My fellow SyndicateRoom analyst, Oli Hammond, recently wrote an excellent article on business plan essentials. Inspired by Oli’s insight and wit, I thought it might be helpful to share my own thoughts. While there will no doubt be a number of common themes, I hope that this article will provide a fresh and complementary perspective.

The points below represent my own personal bugbears that emerged from the dozens upon dozens of company documents sent my way over the past year. I suspect the reader will pick up just a hint of frustration and should therefore take what follows with a pinch of salt…

Language is important, and above all, clarity of expression

If you are a ‘cloud-based SaaS platform looking to disrupt a multi-billion-dollar market with novel technology that leverages AI and machine learning’, that’s nice, it really is – but frankly, so is every other startup out there. Beyond painting you as yet another tech company, this phrase tells me precisely nothing – surely the very opposite of what you want.

Be concrete; what do you actually do? Don’t use jargon or buzzwords, any schmuck can do that. It takes real clarity of thought to present a complex subject matter in a way that a layperson – including me – can understand.

Another thing to avoid like the plague is technical terminology. Just because you’ve worked in software or biotechnology for the last 30 years, does not mean that the poor analyst, who has to assess your deck, or the angel investor, whose money you want, have done so. If you do use technical terms, make sure to explain what they mean. And, for the love of God, do not throw in mysterious and unexplained acronyms – this isn’t a potluck.

If a pitch deck or business plan contains a lot of jargon or buzzwords, as well as unexplained technical words and acronyms, the only things that could possibly make it worse are badly constructed bullet points.

Whatever happened to well-crafted prose? Whatever happened to verbs? As someone with a background in the humanities, I admit I probably have a bias here. That being said, if I had given my first-year university supervisor work that resembled some of the business plans I have to read, he probably would have ripped it up and told me to go home. Unfortunately, one has to be polite in business.

The real danger of bullet points lies in their disassociation from the niceties of time. For example, one might receive a pitch deck in April 2017 which states ‘2017 – contracts with ten clients’. What on earth does that mean? Have you already managed to sign ten contracts with clients this year? Are you currently negotiating said contracts? Or are you hoping to sign these contracts in 2017? If your pitch deck is meant to accompany a verbal presentation, that’s fine so long as you’re there to provide a running commentary; if someone has only the text to go off, then it’s just incredibly annoying.

In my opinion, every entrepreneur should take to heart George Orwell’s six rules of writing. My advice in sum: if your pitch deck or business plan reads less like Orwell and more like Derrida, then you’ve probably gone wrong somewhere. Check out the post-modernist generator; besides being very funny, it’s the antithesis of everything you should aim for.

I love historic financials

Let’s be honest, financial projections in the early-stage context are a bit made up. If only you got a few hundred thousand in this round, you say, your revenues will jump from zero to a million? I bet you say that to all the guys. Even if projections are serious, they are inevitably best-case scenarios. They give a vague indication of potential. Hardly any company will meet them, and this is not really surprising (despite what certain industry bloggers seem to think). They also all basically look the same. No company is going to give you projections that don’t make it look fantastic.

From hence springs my love of historic (actual) financials. It is of course true that past performance is no guarantee of future success (and not just because the Financial Conduct Authority makes us say this). On the other hand, actuals tell you a lot about a company, warts and all, and if you’ve seen enough of them, you will develop a knack for spotting certain red flags that will help you weed out some of the poorer contenders. You’re an eighteen-month-old, pre-revenue startup that raised £300,000 last year and the CEO received most of that as a salary? Hmm… Most importantly, actuals allow you to see what a company has achieved with funds raised to date, and how it compares to others at a similar stage.

That’s why we always ask companies to provide us with actuals, and at least in my experience, the best companies have readily available, up-to-date versions of both Profit-and-Loss (P&L) and cash flow. Yet many companies do not seem to have historic financials at hand, especially when it comes to cash flow. Some even make my request for them seem like a huge and unreasonable burden. I find this rather strange.

I’ve not been an entrepreneur myself, but I imagine I would make sure, especially in the early days, to maintain a cash flow Excel spreadsheet, updated on a regular basis (at least once a month), in order to keep tabs on what is going in and out of the bank. It seems like this would involve the sort of accountancy skills you can teach yourself via Google. Accountancy software, such as Xero, is also incredibly helpful, and will allow you to produce monthly cash flow summaries sufficiently detailed to satisfy even the most pernickety of analysts.

On a final note, I would just like to underline that P&L is definitely not the same as cash flow. In some ways, I don’t like P&L because it allows accountants to work their dark, dark magic to make the numbers seem much better than they are. Cash flow shows you what has actually gone in and out of the account – simple. Here is a P&L and cash flow Excel template that we send to companies to illustrate the kind of thing we’re looking for. It’s relatively new, so feel free to send feedback.

Follow the advice above, and the SyndicateRoom analysts will not only love you, but actually understand what it is your company does and why it’s a good idea. Why care about our love? Well, we’re the ones who will present your company to our Investment Committee. And not only will you gain our love, but we will be able to get your company in front of Investment Committee much quicker than if we need to send endless emails back and forth discussing the finer points of what your bullet points actually mean… Everyone wins.