Last week we touched on the subject of business ideas, and it seemed worthwhile to discuss business plans - because most of us have at least one idea we're convinced will unleash the hordes of Midas into our bank accounts, yet very few of us know what a business plan is. Worse, it sounds too much like hard work. And it's so much more fun to just grab a beer and watch the Springboks lose.

Here follows almost everything you will ever need to know about business planning, based on actual experience in doing it myself, hearing lots of folk talk about it, getting lots of requests on TV about it, and using a water closet full of software to almost get it right!

There are 2 main types of business plans. The first, and by far the most common, is the business plan created for the sole purpose of borrowing money. The secret to this plan is to understand that corporate minds all think alike, which is somewhat different from real, live people. Consequently, such a plan must contain no core words of less than 3 syllables, and must be printed on 160gsm parchment and contain at least 60 pages of tables.

So, instead of 'if all goes according to plan, we will sell 2000 schlitzmos at a price of R23.76', it's far better to stretch yourself and aim at a higher standard, such as 'given that the author's projections (which are based on the Markinate Active Econometric Modular Consensus as ratified by the South East African Economic Summit in Darfur October 1997) are within .6 deviations of the standard mean (at 98% confidence in this scenario according to the Hunk-Twot model) there is a 93.67% probability that sales of the schlitzmo (premium model VA986-87) will exceed 1995 units at a median price of R23.76435'.

The point is that if your banker understands it, it's appropriately obfuscatory and he will either steal the idea or reject it on the basis that it is too simple. Your chances for success in finding funding are greatly increased if your idea is unique and untested - and consequently even less comprehensible - even though unique, untested ideas are about the worst to start with. It has been my experience that almost every business financed in this way will fail - because that's not a business plan.

Hint: Your chances of getting business finance are really dependent on just one thing: how much money you already have in your house and your savings accounts. Bankers can't really read business plans and break out into a cold sweat when confronted by them. At some point the discussion will boil down to just one question: how much are you worth? (Which, amazingly enough, is ALWAYS more than the bank will be prepared to lend.)

Corollary: If you currently have a nett asset value below (or equal to) zero, very, very few banks will be interested in your business idea or plan.

The second type of business plan is much less common, but this separates the men from the girls. This is not so much a plan as a book of questions and answers - because that's all a business plan really is. It is a set of answers to illustrate how many questions you have asked yourself (and others). Hint: a business plan of this nature NEVER contains the word 'hopefully', as in 'if the price is set at R23.76 ex VAT per premium schlitzmo, nett revenue will hopefully exceed gross costs'.

When an architect designs a building, the ultimate result is a PLAN with nothing left to chance. There is no 'hopefully if the wind blows harder than 120km/hour the mainstay will continue to support the roof'. The final result is a diagram that ANY builder can use to transform some sand, brick, glass and wood into a physical structure that directly mimics the architect's dream. S/he has thought through everything - how the sun travels, where the people will sit, how the cars will enter and exit, how much electricity the building will consume in summer and winter, how many people will use the toilets at the same time, including where the water flows in the middle of a 3 week flood. That's detail!

The more questions asked and answered, the better a business plan is. That's why it's so useful to get a consultant to help you through the process. Your typical consultant has seen a whole bunch of different types of business, and is the most pessimistic sod on earth. S/he will ask lots of doom and gloom questions in an effort to check that you've covered all the bases. An example of such a question: "If you want to buy an embroidery machine from Europe that costs R500,000 - which is about R15,000/month over 60 months, how much embroidery will you have to do to cover the monthly cost (to 'break even' in business parlance)?" (Answer: at R5/item, about 3,000, which equals about 150/working day, which equals impossible - so rethink that idea!)

In my humble experience, many of us are a tad lacking in imagination when it comes to identifying the huge range of things that can go wrong. (Hint: the well known prophet Murphy predicts that far more things will go wrong, more expensively, than will go right.)

Consultants, of course, are expensive, and of many different flavours, so you might prefer to use some quality software that not only asks the questions (and a lot of them) but produces an exceptionally well laid out final plan as well - which you can use for financing purposes - but read last week's discussion on the correlation of money needed to anticipated success please. (At www.petesweekly.com )

Both consultants and software (the good sort) cost money. But here's a final thought: I have lost count of the folk who feel that their idea/concept is worth millions, but are not prepared to spend R5000 to develop the idea into a working plan. So they risk R500,000 instead on testing it 'live'. Eish!