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The Most Challenging Component to Write

The official business plan has several key components. In your opinion, which component is the hardest to write? Why?

As an accountant for me the hardest part of would be the Financial Plan. Not because of the mechanics or structure of the Financial Plan is difficult, but the financial assumptions can be difficult to settle on. "Am I too conservative." "Am I too aggressive." "Did I forgot an important assumption." The goal being to present them most favorable picture without being unrealistic can be a very difficult task.

I would also say that the financial section would be the most difficult to write. The excitement of the plan or product would naturally cause you to want to over-estimate the returns and possible underestimate the risks. Making assumptions that are both optimistic and realistic cold prove difficult.

The financial plan is the hardest in my opinion because there are so many little factors that need to be addressed and you always find something else that you missed or need to add.

I have to agree with everyone. When one is doing estimates, and assumptions it is easy to get carried away. Also, in my opinion, we tend to make linear projections and as we all know that is not the case most of the time.

I have some important challenges writing a business plan, but the most important is, in my concept, the financial plan, put the people to think about my business as a money producer is a great challenge, to put the investors in love with my project is something essential in business. Im agree with everyone that said about the assumptions because it is a projection of an idea and that topic is the most exciting part of the businees plan and at the same time the hardest.

Carlos,

Agreed. A passionate description of the product or service is crucial to success, but financial projections, sales forecasts and budgeting are all subject to the keen eyes of credit holders and investors. I think the three key elements that need to be addressed in a business plan for a new product or service are 1) is it creative, 2) is it marketable and 3) is it sustainable enough for a decent ROI?

Jay Hollowell

While the Financial Plan is no doubt a critical part of the Business Plan, I believe that writing the analysis of the business environment can be hard to nail down and can be difficult to write. In the analysis, communicating a thorough understanding of the industry or sector, the competition, the direction of the market, and customers are essential to communicating an effective message to the intended audience. This is in part because the business environment today often changes quickly. Defining the business opportunity within the business environment has to be written clearly and well to be able to support the assumptions described in the Financial Plan. Failure to communicate a solid knowledge of the business opportunity within the environment will negatively impact the ability to secure funding by the owners.

Very good points Rufus. I often think in reviewing business plan that getting the financial assumptions correct is difficult. More often that not, in business plans that I have reviewed for small businesses, not enough funding is asked for and the reason a number of them fail in because they were under capitalized

I agree that over estimating returns is often a problem in business planning. I believe that bankers and investors see this also. That is way communicating a thorough understanding and description of the business opportunity within the existing business environment is so critical.

Believe or not, I find the milestones/timetables the toughest part. Isn’t that weird?

I find the milestones very difficult because they have to have the following qualities:
• Must be measurable as to ascertain their achievement.
• Must all be aligned as to get to the goal.
• Must fit the resources at my disposal.
• Must have support of others involved.
• Somehow (after a lot of struggling) form a path leading to where I envision where I want to go.
• Must contain simple measures while remaining universally understood.

This is the hardest list to match while writing. It requires the I remain focused upon the vision while remaining practical and grounded in reality. Heck, the pro forma is easy compared to that –even operations! I can even sit there and write the contracts for funding, equity and all the tedious stuff although the milestones make me work.

Also, believe it or not, I get hung up in the biographies of the management. I want to present them, in their entirety, but also don’t want to sound like I am “talking them up”. That’s tough to balance sometimes and requires that I remain honest.

Give me numbers any day!

Steve

Steven,

Thanks for your observations. You're right, in many ways, the milestones and benchmarks or as tough because they help to hold us accountable as to timely completion and, as you noted, must have the same qualities as the goals themselves. Balance is key! I have seen some managers, for example, have an escalation of commitment where they won't let a project go when it's time to cut the losses and others who just give up too soon. Your response is very well thought out!

Jay Hollowell

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