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I have written many business plans, read hundreds and hopefully become quite good at it. But I have come to realize that in the end, they don’t really matter as much as you think. VC’s read them to validate that you can go a level deeper on how you will execute on your plans of world domination.

HOWEVER, crappy financial models and/or management team bios on the other hands can make or break you.

Here are a few Do’s and Don’ts that I tell people to stay Zen in their pursuit of venture capital:

DO TELL A COMPELLING STORY – The goal of business plan is to create interest – not to have an investor write you a check. In creating interest, you don’t need to tell a the full story of your company but you need to engage the investor as to why this business should exist and what value it creates. The plan should include the essential elements regarding why an investor should invest and spend more time examining the business opportunity.

DON’T USE A BUSINESS PLAN SOFTWARE PROGRAM – These cheesy programs are great if you are starting a small lifestyle business and you might be looking for a loan from your bank. If you are serious about raising money leave these on the self and spend your money on an XBox game.
DON’T OUTSOURCE YOUR BUSINESS PLAN – Who knows your business better than you? That’s right, nobody. But you are an engineer and you suck as a writer, so what do you do? Write it to the best of your ability and find a copy writer who knows how to edit and tune up the structure. If you need a good template, PWC has a great site.

DO USE PLAIN ENGLISH – This is what many people call the “mom test” or the “dinner party test”. If my mom can understand it, then investors will get it. If I can explain it to people over a drink at a dinner party, then investors will get it. Granted, there are probably industry terms that need to be there, but you can explain it in plain terms as a follow on sentence. Otherwise, you will lose people and maybe someone who would have invested in you if they understood it.

DO KEEP IT SHORT – The shorter length does not mean that your business plan should take less time to prepare. Rather, it will take more time. But some people need guidelines.

Remember, page size is a good test but it is not the only measure.

Page size limitations give the entrepreneur additional incentive to focus and provide something of value to the potential investors.

So how long should a business plan be? It varies, but there are some general guidelines I recommend:

• Pre-revenue to first institutional round: Roughly 15-20 pages – VC’s need to see a level of detail beyond the executive summary but this is most important to demonstrate that you can focus. Don’t write an 80 page tome that looks to reengineer the world when you haven’t built a scalable company yet. Investors usually skim certain sections of the plan, even if they are generally interested, which could lead them to miss essential elements. This is why you must get to the point and get to it fast if you have any hope of raising money.
• Emerging Growth and Latter Stage (additional institutional rounds): Roughly 20-30 pages – Here it is all about scale and rapid growth. You are making money, have a good team and are executing your plan. You have put the money where your mouth is but you need more. You will need to demonstrate current operational efficiency and sustained growth. At this point, you can expand more on what the business is doing and what it is planning, but there will be more supporting documents (i.e. operations plan, product development plan, partnership and channel plans) that exist for due diligence. Your job is to let the investor know they exist and make them available when or if they ask for them. At this point in the life of your company you are looking like a speeding train and are going to make a lot of money. So if people want to get on, they need to get on now.��

Business plans, like other marketing communications documents, should be visually appealing and easy-to-read. This can be accomplished by using charts and graphics and by formatting the plan for readability. Effectively using these techniques will enable the investor to more quickly and easily understand the company’s value proposition within fewer pages.

DO USE APPENDICES -While the body of the business plan should be around 15 to 30 pages, appendices can be used for supplemental information. Appendices could include a full set of financial projections, and as appropriate, technical and/or operational drawings, partnership and/or customer agreements, expanded competitor reviews, and lists of key customers among others. If the Appendix is long, a divider should be used to separate it from the body of the plan, or a separate Appendix document should be prepared. These techniques ensure that the investor is not handed a thick business plan, which will make them queasy before even opening it up.

DO BELIEVE IN YOURSELF – If you don’t believe in yourself and your business, all of this is moot.

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