Requests are posted all over the Internet by people asking for help writing or rewriting their business plans.
With Amazon.com posting more than 32,000 resources to do just that, let alone the numerous tomes on the subject lining the shelves in book stores, one would think the difficulty level of formulating a business plan was one step short of putting an astronaut on Mars.
In reality, it can be quite simple if broken down by its basic elements.
So just what needs to be included to make a business plan good?
All too often, the business plan is conceived as an opening exercise to doing business.
By definition, a good business plan is one that is frequently consulted just as you would with a good road map. The idea is to maintain focus on the goals and actions the plan was created to help execute and avoid running the business by the seat of management’s pants.
In general terms, a good business plan is a “must read” for all people involved with the company.
For those of you who have a business plan, it was probably created in an environment of clarity before you were swamped with the day-to-day pressures of unexpected diversions and challenges.
For those who don’t, you either never made the time or never found that clarity.
Get it Out of your Head
The mere act of putting one’s thoughts down in writing changes them, giving ideas life, reality and authority.
Have you ever said something you were asked to repeat only to struggle to remember exactly what you said? Putting the details in writing improves your thinking and provides a clearer perspective.
The point of a business plan is to maintain course without being sidetracked, or worse yet, being pushed into unfamiliar territory where emotion, interest and intrigue can affect decision-making before you have had the opportunity to think the details through carefully.
Having your plan down on paper also gives your staff confidence in your leadership — knowing you took the time to plan ahead.
Speak to Your Audience:
A common misconception about creating a business plan — a realization job seekers and resume writers find out very quickly — is you cannot write a resume that works for every prospective employer; neither can you write a business plan that works for every person who has an interest, desire or need to read it.
The three most common audiences are your banker, your investors and your staff — the people charged with executing it. Each of these individuals has their own specific concerns. For example, investors tend to be most concerned about the management team, whereas bankers focus on cash flow and the ability to grow profitably.
The number of different plans a company needs is driven by the audiences the company wishes to reach and what you need from each of them.
Know Your Marketplace:
You cannot craft strategy or create plans to execute it until you have a clear understanding of your market.
There are three components to that research: need, competition and size. Omitting any of these areas will doom a company to failure.
One classic example of this is a story about the BMW mechanic who opened a repair shop near his home. The mechanic printed postcards, bought a mailing list and sent them to every household within a five-mile radius promoting his services with an offer no BMW owner could refuse. Indeed, every BMW owner within that radius responded — both of them.
This simple story highlights the critical importance of thorough and accurate market research. It often is the difference between opening your doors to hordes of eager customers and struggling for years just to break even.
Build Your Strategy around Facts — not Wishes or Assumptions:
When it comes time to craft your strategy, be careful not to ignore weaknesses or overemphasize strengths. Be realistic and honest in this process. Not doing so would be like the card player who cheats at Solitaire. Who do you think you’re fooling?
Ask for input from others and don’t make assumptions or depend on wishful thinking that deals with what-ifs.
Identify the milestones the company needs to achieve and the steps that will need to be taken to achieve them.
Recognize when you reach each milestone and celebrate your progress.
Ask yourself what will be different tomorrow, after you reach your milestone, from what it is today.
Don’t start executing until you have objective measures for each milestone.
Never say your company is without competition. Even if true, it is very difficult to prove and likely to be short-lived, especially if your idea is a good one.
Make the Numbers Real:
The financial projections you create will be viewed through many different looking glasses. They are approached by viewers marinated in the juices of their personal experience and seasoned with skepticism.
The more realistic (read: accurate) the financials, the easier it will be for you to defend them.
If indeed you have been thorough in your market research, this will be easy. If not, you are playing a very expensive game that is most often lost. Over-reaching revenues and underestimating costs never benefit anyone. Worse yet, it makes you look incompetent and places the rest of your plan into question. It is always better to underestimate income and overestimate costs. If your idea still looks profitable — you have created some room for error.
If you implement the necessary elements outlined above into your business plan, it will be one of the most valuable documents in your organization — so important to your company’s success it will demand everyone in your organization be familiar with it.
Your business plan will become the map for what your company does and how the company and everyone in it operates. A thoughtfully executed business plan will provide clarity to everyone involved as to their individual purpose and role in the success of your company.
In short, if you do your job, the business plan will do its job, and you will be well on your way to a more professional, profitable business.