A business plan can mean the difference between having a good business and having a great business. Here’s some tips for writing a business plan that’s a cracker.
Your business plan is basically a list of goals, with a road map of how you intend to achieve them.
Start with the basics
Depending on the type of business you run, and whether you’re established or in start-up mode, your business plan will probably include the following elements:
- Executive summary: a one-page overview that’s best written after all the other elements of your business plan are finalised
- Introduction: An explanation of the purpose and objectives of your business
- Market analysis: An assessment of your industry, and where you fit in it
- Operations plan: How you’re business is or will be set up in terms of structure, location, regulations and so on
- Management plan: How you’ll manage your business
- Financial plan: How you’ll finance your business. This section also includes your costing and financial projections
Pitfalls to avoid
Some of the common mistakes I’ve seen with business plans include:
- Not getting professional help: Preparing a business plan can be a daunting task, so professional advice can be valuable, especially if you’re seeking finance
- Not setting the right or most appropriate goals: From the very start, you need to set goals that are both appropriate and achievable for your business
- Making unjustified predictions: By nature we tend to be over-ambitious when writing our business plans, but try to avoid this, as kidding yourself about your prospects won’t help you or your business
- Too little focus on cash flow: You’ll always want to know about your profitability too, but when starting and running a business your cash flow is more important
- Never reviewing your plan: Business planning is an ongoing business activity – you should regularly review and revise your business plan. Don’t be tempted to stop the planning process after you’ve found your feet, because as you become more established you’ll be able to stop making assumptions and use actuals – making your plans that much more valuable than they were early on
Over the years, I’ve also observed some factors that contribute to writing a business plan that works. Here are my top five:
- Consider numerous ‘what-if’ scenarios: Proper business planning involves testing various scenarios and deciding which of them will be the best for your business. A good business plan should provide for the worst-case scenario as well as the best case. Testing numerous scenarios will allow you to show the reader how you’ll address them if they arise, and will also give you an action plan to turn to when needed
- Follow the formula: As mentioned above, your business plan should include some core basics. Investigate, analyse, research and seek advice to set out your plan within those guidelines
- Play to your strengths: Get help with any aspect of your plan that’s outside your area of expertise. Your whole plan has to make sense, not just to yourself, but to any external advisors or stakeholders
- Verify your assumptions: You should always be able to show where your data and figures came from
- Be clear, concise and realistic: Your business plan is not the place to wax lyrical about your business. Keep it as realistic and accurate as you can, and keep it short too
Want more articles like this? Check out the business plans section.
Can you recommend any other do’s or don’ts of writing a business plan? Please share your tips below.