Here’s the key to writing a good business plan: Think of your business plan as a key to the long-term growth and success of your company, and not only as a short-term sales tool for raising capital.
If you remember that, you’ll naturally cover all the bases, and you’ll be okay.
That said, there are certain things – best practices, really – to keep in mind while you and your partners or employees are crafting a plan.
It’s not easy, and it probably shouldn’t be, but a good business plan can help your company, whether it’s early-stage or more established, apply its resources effectively and take advantage of promising opportunities.
Eight Best Practices in Business Plan Writing
1.) Remember why you’re doing this. Putting a business plan together isn’t a lot of fun. You’re trying to make your life’s work impressive enough to get other people (investors, bankers, employees, partners, etc.) to buy-in. That’s pressure. But keep your eye on the ball and focus on why you’re doing this. Namely:
- Promotion. This is the most common reason for putting a plan together. A good business plan can help promote and “sell” your company and its vision to investors, strategic partners, customers, suppliers, employees, and other potential stakeholders.
- Commitment. A well written business plan conveys a sense of seriousness about what you’re doing. Clearly explaining your plans and goals for the business puts you in a better position when talking to, or negotiating with, outside parties.
- Focus. Your business plan should help direct money, time, energy and other resources toward the strategic goals of the company. A thoughtful plan can keep your company on track and help avoid costly mistakes.
- Efficiency. A well-written business plan should provide operational guidelines, which can help your business focus on what’s most important and in the best interest of the organization.
2.) Use a conventional format. This is one time where you might actually lose points for creativity. Your plan should include:
- Table of Contents
- Executive summary
- An overview of your company, with bios of key personnel
- An assessment of the industry or market niche where you compete, with particular focus on unfulfilled customer needs
- Descriptions of your products and services, and explanations of how they’ll meet the needs described earlier
- Marketing and promotion strategies
- Current and projected financial statements
- Appendices with supporting data and documentation
You can vary from this template slightly, as long as the basics are addressed, but don’t overdo it.
3.) Divide and conquer. Trust us. You don’t want to write the business plan on your own. No offense, but you’ll get distracted, bored, discouraged, and then end up doing a lousy job. (Unless your business happens to be writing business plans.) Divide the plan up among trusted staff, and have them work on sections that make sense based on their responsibilities at your company. When they’re finished, hire a professional writer to make it gel.
4.) Know your audience. Who’s reading the plan? If you’re writing for potential investors, they’ll want lots of data, heavy number-crunching, a reasonable growth strategy, and an explanation of what you do better than the competition. Think about it this way: Based solely on the information in the plan, would you invest in your company?
5.) Have financial statements professionally prepared. This goes for both past and current statements and also for any projections you provide. Include contact information in the appendix for the accountant or finance manager who put the information together. And definitely have this person with you when pitching an investor or lender.
6.) Sell! Sell! Sell! Yeah, yeah, yeah. While you have to be truthful, reasonable and credible regarding what you put in the plan, you also have an obligation to put your best foot forward and make a compelling case for your company and its products and services. This is no time for contrived modesty. Explain why your services fill a particular need (cite your research), why the timing and circumstances are appropriate, and the potential upside if your plan works.
7.) Write the executive summary last. For some reason, most first-time business plan writers want to begin with the executive summary. It’s smarter, and ultimately easier, to wait until the other components are completed and then assemble the summary as a sort of condensed version of the plan. An effective executive summary should have the reader ready and eager to learn more. Here’s a dirty little secret: If your executive summary’s mediocre, there’s next to no chance that a serious reader will have the patience to wade through the full document…so give it the attention it deserves.
8.) More is more. Sometimes less is more, but sometimes more is more. Use the appendices and space for additional information at the end of the plan for spreadsheets, graphs, charts, brochures, product descriptions, pricing sheets, or any other information that helps the reader understand your company’s capabilities and opportunities.
One More Thing about Business Plans
Don’t be intimidated by the process of writing your plan. It doesn’t need to be perfect. It can’t be. There are too many factors and circumstances out of your control. What’s the cliché? Don’t let perfection be the enemy of good.
Your reader would not appreciate the difference, anyway, and the time lost chasing perfection would be better spent moving your company’s agenda forward.
Do the best you reasonably can with your business plan writing and shoot for 90% perfect. That’s an “A” in nearly any classroom.
What good business plan writing tips can you share? Leave them in the comments below.
Image courtesy Jon Bodsworth
MP Star Financial’s team of advisers can help you make decisions regarding your cash flow management and business funding needs. Call for more information at (800) 833-3765, extension 150.