I spent the night on Sunday at Hoppapalooza, one of the best events for Vancouver Craft Beer Week, hosted by the amazing Alibi Room. I had the chance to speak with many amazing people at party, many of whom gave me great suggestions and advice on what choices to make with our brewery. I was asked numerous questions about our business and starting a brewery, which I found very interesting and flattering. One of the questions I was asked several times throughout the night, was about writing a business plan. It is also one of the questions that I get asked most often via email, by way of this blog.
So instead of going on and on about the business plan, what to put into it and what not to put into it, I figured it would be best to just give a few pointers and then a list of important points to consider when creating one.
- Start with the end in mind: Yes, this is one of Stephen Coveys 7 habits of highly effective people, but I have always liked this point. So in other words, what are you going to use the business plan for? Your answer to this question will directly effect the scope of your plan. A plan to just figure out your operations might be a little different than one aimed at investors.
- Put more into it, get more out of it: Our business plan was a real labour of love. We put excessive amounts of time and energy into our plan, as both Iain and I have personalities that make us overly fastidious about this kind of thing. So we spent a lot of time making sure that we planned every detail, and projected every scenario, good and bad.
- No matter what, this is your roadmap: We refer to our business plan on a regular basis, and it has become a living document for our business. The great thing about having a plan is that it also allows any difference in opinion you may have with your partner to be vetted. Moreover, the roadmap ensures that when you opinion changes in the future on something, you can judge it against a baseline, of what you once thought.
- Plan for about 6 months minimum: I can’t see how you could write a well thought out business plan in less time than this. Our business plan was a solid 12 months of writing, and then about 2 years of reviewing and revising every component of it. By the end of the 2 years, our plan had completely changed several times over to become what it is now. Moving forward, our plan will surely continue to change, and each time, we will take the time to update the details, so that our roadmap stays accurate.
- Its all about the financials: Your cash flow is the most important part of the business plan. It has to be realistic and it has to prove that you can make money quickly and consistently. If you financials don’t add up, then you need to re-evaluate what you are doing and the approach you are taking. Our cash flow has become a monster, and it is something that without, we would be lost.
- Keep it short and sweet: No matter what, but out all the crap. Your plan should be no more than 25 pages written and about 25 exhibits. For your financial projections, create a high, low and medium. Shoot for the stars with your high projections …. say Parallel 49 or Driftwood. Aim for realistic on the medium …. say Powell Street or Coal Harbour. Seriously tank on the low, so you know what could happen …. say Surgenor or other under performing brewery. The low will get you out of bed at 5am, the high will keep you dreaming of what could be, and the medium is likely where you will end up (I think).
- Don’t use we, use your company name: Maybe this is just a stylistic thing or my personal preference, but you are not talking about you, or your life. You are discussing a business that you may or may not be a part of down the line. According to your lawyer and accountant, your business is an entity unto itself, so refer to it that way.
- Have sub plans for various facets: We have a marketing plan that is about 25 pages, and a production plan, that is also about 25 pages, along with a few other plans we are working on. Each of these detailed plans will be shortened and augmented to fit within your plan. Just put a note in that section of the business plan, that there is more information if the reader so desires.
- Non-disclosure: You may be handing out your business plan more than you think, so you will need to decide who needs to sign a NDA and who doesn’t. From what I read, anyone that is a seasoned investor, don’t bother asking them to sign one. It will be insulting. But for others who are already in the business, or locals who you might think will tell the world what you have planned, it is your call. We really never had anyone sign our NDA, other than some local brewery owners who we were going to partner with (but didn’t) several years ago.
- Prepare a presentation: Maybe not if you don’t need any investors, but for those of you who need outside investment in your brewery, create a power point presentation of your plan, and summarize the key points. Make sure you let the people know what is in it for them. They will always want to know what they will get in return for allowing you to use their hard earned money. Practice your presentation over and over, until you feel at ease. Make sure you try it out on a few people before you go to any actual investors.
- Prepare to get rejected: I didn’t track all my failures as much as could have, but I will tell you that I met with about 50 people over the course of 18 months, and we have only about 10 investors in our brewery. That meant I had a 1 in 5 success rate. You may be much better than this, but no matter what, expect some people to pass on your opportunity. Don’t take it personally, ask a lot of questions why they didn’t go with you, and learn so that you can minimize this moving forward.
- Be proud, positive and confident: I am overly realistic, so one of my biggest challenges was that I didn’t sugar coat anything for anyone. I never promised that we would make it, never promised riches at the end of the journey, so if things did go off the rails, I would have my conscious clear. However, you can still be proud and positive about what you are doing. In fact, this is super important. No one else will believe in you, if you don’t believe in yourself.
- Use a business plan guide: I have my business plan guide in storage, so I can’t tell you which one I used, but be sure to have a guide that will help walk you through each of the key facets of your business plan. A guide explains all the details that you need to know, and will help you determine how to best write your plan. I have written a total of 4 business plans in my lifetime, and I still wouldn’t consider writing a business plan without some sort of guide to help write the plan.
So that is my best practices on writing a business plan. I will gladly send you a copy of my business plan, should you want to see what we created. Just send me a message. Best of luck, and writing a business plan can be a lot of fun, so make sure you prepare yourself for an amazing journey.