How to Assess Business Plans

If you are a lender, a venture capitalist or a business advisor, chances are high that you will look at hundreds of business plans. While many new business owners understand the need for a business plan, the purpose of the plan can be elusive. Good business plans show not only the potential of the business idea, they show the ability of the entrepreneur to make the idea successful. It is essential to understand how to assess these factors in a business plan to make smart investments.

Instructions

1.    Examine the marketing plan. Every good business plan has a marketing section that explains how the company's product or service will fit into a specific niche of the market. Does the product clearly meet an unaddressed need in the market? Does the marketing plan define specific target customers? According to Entrepreneurship.com, "too many plans assume that anyone or everyone will buy the product or service." Look for business plans that show thorough research on the specific demographic group the product will target. Assess whether the advertising plans are designed to successfully reach that demographic and engage their interest.

2.    Look at the financial projections for the company. Accurate financial projections are essential to the success of any new business. For example, a business with a great product can easily fail because the entrepreneur failed to fully assess operational costs. Read the financials with an accountant's eye. Do the cash-flow estimates appear accurate? Has the owner been thorough in addressing all of the operating costs? Is there a cash reserve for emergencies or will the business fail at the first hurdle? Even the most profitable business venture can take some time to become profitable. Assess whether the financial projections indicate a business prepared to stay afloat long enough to become profitable.

3.    Consider the expertise of the business owner or management team. Do they have previous successful business start-ups under their belt? If the business plan is from a first time entrepreneur, look for experience with the offered service or product. According to Real Small Business, many investors will look at the management section of a business plan first to assess industry and business credentials. Use the management section of the business plan to assess whether the owner or management team has the experience needed to build a successful company. Look for industry experience that indicates a professional understanding of the product and its customers.

Various presentation skills are explained.

Here you can learn how to develop your presentation skills, we recommend working through our step-by-step guide:

What is a Presentation?

A presentation is a means of communication which can be adapted to various speaking situations, such as talking to a group, addressing a meeting or briefing a team. To be effective, step-by-step preparation and the method and means of presenting the information should be carefully considered.

Preparing a Presentation

Preparation is the most important part of making a successful presentation.  This is the crucial foundation and there should be no short-cuts. 

Organising the Material

Irrespective of whether the occasion is formal or informal, always aim to give a clear, well-structured delivery.  You should know exactly what you want to say and the order in which you want to say it.  Clarity of ideas and good organisation should result in a lively, logical and compelling message. 

Writing Your Presentation

Before you write your presentation, you should already have started to prepare by developing your ideas and selecting the main points to include. 

Deciding the Presentation Method

Few people are able to give a presentation without notes. You will need to know your own abilities and decide how best to make the presentation. You might manage your talk by using full text, notes on cue cards, keywords on cue cards, or mind maps

Working with Visual Aids

Most visual aids will need advance preparation and should be operated with efficiency.  Only use visual aids if they are necessary to maintain interest and assist comprehension: do not use them just to demonstrate your technological prowess. If visual aids are used well they will enhance a presentation by adding impact and strengthening audience involvement, yet if they are managed badly they can ruin a presentation. 

Managing the Event

The practicalities of how you manage your presentation even can make a significant difference to its success, and to your nerves!

Coping with Presentation Nerves

It is entirely natural to feel nervous before making a presentation. Fortunately, there are some tried and tested strategies and techniques to manage your nerves so that you can concentrate on delivering an effective and engaging presentation.

Dealing with Questions

At the start of your presentation, you should make it clear whether and when you would prefer to deal with questions. Some speakers prefer questions to be raised as they arise during the presentation whilst others prefer to deal with questions at the end. Decide in advance how and when you wish to handle questions.

The oral presentation of the business plan is assessed.

If you have excelled in putting together your written business plan, you will have a chance to make your case on the phone and/or in person. You must be thoroughly prepared to make a positive and lasting personal impression and a strong argument for your business. How will you accomplish this?

First, practice your pitch. Even though the potential financier should have looked at your business plan by this point, you should still prepare a short summary speech that highlights the points you made in your executive summary. Don't memorize an entire speech; just memorize the outline of what you want to say. That way, you will hit all of the important points but sound sincere in your delivery. You may even want to visit a public speaking club to practice your public speaking and presentation skills ahead of time and get constructive feedback on how you can improve. Even if you don't want to present your plan to a group of strangers since it may contain proprietary business ideas, getting practice speaking on other topics will still help you.

Brainstorm questions that the person or group you are meeting with is likely to ask you, and prepare answers to those questions. It might help to ask trusted, business-savvy friends to review key parts of your plan as devil's advocates so you can practice and be prepared to defend everything in your plan.

A common mistake business owners make is to get feedback only from friends and relatives. The problem with this is that, often, the people who care about you will be inclined to support you or tell you that your ideas are good because they simply believe in you or don't want to hurt your feelings. Even if you have less-sympathetic, brutally honest friends and relatives, they may not understand your idea from a business or investment perspective, and thus will not be able to give the kind of feedback you really need.

If you're not a numbers whiz, you don't have to become one, but, as the owner, you should thoroughly understand the financials included in your plan. Bring other members of your management team onto the call or into the meeting if they will strengthen your presentation or compensate for any weaknesses you may have. For in-person meetings, make sure that you present yourself with a professional and confident appearance and manner, just like you would do for a job interview.