The Biomass Business Plan
August 22, 2011
By Reg Renner
Funders may only have 15 minutes to look at your business plan, so make it easy for them to know about your project by getting to the point.
Have you ever been in the midst of a one-sided conversation and your spouse says, “Honey, could you get to the point?” Or as a long-time friend from university once said: “You sure know how to make a short story long!”
We are often so passionate about our dreams and new business plans that being concise and succinct is just not in our nature. After all, we have spent months or years building the business idea and we expect everyone to be just as excited about biomass energy. So before our listeners’ eyes glaze over, let’s just get to the point.
The point is that you have a limited amount of time to get your message across, and you need to give the “elevator pitch” when building and presenting your six- to eight-page executive summary of the business plan. Like the time it takes an elevator to go from the ground to the tenth floor, you must keep it short. It is my experience that you should only have three to five pages of written word, followed by some concise pro-forma numbers. Try to recognize that you are probably writing for a busy executive who may only have 15 minutes to read the entire proposal.
In the first paragraph, the reader needs to know what the main concept is and how much funding is required. You will need a paragraph or two to address the individual issues of management team, equipment costs, feedstock supply, and marketing opportunities, while laying out a construction budget and financing proposal. In other words, you have a lot of topics to cover and very little time and paper to use. Therefore, a suggested solution is to ask a trusted friend and advisor to review your current business plan and help rewrite it with the sole goal of editing it down to an executive summary. Think of your executive summary as the final product, the conclusion of months of work and research, and get it down to an understandable and shareable version of your larger and more detailed business plan. Each sentence needs to be crafted with care and with the understanding that you need to make a long story… short.
The biggest challenge is that your executive summary must cover a lot of territory in a small space, and it should include appropriate supporting financial information. In reviewing numerous business plans, I am often surprised to see how much effort is put into the written word, and yet there are no construction budget or cash flow projections. Remember your audience. You are attempting to convince a financing expert to lend you a large amount of money, and he/she will need to know how you plan on spending it, and most importantly, how the business is going to pay back any loans.
But don’t fall into the trap of thinking that the written word will convince a mathematician that the business plan is sound. You must include a one-page summary of the construction budget and financing plan, along with a two-page projected income and expense statement. The financial projections should cover the first two or three years of business growth and will be key in showing that your plan translates from words to positive cash flow.
Remember, the goal of the executive summary is to get you into the second meeting, where you can spend more time answering the funder’s specific questions and concerns. As with any successful venture, you will need to do your homework and prepare to present your best effort in the midst of intense competition. A concise six- to eight-page summary of your business plan will go a long way to showing that you can get your message across quickly and in an engaging manner while covering all the key subjects, including financial projections. Think of the executive summary as a public speech; you want to get your points across within the allotted time and not lose your audience’s attention with too many words or graphs. You need to grab their attention and impress them with your professional approach.
Throughout this ten-part series on financing biomass projects, it has been my goal to see that your biomass project would be selected from the many that come across a lender’s desk in the course of a typical business day. After all, a well-crafted business plan, like a well-written magazine article, is impressive and a delight to read.
Reg Renner of Atticus Financial in Vancouver, BC, finances machinery ranging from biomass boilers to densification equipment. With 38 years of industry experience, he recently helped secure carbon offset credits for four greenhouse clients. E-mail: email@example.com.
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