As Earth Day 2010 rolls around, green entrepreneurs everywhere are taking stock of where they are going with their business. Green businesses provide a powerful opportunity to make money and make a difference, with green leaders like Seventh Generation and Stonyfield Farms making it clear that green businesses can be both very profitable and do the right thing for the environment. Sometimes good intentions are not enough though. If you want your green business to reach its goals you need to take care of fundamentals like planning, and take care of it well. I recently talked with Tim Cassidy of Green-BusinessPlans.com, who shared his secrets for creating the plan green businesses need to succeed.
A good business plan clarifies your thinking about your business, making it clear where you want to go and how you’ll get there, and a business plan can also be essential for securing investment. While people are often intimidated by business plans and do their best to avoid putting one together, they don’t have to do it on their own. They can get help from experts like Tim Cassidy, CEO at Green-BusinessPlans.com, starting with a free initial consultation about your plan.
Cassidy helps a broad range of green businesses with business planning and raising money. He knows his stuff and he’s the kind of guy who comes right out and tells you what he thinks, providing honest constructive criticism. When Cassidy sits down and looks over business plan folks send him, he often finds common mistakes that many different people make. The most common problems with green business plans include:
1) Too Much Use of Templates and Software
A plan created from a software template typically falls far short of your business needs, often reflecting the deficiencies of the template you start with. Presenting investors with a plan obviously derived from a template will not impress them. If your business is creating a unique business installing water conservation hardware for landscaping in the high end residential market, your plan should be as unique as your business is.
2) The Executive Summary is Missing
Not everyone has time to read a full business plan so you’ll need a short version, an executive summary, to send first. "Most investors or lenders only want to read an Executive Summary and then, if interested, they will ask for the complete business plan," says Cassidy. If you are developing a solar installer business, summarize in the clearest terms what your mission is, where your business stands today, and your goals for the future. The more concrete and to the point, the better.
3) Insufficient Market Analysis
"Market Analysis including Market Penetration and Competitive Analysis almost always fall far short of the type of depth analysis investors expect in plans we receive," Cassidy says. Reaching the market with your business requires crystalline clarity about what your business is all about. If you have a solar business, what market niche are you targeting, how large is that market, and how much of this market can you take? Who are your competitors in this niche? You need to have clear and substantiated answers in your plan for all of this.
4) Financial Projections Are Thin
"Internal financial projections usually fall far short in meeting the needs and expectations of either a senior executive at a lender and his ‘bean-counter’ or an investor and his trusted accountant," says Cassidy. Even if your mission relates to the health of the planet, you business still needs clear financials that show how they’ll make money. Sticking to the expected format for financials and providing sufficient details like notes on assumptions will allow quick edits for investors or banks.
5) The Plan is Not Understandable to People In Other Fields
Not everyone will be as immersed in green as you are. If you’re in the business of green building supplies, the potential of the green building market may seem obvious to you but it won’t be for everyone. "You are so close to your business that it is easy to assume others know the same important details about your industry and company," says Cassidy. You may not sufficiently define items such as the competition or industry resources like reports from the US Green Building Council.
All of these errors can be readily fixed with a little help from an experienced hand like Cassidy. The better your plan is, the quicker you'll achieve your financial goals, and your vision of helping the environment so that when Earth Day 2011 rolls around, we’re all a little closer to having a strong economy and a healthy environment for the long haul.
Glenn Croston is the author of "75 Green Businesses You Can Start to Make Money and Make a Difference" and "Starting Green: An Ecopreneur's Toolkit for Starting a Green Business From Business Plan to Profits". He is also the founder of Starting Up Green, helping green businesses to get started and succeed. Contact Glenn at firstname.lastname@example.org to connect with Tim Cassidy for help with your business plan.