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How to Document Business Rules and Business Requirements

September 1st, 2010 · Business Process

Post by Ivan Walsh. Follow me on Twitter.

What’s the connection between Business Requirements and Business Rules? One of the problems for Business Analysts is that they may focus so much on gathering Business Requirements, that they forget the underlying Business Rules which define how the business functions. Unless you’re clear on the difference between the two, you may end up gathering requirements which you may have to revise change later on if they contradict or break an existing business rule.

Business Requirements – Excel Template

Difference Between Business Rules and Business Requirements?

One area where many Business Consultants get tripped up is confusing Business Rules and Business Requirements. We looked at how to write Business Requirements last week, so let’s look at what Business Rules and Business Requirements have in common and where they differ.

What is the difference between a business rule and a business requirement?

  • Business Rules – these are statements (or conditions) that tell a person whether they can perform a specific action that relates to how the business operates. Business Rules also give you the criteria and conditions for making these decisions.
  • Business Requirement – this may include what you need to do to enable the business rule to be implemented. In other words, a business requirement may not be valid if it contradicts or breaks an existing business rule.

Example of Business Rules

Let’s step back a minute. My Dad has three pet ducks at his home. One water duck and two land ducks. Yes, it gets very loud sometimes.

So, here are some rules regarding the ducks health and safety:

  • Ducks cannot be given bread. It may choke them.
  • Ducks cannot be left unattended when swimming. They are poor swimmers and may drown.
  • Ducks must be given water with all meals. Helps them digest.
  • Duck must have buddies. They’re very socialable and pine when alone.
  • Ducks must be kept out of the kitchen. Yes, I see the irony :)

Ok, these are some of the rules we have for the ducks.

From Business Rules to Business Requirements

Now, imagine we were building a new apartment block for millionaire ducks. No doubt there will be many requirements about their lifestyle, feeding, entertainment and transport. While gathering and defining these requirements, we need to consider:

  • The new apartment owners must not allow folks to give bread to the Ducks.
  • If you’re building a swimming pool. They can have a pool if it’s a requirement, but they also need a life guard.

You get the idea, right?

Connection Between Business Rule and Business Requirements

Now that we’ve looked at how Business Rules work, let’s look at how and where they are connected:

  1. Do business rules exist even when you can’t implement a requirement? Yes. The Business Rules inn independent of the requirements gathering process. It can and must exist independently of other processes.
  2. Does implementing a business requirement mean complying with the business rule? Depends. In general, Yes, but there can be exceptions.
  3. Does implementing the business requirement make it easier to comply with the business rule? Yes. The connection will be stronger across all business process and allow greater understanding of how the Business Rules to Business Requirements function.

Sample Business Rule

This is an example of business rules for a bank taking credit card applications over the web.

Example: Taking Credit Card Applications Over The Web

  • Business Rule: Customer has an Email Address.
  • Business Requirement: Ability for bank staff to send and receive emails to the customer.

Now if we change the business rule:

  • Revised Rule: Customer must have a valid Email Address.

Note: A second rule is required to define ‘valid email address’. An Email Address is considered Valid if does not return as ‘undeliverable’ within 60 minutes of being sent out.

Additional Business Requirement to support Business Rule:

System will immediately send email to customer once email address is received. The email is not batch processed but sent in response to each email received.

Note: The smallest change in the wording of the business rule can have significant impacts on other business processes. When testing business requirements make sure that you consider all possible scenarios where the revised business rule will impact other parts of the business.

Recap

  • Business rules describe what you may or may not do in a specific business scenario. It also gives the criteria, conditions and exceptions for making these decisions.
  • Business Requirements capture what a user must do to implement and/or comply with a Business Rule.
  • You may need different sets of business requirements to implement different sets of business rules, for example, when dealing with complex business processes with complicated conditions and exceptions.
  • Business rules are independent of business requirements and shouldn’t be changed to accommodate a requirement.

Be careful when changing a business rule in case it impacts how a business process functions.

Conclusion

There is one final point I want to share. Make sure that ownership of the business rules is properly assigned to someone – and make the person accountable.

One approach is to assign this activity to a business analyst with strong skills in document control and with the ability to push through new versions of revised Business Rules.

Try to find the most practical solution for managing your business rules. We used a networked Excel spreadsheet at a large European bank and it worked very well. All documents were version controlled and we followed a strict naming convention which made it easier to retrieve and update the rules when needed.

Don’t get tripped up on the technology. Once the team understand how the documents are structured, written and shared, then you should be fine. Also, remember to purge out-dated business rules. This means you’ll have fewer documents to manage and should speed up annual audits if/when the auditors want to check your document repository.

Final tip: in the Excel spreadsheet, cross-reference the business rule to the business requirements so you can quickly identify where one change impacts another.

About the Author:  Ivan Walsh runs the How to Write a Business Plan Blog. He also shares Small Business Information for Entrepreneurs at Klariti.com

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What Warren Buffet Taught Me About Plain English Writing Techniques

August 17th, 2010 · Business Planning

In the late 90s, I found the Plain Language writing technique almost by accident. It’s also called Plain English, by the way. I was reading a lot about Warren Buffet a few years back and came across a nice, short document he wrote for the SEC. These are the folks who submit legal and business document to Wall Street when going on the stock exchanges. Buffet writes like he speaks. Direct, immediate and without pretension.

Ever read an annual report from Warren Buffet. Try it. Easy, isn’t it? Few successful business-people write so clearly. There is no pretension, no haughty references to obscure allusions and no strange acronyms. It’s all there in black and white. Here’s what Buffet had to say about other business writers, though,

“For more than forty years, I’ve studied the documents that public companies file. Too often, I’ve been unable to decipher just what is being said or, worse yet, had to conclude that nothing was being said. If corporate lawyers and their clients follow the advice in this handbook, my life is going to become much easier.

Audience Analysis Template - MS Word

Audience Analysis worksheets.

From the handbook:

There are several possible explanations as to why I and others sometimes stumble over an accounting note or indenture description. Maybe we simply don’t have the technical knowledge to grasp what the writer wishes to convey. Or perhaps the writer doesn’t understand what he or she is talking about. In some cases, moreover, I suspect that a less-than scrupulous issuer doesn’t want us to understand a subject it feels legally obligated to touch upon. “

He adds that “Perhaps the most common problem, however, is that a well-intentioned and informed writer simply fails to get the message across to an intelligent, interested reader. In that case, stilted jargon and complex constructions are usually the villains.”

It’s a great read and you can download it here www.sec.gov/pdf/handbook.pdf in PDF.

Write Business Proposals in clear English

So, with this in mind, I wrote this short guide to help you write Business Proposals in clear English. It explains how to prepare an business documents that readers can digest in one reading. That’s the acid test. They shouldn’t have to read them twice and three times to get the meaning. It also covers how to use Plain Language writing techniques to win more business, accelerate your tender process, and encourage staff to contribute to the overall tender process.

1. Start Early

Developing a Plain English document takes time – the first time!. For your first Plain English proposal, allow extra time to write, edit, and revise. Add more time than you would expect to your usual schedule if possible. The next time it’s easier.

2. Study the principles of Plain English

Remember: you want your request for proposal to be understood in one reading. This means you need to:

3. Promote Plain English amongst your Staff

Once you’ve seen the benefits of plain English compared with other writing styles, you can promote its values to your own staff and senior management. You need to get your staff onside so that they will begin writing in this style. Likewise, you also need to convince your managers of its values and possibly funding for a training program. Explain to both camps how they will benefit. Outline a high-level roadmap with timelines for the overall program.

4. Contact an experienced proposal writer

The first time you write a plain English proposal, you may find it time-consuming and more difficult than you thought. If this is the case, you’re on the right track! Everything worthwhile is difficult the first time round – soon you will get the hang of it.

You can also approach a writing consultant, especially someone who has a proven track record of writing good, clear English.

5. Review previous Proposals and see where you can improve

Before you start writing, consider the following:

  • Literacy level. What level of education is required to understand the Proposal? Use the Fog Index to test your proposal’s readability.
  • Clarity. What parts of the Proposal are hard to understand? Are the sentences too long and complex? Does it use technical terms and acronyms that the target audience will not understand?
  • Organization. How easy can you find relevant information? Would the Proposal be clearer if you reordered the main sections and possibly the sub-sections within it? Does the table of contents and index need sharpening? Are there too many/too few levels of information in the TOC.
  • Repetition. Is the same information repeated in several sections? Does it have any real benefit?
  • Headings. Should the headings be re-written in the form of questions that each section answers?
  • Format. Do you need to add more bullet-point lists? Put keywords in bold? Use more white space?

6. Create an outline to help readers find information faster

One very effective writing style is to write headings as questions,which each section answers. If you include sub-sections, use a numbered outline format (e.g. 1.2, 1.3) for the section headings. This helps the reader find the main sections quickly and see the relationship among subsections.

7. Write the RFP, section by section, using plain language techniques

If some sections are hard to write, read them aloud and see where they are difficult to understand. Go through the document section by section.

Write the first draft of key sections first, and then work on the inside sections. Once you’ve written these, refine the text by editing each section tightly. However, make sure your text does not become too cold and dry. Write as if you were speaking to a colleague whom you respect; this often helps control the tone of the document.

8. Review and Revise

Once you’ve finished the first draft, get it reviewed internally by colleagues who can add value to the review process. Don’t choose colleagues who are too close to the Proposal, as they will not see errors. Instead, get a neutral reviewer if possible. After getting the feedback, make the required edits.

If possible, ask volunteers from the target population to review the draft Proposal. Ask them if they can locate information easily. When interviewing ask open questions and you will get a better response.

Avoid closed questions, such as, is this a great RFP? Most will say Yes, just to please you – and make you go away!

Ask how much they could read in one sitting. Again, revise as needed.

9. Create an easy-to-read format

Format the document to make it easy to read and attractive in presentation. If you have time, prepare a template that can be re-used for all future RFP’s. This will reduce the time spend on preparing the document.

  • Leave a blank line between paragraphs
  • Use bulleted lists
  • Highlight main points with bold and italics
  • Use boxes for examples
  • Use white space generously
  • Include margins of at least one inch all around the page
  • Use two (2) columns to increase readability, if practical

Use several different type sizes for headings. In many documents, the headings are in San Serif font (i.e. Verdana) and the body is in a Serif font (e.g. Times New Roman). Use a contrast in style to add emphasis.

10. Get feedback – and share it

Lastly, see if the Proposal works! Ask the external reviewers how they felt using the ‘new’ plain English Proposal. Get feedback from personnel involved in the review process and collate it for distribution.

  • Did they find that the plain English Proposal made a better application?
  • Was it easier to write the application, and what made the most difference?
  • What worked and what needs more refinement.

Summarize what you learned and share this information with colleagues. Encourage them to try writing plain English Proposals.

Track Your Proposal Wins

Keep a record of all the Proposals written in plain English and see if their success rate is higher than the previous styles of writing. There are more great writing resources are at: http://www.plainenglish.co.uk/

About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the popular Business Planning Blog at http://www.ivanwalsh.com. Follow him on Twitter @ivanwalsh

PS: The Audience Analysis Template is here.

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12 Steps To Setting Up a Small Business Consultancy

July 20th, 2010 · Uncategorized

Post by Ivan Walsh. Follow me on Twitter.

The BBC quotes research from Barclays Bank which shows that semi-retired workers are responsible for 50% more start-ups than 10 years ago. In the UK, 67% of small business owners are over 45, while a mere 8.7% are under 34. Such data suggests that running a business actually plays to the strengths of older people. One area where my friends have done well is in Business Consultancy for small businesses (SMEs).

Farm 360

Three Types of Business Consultant

In general, there are 3 types of consultants:

  • Academic – Those with academic achievements, e.g. PhDs, who are brought in to solve/explore/test
  • Management – Those with Management skills, such as in M&A, legal etc and
  • Specialists – Those who’ve moved from 9-5 occupations and now want to work for themselves and/or have others working for them.

How to get started as a Business Consultant

Let’s look at how you can get started as Business Consultant and start your own business.

"They tend to be successful at starting new businesses because they do the right things," says Mike Rogers, managing director of small business and start-ups at Barclays. "They do the planning, they are well-financed and they have accumulated wisdom. "They also define success in their own terms. They don’t want to take on the world, they just want to supplement their income or keep themselves busy," he told BBC News Online.

As well as preparing business plans, new business owners need to make sure they are totally committed, says Mr Rogers from Barclays. "They have to take into account the demands on themselves and their time, and on their families."

Research also suggested that older people find running their own business less stressful than their younger peers. Why? Only 27% of owners over 50 run their business as the only source of income in the household.

Ok, how do I get started?

  1. Identify your top 3 business skills (not technologies).
  2. Write a pen portrait (100 words max) of how you see this person. If you were introducing this person to someone you’d say “This is Robert,…” Focus on the benefits you offer, not the tools. Start to visualize the person/consultant you want to become.
  3. Identify 3 business leaders and use them as role models.
    For me, Richard Branson is a good example, for you it might be someone else. Read everything about these people, soak up how they made it. It’s not in the words of their bio – but the energy, the drive they had. Having a role model gives you a frame of reference, something to use as a compass/anchor.
  4. Join Foursquare and contact 10 people who are in a similar position/industry as you. Meet up on the weekends and see how you can help each other.
    Remember, you’re looking to link up with people for the long haul. Ignore the tire-kickers. Find 1 or 2 decent people that you trust and keep connecting with them.
  5. Create one business target with these folks. For example, aim to run an event, workshop, training course (whatever) by a specific date. You have to have targets, otherwise nothing will happen.
  6. Create an Action Plan and assign tasks to each member
  7. Define you USP – I know this sounds predictable but you have to differentiate yourself from the competition. This is the key. If you become ‘that guy’ who does, for example, Adobe Air training, Social Media business communications, Proposal development for biotechnology, then you can work towards dominating this one area.
  8. Once you have all your ducks in a line, start getting the message out. Write guest articles in blogs, contribute to events, share information on LinkedIn, send free White Papers to people in your target market – do whatever it takes to promote yourself (and your colleagues) so that you become that guy.
  9. Use Personal branding to get your site, business cards, sharp suit etc in place. People still judge on appearances. If you look successful…
  10. Network like crazy. Look for places to get out and meet people. People do business with people they meet.
  11. Be consistent – If you keep this up for 3 months, you’ll change your perception of who you are. Also, by getting out and meeting people, you’ll learn things. The web is great for starting relationship but the human touch is what makes the connection more personal.
  12. Anticipate Problems – Chris Brogan made a very interesting observation recently when he said that he tries to be there before the fire starts. What he meant was that everyone wants to help (sell you something) when things go wrong but it’s the people you know before it happened that count. Tom Peters, Chris Brogan, Branson, ‘Rich Dad, Poor Dad’ have all helped me in different ways.

I bet there are people in this group in a similar situation as yourself. Try to connect with them and I’m sure it will start to happen. One last thing – the harder you try, the luckier you get.

Update: One of the paradoxes of social media sites such as Facebook and Twitter is that everyone is in such a rush to get their opinion heard, that they ignore other folk’s comments. They miss the opportunity to create a dialogue.

Commenting on others’ comments helps explore topics and, if you’re considering moving into consultancy, gives you an opportunity to soft sell your expertise. Find sites aligned to your business area, join the conversation and then make some useful suggestions. Pretty soon you’ll build a following and start to get enquiries for people looking to pick your brains…

For some, the term ‘Business Consultancy’ seems a bit intimidating. “It’s not for me” I’ve heard some say. But, it may not be true. There are different types of Business Consultancies and maybe you’re a lot closer than you think.

About the Author: Ivan Walsh shares Small Business Tips for Entrepreneurs at Klariti. He also runs a blog on Creating Business Plans at www.IvanWalsh.com

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Business Plan format, style, layout

July 19th, 2010 · Business Planning

Your Business Plan is made up of eight different sections.

1 – Business Concept

  • Define your product or service – outline what you’re offering in its simplest terms.
  • What problem does it address – describe the single most important problem is solves.
  • This tells the reader what you’re offering and what problem you’re solving.

2 – Target Market & Potential Customers

Break out the target market and the number of customers you hope to attract.

  • Who are your target customers?
  • What is the market size?
  • How large will this market be in the next 2,5,10 years?
  • How do you plan to attract customers?
  • What is your sales strategy?
  • What is your marketing plan to promote your company?

All of this is speculation. You don’t know how many customers will actually buy. Maybe none! But, you have to future plan so you can attract the investment you need.

3 – Competitive Advantage

In this section of your Business Plan, describe what gives you a Competitive Advantage.

  • What makes your business unique?
  • What patent do you have (or will develop) that will generate royalties?
  • What makes your product than others in ways you can quantify? For example, you can provide credit cards to teenagers. Most companies are not authorized to give credit cards to teenager. You can! That’s your competitive advantage.
  • Identify the greatest obstacles to the success of your company and not just competitors. Maybe it’s legislation, drug trials, testing, compliance, IT platforms, or other issues such as lack of experience.

4 – Competitor Analysis

Next, counter-balance the claims made in your Competitive Advantage and identify the three ways your competitors may undermine your business. If you don’t know your competitors, you have looked hard enough!

  • Who are your three main competitors?
  • What are their strengths and weaknesses?
  • Could you partner with them?

5 – Legal & Managerial Issues

In the next part of the Business Plan, look at the nitty-gritty of setting up a business from a legal perspective. While this may seem boring at first, hire the right lawyer and accountant to setup your company.

For example, setting up as a Limited company (LLC, LTD) gave me tax breaks that I didn’t have as a sole trader, single businessperson or partner. You can also set as a charity or religious organization and avail of tax breaks that way.

  • How will you setup the company? Most likely as a limited company but you may also consider making it a partnership, corporation, or other business type.
  • What other legal considerations need to be organized, for example, patent protection, and copyright?
  • Identify the organizations, companies, groups you plan to build relationships with? For example, Chambers of Commerce, international trade organization, peer groups, industry bodies.

6 – Finances

Financials are the heart of the Business Plan. It’s where the investors will examine the numbers, run business model calculations, and see what profit margins can be made.

See this Cost Benefit Analysis Template for more details.

  • Using tables or matrices may help present the financial data, especially for projections.
  • How much will it cost to make your product?
  • How much will it cost for recruitment?
  • How much will it cost for marketing?
  • How much will it cost for equipment, software, hardware etc?
  • How much will it cost for operations, office, infrastructure etc?
  • How much will it cost for salaries?
  • How much total up-front investment is needed?
  • How will your company generate revenue?
  • When will your company break even?
  • How will you use the profits you generate?

7 – Management Team

If the investors get past the Financials, they’ll want to see who’s involved.

  • Describe each team member’s background.
  • Describe the unique skills they bring to the project.
  • Explain why this is a winning team? Why the investors should believe in the team.
  • What other people/skills do you need to find?
  • Add resumes to the appendix.

8 – Appendices

Include any supplementary information (graphs, charts, statistics, research etc) that would help you put your idea in context.

write for your readers

Provide the answers to the questions that the investors will most likely have. Let me put that in better English.

Write the Business Plan from the perspective of the investor. No investor wants to invest in a project unless it passes all the tests. From an investment perspective, put yourself in their shoes. What fears are they most likely to have? Then address these fears. What concerns will they have about your team? Describe the unique attributes that make your team special. Where will the profits come from? What contingencies do you have in place?

It’s classic FUD. Address their Fears, examine where they have Uncertainly, and why they might Doubt you. Then respond to each of these point by point.

Business Plan Excel Templates
Business Plan Excel Templates

Next Steps

If I were to help you write your next Business Plan, what would be the one area you’d want to do first. Let me know and we’ll discuss it here next week?

Please share your thoughts below.

About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the Business Plan Blog at http://www.ivanwalsh.com. Follow him at http://twitter.com/ivanwalsh

PS – you can download the Business Plan Template here

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The Biggest Mistake In Business Planning

July 19th, 2010 · Business Planning

Remember when I said that people invest in people. The number one mistake to avoid in Business Plans is not talking about your people. Or to put it another way, not weaving their story into your business plan.

  • Talk about your team,
  • What drives them?
  • Why did they build this product?
  • Why did they leave their former employer to create this product?
  • Where did they come from? Both socially,
  • How they got there? Discuss their qualifications and how they will drive the project onwards.
  • What are their ambitions? Why do they believe in this project over a comfortable 9-5 job?
  • Why do I need to do this?

Even if your business model is excellent, if the people involved are ‘perceived’ to be raw/weak/inexperienced, the project will most not get the funding it requires.

So, your story needs to be very compelling.

Most startups fail, not because of the product, but because those involved didn’t have the long-term commitment to the project.

So, when writing your Business Plan, develop each section to highlight how your team (and why it has to be your team!) will be the ones to make this happen. Why they will be the ones to ‘carry the can’ when things get rough.

how to start your Business Plan

One school of thought is to develop a 1 Minute Investor Pitch also called an Elevator Pitch. For example, if you met Warren Buffet—and had just one minute—how would you pitch your idea?

I don’t know if this works in the real world. Somehow, I doubt if Warren Buffet or Guy Kawasaki invest in firms on the basis of an Elevator Pitch. They want detail. One way to get those details is to develop a Business Plan.

About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the Business Plan Blog at http://www.ivanwalsh.com. Follow him at http://twitter.com/ivanwalsh

PS – you can download the Business Plan Template here

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How Business Writers Could Use Twitter

July 13th, 2010 · Marketing

Twitter is about publishing. Twitter is about writing. And it’s about having fun, making connections and sharing things. Here are some ways I use Twitter and some ways I don’t!

technical-writer-twitter

Do’s And Don’ts For Using Twitter

I’ve made a focused effort to use Twitter a little more strategically since May as it tied in with some other business aims. And it’s started to work.

Please don’t …

  1. Thank me for following you. I don’t read DMs as I get over one hundred and fifty every day and it’s just not possible.
  2. Get angry with me for not thanking you for following me.
  3. Send me get rich quick schemes or introduce me to ‘Natasha.’ I’m fine thanks :)
  4. Tweet every mundane details of your everyday life. Some is fine but I don’t need a running commentary of your daily life. No one does! No, really, they don’t.
  5. Tweet embarrassing (for me to read) private details of your significant relationships. And your partner may not want it in the twittersphere either.
  6. Moan, especially about Microsoft Word. You try and build a better office suite and see how far you get.
  7. Start flame wars with people in twitter. They’re out there, just ignore them.

Please do …

  1. Tweet things that are interesting. Such as… pictures, articles, websites, news items, exhibitions, shows, tutorials. You get the idea.  Share, share, share
  2. Help others. Reach out to those who ask questions and see if you can point them in the right direction.
  3. Tweet your own blog posts. I’m still amazed that technical writers write so little. C’mon, folks get a blog like these guys.
  4. Share quotes, sayings, and interesting thoughts.
  5. Share jokes and humorous items. We all need a laugh during the day. I use Twitter at short breaks and catch up with friends. If you share something funny, I’ll pass it on to them.
  6. Use Hootsuite or Tweetdeck so you can track by keyword, monitor things, and share information quicker
  7. Create lists like this http://twitter.com/ivanwalsh/thoughtleadership and follow all of these wonderful technical writers as they tweet.
  8. Follow other lists like this http://twitter.com/tom_peters/cool-friends from @tom_peters
  9. Retweet others tweets. This is the fastest way – by far – to increase your number of followers
  10. Re-write tweets to make them more interesting. You’re a writer, go on, give it a go! Think of it as a challenge. How can I make this tweet more interesting?
  11. Add hashtags like this #techcomms. But don’t go overboard. One is fine.
  12. Track your Twitter stats on http://twittercounter.com/compare/ihearttechdocs/month/followers. This is my list. See how it’s grown in the past 30 days.

Write, re-tweet and be interesting.

What else?

I’m @ivanwalsh

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How to Get Funding for Your Business and Then Lose Your Friends and Family

July 11th, 2010 · Business Writing

You can get funding in different ways for your business:

You can get it:

  • from yourself (mortgage your house),
  • from your family (Dad, we don’t talk enough, I have this idea, maybe you’d be interested …),
  • from friends (look, you trust me, right? Well, I have this amazing idea, let me explain. maybe you’d be interested.)

Each of these has its own merit and somewhere on the web is a case study of a guy who built an million dollar company in his garage. Remember, the exception proves the rule!

is it wise to Take Investment From Friends?

One warning about taking investment from friends. If you lose the money, you may lose the friendship. I’d advise you to keep business and friends apart. If you need money, go to the Chamber of Commerce, Venture Capitalists, or explore other investment options, such as SBA or bank loans. 

About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the Business Plan Blog at http://www.ivanwalsh.com. Follow him at http://twitter.com/ivanwalsh

PS – you can download the Business Plan Template here

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Why Business Plans Will Make You More Successful

July 5th, 2010 · Business Planning

Does this sound familiar? You’ve started a business, built products, made some sales, and started to scale. But your cashflow has ground to a halt! You need funds to drive the business forward and also ensure it doesn’t slide backwards. Investment is the answer, right?

Here’s the part no-one wants to hear.

It takes effort.

You didn’t get a degree in college by accident. You have to put in the hours, get the credits, and make the effort. We all understand this. Effort equals reward. And it’s the same if you want to get your business to graduate. It takes time, effort, and a little dedication.

So, to grow the business you need to develop a Business Plan to get the (significant) funding you need and also to clarify to yourself what direction the business should be heading in. I hear what you’re thinking. I know you can find articles that tell tall tales about companies setting up with no business plan and ‘following their passion’. And it’s true, some companies grow by the seat of their pants. But the exception doesn’t prove the rule.

Why Business Plans will make you more successful

Why Business Plans will make you more successful

Tim Berry shares this research findings which show that, ‘those who finished their Business Plans were about twice as likely to successfully grow their business, get investment, or land a loan than those who didn’t. You can see the numbers on the chart.

But, you’re not sure how to write a Business Plan. Anyway, many investors laugh at the idea of writing Business Plans. Seems a little dated, right?

What investors say on their twitter-feeds to look cool and what they do in the office are not always the same. They want to know who you are, what you’re selling, and what the profit margin is.

About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the Business Plan Blog at http://www.ivanwalsh.com. Follow him at http://twitter.com/ivanwalsh

PS – you can download the Business Plan Template here

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Guy Kawasaki 9 Point Business Plan Checklist

June 30th, 2010 · Business Planning

Guy Kawasaki says that it’s the people involved in the business that interest him first.

  1. Will they drive this business forward?
  2. Can he trust these them with his investment money?
  3. Will they stick with it through the difficult periods?
  4. What’s their track record?
  5. Have they don’t this before?
  6. What’s their biggest weakness?
  7. Do they know their own biggest weakness?
  8. If not, how will this impact the business?
  9. Investors invest in people.

Ok, what does this mean for your Business Plan?

The Biggest Mistake In Business Planning

Remember when I said that people invest in people. The number one mistake to avoid in Business Plans is not talking about your people. Or to put it another way, not weaving their story into your business plan.

  • Talk about your team,
  • What drives them?
  • Why did they build this product?
  • Why did they leave their former employer to create this product?
  • Where did they come from? Both socially,
  • How they got there? Discuss their qualifications and how they will drive the project onwards.
  • What are their ambitions? Why do they believe in this project over a comfortable 9-5 job?
  • Why do I need to do this?

Even if your business model is excellent, if the people involved are ‘perceived’ to be raw/weak/inexperienced, the project will most not get the funding it requires.

So, your story needs to be very compelling.

Most startups fail, not because of the product, but because those involved didn’t have the long-term commitment to the project.

So, when writing your Business Plan, develop each section to highlight how your team (and why it has to be your team!) will be the ones to make this happen. Why they will be the ones to ‘carry the can’ when things get rough.

About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the Business Plan Blog at http://www.ivanwalsh.com. Follow him at http://twitter.com/ivanwalsh

PS – you can download the Business Plan Template here

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Warren Buffett and Writing Better Executive Summaries

June 28th, 2010 · Business Planning

First impressions count, right? The Executive Summary of any business document is the first impression you make on the reader. If your business plan’s executive summary is poorly written, dull, or cut/pasted together it will hardly get noticed and the effort you put into the rest of the document won’t be seen.

Instead, set aside two or three hours and write the best Executive Summary you can. Challenge yourself to write three hundred words that excite you, generate interest, and paint a picture of your company. People want to read about other people. Don’t forget the power of human interest. In the end, they’re going to do business with you – not your product.

‘The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.’ Warren Buffett

warren-buffet

How to Write an Executive Summary that generates interest

Your Executive Summary should excite the reader and help them understand the key results and conclusions in your business document, whether it’s your business proposal, business plan, annual report, case study or white paper.

Looking for inspiration?

Read the Annual Reports written by Warren Buffett and you’ll see how he does it. You know he has confidence in his company. He highlights the goods news in a nice understated way and delivers the less pleasant results with the same even tone.

Executive Summary Definition

Here’s one definition from The Handbook of Technical Writing, “An executive summary is to consolidate the principal points of a report in one place. It must cover the information in the report in enough detail to reflect accurately its content but concisely enough to permit an executive to digest the significance of the report without having to read it in full…."

Characteristics of a Well-Written Executive Summary

While this is a business document in the tradition sense, you must still find ways to stimulate the reader’s interest, make them want to turn the page and take some action.

  • Executive summaries must be original.
  • Executive summaries must not be cut-and-pastes extracts from the main document.
  • Executive Summary should provide unique information not contained anywhere else.
  • Executive summaries are standalone documents. The reader, for example, an investor, should be able to grasp your over-arching aims without having to read the entire document.

Documents That Require Executive Summaries

Some business documents require summaries, others don’t. Write an executive summary for the following types of documents:

  • Grant Applications
  • Standards
  • System Design Documents
  • Technical Reports
  • Training Plans
  • White Papers

Documents That Do Not Require Executive Summaries

You do NOT need to write an Executive Summary for shorter documents or certain technical publications, such as:

  • Functional Specifications
  • Meeting minutes
  • Release Notes
  • Status Reports
  • User Manuals
  • Workshop reports

Executive Summary Format & Guidelines

These are guidelines for your Executive Summary. They’re not set in stone, so adjust where necessary. The summary should cover the:

  • Purpose
  • Scope
  • Methodology
  • Results
  • Conclusions

In general, you can write it as follows:

  • First paragraph answers: "What is this document about?"
  • Summary answers "How did you get the information?"
  • Expand on the Software Development process (if applicable)
  • Facts
  • Results
  • Conclusions
  • Findings Note: present facts in tabular format.
  • Recommendations

What doesn’t go in the Executive Summary?

Other information that doesn’t go in the Executive Summary includes:

  • Acknowledgments
  • Background data
  • Cross-references
  • Footnotes
  • Industry updates
  • Justifications
  • Objectives
  • Project history
  • References

Remember to close your executive summary will a strong summary statement. This must persuade the reader that your business is a winner and the only way to do this is to turn the page and learn more about your company.

Final Tips for Writing the Business Plan’s Executive Summary

Provide a summary. The business plan itself gives the financial details.

  • Use strong and positive language.
  • No more two pages long. Don’t pad your business plan’s executive summary with fluff.
  • Generate interest by enticing your reader to read the rest of the business plan, not tell him everything.
  • Read it aloud. Does it read well or sound artificial? Is it clear and succinct?
  • Adjust the executive summary for your respective audience. For example, if you want to attract investors, focus on the opportunity your business provides investors and why this opportunity is so special.
  • Put yourself in your readers’ shoes. Does the executive summary really make you feel excited? If not, why?

The final word goes on Warren. Here’s his take on gold, “It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

Make sense?

About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the Business Planning Blog at http://www.ivanwalsh.com

PS: The Business Plan Template is available from our partner here.

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