Numbers “your granny could understand” – keep the business plan simple

The text of this article caught my eye in the Sunday Times of 22/11/2009. The piece “Write your own success story” by Sandra O’Connell refers to the need for a good business plan for any start-up business. According to O’Connell, a business plan needs to provide TEN – text, evidence and numbers. Text is the story of you business plan, evidence is your supporting facts and research and numbers are the supporting financial data which show that your story and evidence convert to sales and profits. So how can you provide numbers in a way even you old granny would understand. The answer is to keep it simple. This means three key numbers should be the main focus of your plan; 1) how much can you sell, 2) how much does it cost, and 3) how much money do you need to get this off the ground. I think even granny can understand these! But should my business plan not be detailed I hear you say? Yes of course, but you can summarise it down to a page or two that you place at the front as an executive summary. The details – sales prices and volumes; detailed costs; detailed cash requirements – can be provided in as much detail as necessary later in the plan. So, as you fight with projected costs, revenues and cash-flows, try to do a summary of each as you go. Then give it to granny to see if she can understand it.