Evan Carmichael explains why business plans fail when they're written in jargon instead of plain English. He uses the "grandmother test" to check clarity and stresses that the executive summary is what investors actually read. Simplify your language and test it on non-technical people before you pitch.
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Hi, I'm Evan Carmichael. Welcome to another edition of Ask Evan. Today I'm going to answer a question from one of my YouTube viewers, Amir, who wrote in asking about business plans. So he wrote saying, "Hi Evan, I absolutely love your videos. When creating a business plan and I'm writing it, does it have to be with all the confusing terms or can it be in plain English?" So thanks for the question, Amir. First of all, for your business plan, you never want it to be confusing. You don't want it to be confusing for you, you don't want it to be confusing for any of the readers. So as much as you can, put it in plain English, plain language, so that everybody can understand it. Depending on what your plan is for the business plan, if it's something that you're just going to use internally to help you build your business, or if you're also going to use it to go out and get investors or potentially get a bank loan, if it's going to be read by other people, then you really have to make sure it's in plain English because they're not going to know your business as well as you do. So a quick example, when I was in the venture capital business, I got so many business plans. People wanted to get funding, and a lot of it was not in plain English. It was very technical, a lot of people with great new technologies, and I'm sure to them when they read over their business plan, it made a lot of sense. Like, this is what we do. But for somebody who is looking at it who doesn't know your business, it's a lot of technical jargon. So you want to make sure that you can, you can really put it in simple terms, easy to understand, that anybody can understand. A lot of these bankers and investors, they may be knowledgeable about your industry, but they're not going to know it as well as you will know it. So it's really important to put it in terms that everybody can understand. So for those ones, usually they got rejected. Sometimes if we saw something, we might, you know, bring them in. But for the most part, it's the ones who had the really clear, you know, simple to understand business plans that we would call in to be able to meet them because we understood what they do and they clearly explained their value proposition. So hopefully that helps. One last thing, when we looked at business plans, there's a term within the venture capital industry called the grandmother test. And it basically means, is your business plan written so that your grandmother can understand it? And, you know, great test. Once you finish your business plan, show it to your grandmother, show it to your friends and family, people who kind of know what you do but they don't know the specifics, they're not technical people. Show it to them, and if they can understand what the opportunity is and how you solve a problem and are able to really help people. If they can get that from your business plan, then you're ready to start giving it to investors and bankers. If they read it and they have still no idea what you do, then it's time to go back to the drawing board and recreate it, especially that executive summary. That first part, the executive summary, is really important. That's the first thing that somebody's going to read. If they can't understand the exec summary, then forget it, you're gone. Usually look at the exec summary, then we'd look at the management team and see who's behind it, and then we look at the financials. And if all that made sense, then we start reading the rest of the business plan. So really make sure that your executive summary is especially written in plain English. So hopefully that helps, Samir. If you guys like the video, for you who are watching, please give it a thumbs up below. It helps me know which videos you like and which ones you don't like as much. But I always like making these videos and I appreciate seeing those thumbs up come in. And if you have a thought about business plans, you want to add something to this video to help Amir, or you have another question for me, feel free to leave it in the comment section below. I always read those. So thank you, and we'll see you on the next episode.
