business concept and every enterprise needs a target perspective and thus a strategic orientation. The concept must indicate how the goals are to be operationally implemented in reality. It must be shown with which organisation and with which people the business goals can be achieved. This can only be achieved by those who know their products and services well, have developed them to market maturity and have dealt intensively with the market and especially with competitors. The concept is therefore about setting out how the business is to be implemented from a technical and business management point of view. A business concept begins with the "business idea" and describes the economic and financial implementation.

1.2.3. Market Maturity and Marketability

A business idea must be developed until it is ready for the market. It must be up to date so that it can become marketable. A business idea is marketable when it can successfully assert itself in the market. The services offered must reflect the current state of knowledge. Today, it is hardly enough to put "old wine in new bottles". In the global knowledge society, topicality is crucial.

For example, the service description must indicate that the type of product or service meets the quality requirements and customer wishes "today". The service description can be understood as the "food and drink menu" in an excellent restaurant. It simply and clearly defines the offer in terms of image, type, quality, quantity, unique selling points, price and customer orientation. It is about the value proposition to the customer. This should be appropriate to the offer and the target customer in terms of price-performance ratio.

1.2.4. Factual Requirements

The business plan must be factually correct. The requirements for the business concept must soundly describe the current state of know-how in the market. The individual modules of the business plan must be evaluated in terms of content. The data, facts and figures must also be related to each other in the business plan. The individual modules represent the inner context of the overall concept.

The assumptions and statements in a business plan must be justified and, if possible, substantiated. If analyses or scientific statements are involved, sources, literature or internet data must be cited. Sources must always be cited. Experiential knowledge from the market can be presented as such. This documents background knowledge and creates reputation. It creates respectability and shows that the entrepreneur is serious.

The quantitative information and figures, in particular the business plan with sales forecast, investment, financial, turnover, cost and liquidity planning must be arithmetically correct.

1.2.5. Plausibility, comprehensibility, realism

The business plan is not a scientific treatise, but an economic concept. The difference is that it is not about a scientific question or a theoretical interest in knowledge, but about the entrepreneurial challenge of developing a business idea in such a way that a successful company can emerge from it or be continued in the case of a company takeover. Therefore, the criteria of plausibility, comprehensibility and realism are of decisive importance for the evaluation of business plans.

With an economic concept, it is important to recognise the opportunities and risks of the business concept in order to be able to make the right decisions as an entrepreneur. In this sense, success is to be seen as the "sum of right decisions".

Since there is not only one reality, but always several views of reality apply, the final evaluation of a business plan - despite all objectivity - always also represents a subjective view. This view is of particular interest, since third parties are always involved in every business plan. If the business plan is convincing, the decision-makers, whether they are the managing director of a company, the loan officer at the bank, the investor, a business promoter or the expert, will be able to understand and confirm this.

• Plausible means it must be acceptable, plausible and comprehensible to a third party. The assumptions must be acceptable, for example, the sales forecast should be able to explain why a certain customer or target group can and is likely to buy a certain amount of products in a certain time.

• Comprehensible means that a third party can see and understand something in writing, graphically, mathematically and/or in tabular form, i.e. in text form. For example, it is comprehensible if a company presents and elaborates its unique selling propositions in comparison to competitors.

• Realistic means that it must correspond to reality to a high degree. This must be based on the conditions of social reality in which today's business world operates. If today's world is, for example, international and digital, its effects must play a role in the business concept. For example, it is about the concrete competition in the place where the business is to be done. This must be recorded as precisely as possible. The criteria for success or failure must be identified, described and mentally turned around in the concept so that the business idea can be successful. It is important to recognise the economic risk and at the same time the opportunities.

In the market, it is the customers who decide on success and failure. The success of a business plan is only decided when a product or service is purchased. Therefore, it is quite possible that all decision-makers have an inadequate view of future reality and a start-up nevertheless succeeds with its business concept. Otherwise it would be hard to explain why the famous "garage companies" or "dishwashers" achieve world fame - because they would not have received a start-up loan from a bank. On the other hand, reality is tougher in any case than a rejected concept. In business life, a flawed business plan is punished with insolvency, i.e. economic loss - which can also result in personal failure.

1.2.6. Typical Mistakes in Business Plans

When it comes to the business plan, it is the inner coherence and the details that matter. Common mistakes made by entrepreneurs are:

Insufficient professional, commercial qualification or personal competence .

The business plan does not match the professional qualifications of the founder. It is not clear that the founder has the factual and/or commercial knowledge that makes business success likely. This may be the case if an interesting business idea cannot be marketed successfully or if the financial considerations or cost accounting do not match. It is also possible that the content and quality requirements are so high that the business management implementation cannot keep up with them. The founder lacks the professional and life experience to be able to offer a certain service; this could be the case if, for example, a "career starter" wants to start as a management consultant for top management.

Insufficient market knowledge , of the industry and competitors

Every product and every service has to find its customers. Often the sales forecast does not match the market, the demand is overestimated. It makes a difference whether a business is to be done in the trade, commerce, service sector or in the health industry. Everywhere there are standards and rules that make a market and an industry special. Market maturity means knowing the industry and the customers as much as possible. This is especially true for competitors who have been in the market for a long time. Not only must they be perceived, their offer must be analysed so that unique selling propositions can lead to a market advantage. It is important to discover gaps in the market.

Insufficient commercial or economic concept

Every successful entrepreneur must know the basic arithmetic of his business. It is often misunderstood that the product or service description has a direct impact on the sales forecast and the target customers. There is a lack of basic understanding of what investments are and how they can be financed. The calculation is often a book with seven seals. If you don't have enough equity capital, you have to raise outside capital. A favourable business start-up loan can help. Often the running costs are underestimated. The entrepreneur's salary is forgotten or set too high. Basic commercial knowledge is lacking for liquidity planning. Illiquidity is one of the most frequent causes of insolvency. Then the company has to leave the market, usually with high personal debts of the entrepreneur.

Inadequate presentation of the business plan

A business plan must be written and presented in the same way as an application. The personal impression that the founder makes on the decision-maker, the managing director, the bank or a business promoter must be right. If you want to sell something, you have to put yourself in the position of the customer or client. In other words, customer orientation also applies to the self-presentation of the business plan. Success comes to those who know how to convince others with their cause and their person. The personal competence and motivation for the success of the business idea must be presented.

(Source: TED 2016)

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