Many people request help and guidance on how to write a business plan. Most people view business plans as an optional aspect of the entrepreneurship process, which is not true and can be very dangerous to a new business. A business plan is probably the most feared, yet most important part of a new business venture.Over the next few weeks, we will go through each aspect of a business plan and provide helpful tips to ensure that everyone has a clear understanding of the sections and their contents.
4 Basic Facts About Business Plans
A business plan is a document that tells its reader all about your company. The “reader” is typically an investor, a bank, management, a member of your company’s board, and YOU! Always keep the reader of your business plan in mind while drafting it.
The business plan provides a detailed and in-depth look at the internal workings of your company and shows the company’s current and future plans. The business plan should also tell a very interesting story about your business, explaining who, what, when, where, how and why.
Think of it this way, if a business’ CEO was suddenly kidnapped by aliens, a person should be able to read your business plan and know where the company is headed, who will take it there, and what is needed to get there. The business plan is a staple for small business owners and should accomplish the following:
1. Your plan should be focused and clear. Do not get caught up in the number of pages in your business plan or how it’s decorated. Instead, spend your energy making sure that your business plan makes sense and is easy to read. There are many business plan templates available, but I would only use them as a guideline. A generic template can become confusing, particularly when the sections do not pertain to your business and/or industry.
2. Your plan should define your specific objectives and how to accomplish them. Your business plan should list your objectives, or what you plan for your small business to accomplish in the future. By the time a person gets to the last page of your business plan, they should not only know what the objectives of your small business are but also how the business plans to accomplish them. This may take a bit of time to do initially, but it’s definitely worth the time.
Writing down your objectives also gives you motivation to stay the course with your business. It definitely gets hard at times but when you have an end result to aim for, it makes it a little easier. We will go into further detail about objectives in the next lesson.
3. A good business plan is a “living document”. Your business plan is not chiseled in stone. It is not “one size fits all” and it is not designed to be drafted and left alone until thy kingdom come. Your business plan should be updated regularly and should be adjusted to the needs of your business.
There are so many things that can occur in the small business world—new trends, the economy, new laws, costs, etc.—that you must be willing to change (even if it’s just a little bit). This does not mean that your complete business model should be changed every week but it does mean that the business plan and certain objectives should be easily adjustable.
4. Your plan should MAKE SENSE! This seems like a no-brainer but there are many business plans that read like greek to not only the person reading it, but to the person that writes it as well. If you draw yourself a map to help you get from point A to point B, but have no idea how to read the map… you’ve probably wasted a lot of energy and time, because you’re going to get lost anyway. The concept is the same with business plans.
Your business plan should be realistic and easy to read. The objectives and the goals that you hope to accomplish should be clear and understandable to anybody that picks up your business plan. The vocabulary used should make sense and should not make you uncomfortable to recite. Actually, there is no section of your business plan that should make you uncomfortable to discuss. This is why I strongly advise AGAINST having the business plan for your small business written by a third party that is not associated with your business. It’s totally fine when you have somebody else type it up, however, if you’re going to use somebody else’s interpretation of your business dream and vision, this is venturing into dangerous territory!
A business plan is designed to keep business owners on track! Referring to your business plan should be a source of comfort and excitement, and should never evoke thoughts of fear! When drafted and planned properly, a business plan is an invaluable business tool!
Well, that it for Lesson 1. Lesson 2 will focus on the mission, value, and goals included in a business plan. What do you think of the 4 business plan basics listed here? What extra tips on business plan basics do you have to share?