How To Write A Busi­ness Plan That Works

A busi­ness plan is a strate­gic tool that every busi­ness should have, even if you think you’re „too small” to need one.

A busi­ness plan is most valu­able be­cause it com­pels you to think holis­ti­cally about your goals, as­sets, strengths and weak­nesses, and closely ex­am­ine any as­sump­tions you’re making.

Use your busi­ness plan to de­scribe your company’s:

• Mis­sion, vi­sion and core principles.
• Prod­ucts and services.
• Or­ga­ni­za­tional struc­ture and key leadership.
• Goals, mar­ket op­por­tu­ni­ties, risks and cus­tomer profiles. 
• Ac­tion steps and re­sources needed to achieve long- and short-term objectives.
• Fi­nan­cial data, such as profit and loss, cash flow, sales fore­casts and out­stand­ing debt.

Why do you need a busi­ness plan?

A well thought-out busi­ness plan pro­vides es­sen­tial doc­u­men­ta­tion to ob­tain financing.

It may also be use­ful to per­suade po­ten­tial part­ners and sup­pli­ers to work with you.

A busi­ness plan is also a way to take the pulse of your busi­ness and make pro­jec­tions about fu­ture growth. Is your busi­ness healthy?

It serves as a men­tal ex­er­cise to see how, or even if, the busi­ness will work.

A busi­ness plan can also high­light prob­lems and pit­falls if you are pur­chas­ing an ex­ist­ing business. 

„We were se­ri­ously in­ves­ti­gat­ing the pur­chase of a well-loved lo­cal busi­ness,” says Katie Mc­Caskey of George Bow­ers Gro­cery in Staunton, Vir­ginia. „Once we gath­ered the nec­es­sary data to write a busi­ness plan we could see that this busi­ness lost money on every sale, with no so­lu­tion in sight.”

The busi­ness plan ex­er­cise pre­vented Mc­Caskey and her hus­band from buy­ing some­one else’s prob­lem business.

Map a route, but look for new directions. 

Just as you need to bal­ance your check­ing ac­count to make sure your fi­nances are on track, you need to check your busi­ness plan reg­u­larly to make sure you are on track with your goals. It is also im­por­tant to en­sure you’re still mak­ing a profit. As Je­re­miah Daly of High­land Cap­i­tal Part­ners puts it, „…the busi­ness plan serves as a key road map to help the com­pany nav­i­gate its way to success.”

Suc­cess­ful nav­i­ga­tion fre­quently in­volves course cor­rec­tions. The busi­ness plan is a „liv­ing document.”

If your busi­ness plan does­n’t align with what you’re ac­tu­ally do­ing, it may just be more a mat­ter of re­vis­ing your plan, not what you’re do­ing. Be will­ing to adapt.

„Be­ing in busi­ness means to be ever chang­ing and adapt to the changes that present them­selves to you,” notes Kristy Straka at Women on Busi­ness, „the chal­lenges you might face in fi­nanc­ing your busi­ness or other ob­sta­cles may lead you to al­ter­na­tive so­lu­tions that you might not oth­er­wise explore.”

Don’t be in­tim­i­dated: You’re not writ­ing a Har­vard case study or a text­book. You’re just lay­ing out your an­tic­i­pated cash flow in a way that you can understand.

Your busi­ness plan should fit the needs of your busi­ness. If, for ex­am­ple, you’re not look­ing for fi­nanc­ing, then you don’t need a com­plete P&L state­ment in your busi­ness plan. You just need to tally and then vi­su­al­ize all the ex­penses flow­ing out and an­tic­i­pated in­come flow­ing into your busi­ness. If you need help there are sup­port or­ga­ni­za­tions who will as­sist you, even for free. Lo­cate your lo­cal SCORE chap­ter or com­mu­nity de­vel­op­ment agency for resources. 

Tim Berry, Founder of Palo Alto Soft­ware re­minds new en­tre­pre­neurs that a busi­ness plan needs only to be as big as what you need to op­er­ate your busi­ness. Not every­one needs a soup-to-nuts for­mal busi­ness plan, at least to get started. 

„The pri­mary value of the busi­ness plan is, as Paul Morin of Companyfounder.com, puts it, „the in­sights you gain into po­ten­tial op­por­tu­ni­ties and pit­falls of grow­ing your busi­ness…” He goes on to say that a busi­ness plan al­lows you and your team -- even if the „team” is just you! -- to ‘get on the same page’ and de­velop a com­mon ‘lan­guage’ and un­der­stand­ing of the is­sues of your par­tic­u­lar busi­ness, its tar­get mar­kets, growth potential.”

One way to en­sure every­one is „on the same page” is to try to min­i­mize the num­ber of pages. Keep it simple.

Keep it short.

Quan­tity is not qual­ity. As Entrepreneur.com writer Mark Hen­ricks writes, there’s no need to have busi­ness plans that run 20 or more pages. In fact, the shorter your busi­ness plan, the more likely it is to be read and understood.

You and your man­age­ment team don’t need the long story be­cause you al­ready know the de­tails. Use a busi­ness plan as a re­fresher now and then to check on your execution.

Even prospec­tive in­vestors don’t want to wade through page upon page of fi­nan­cials. One or two spread­sheets may be all that’s nec­es­sary to get started. Your busi­ness plan just needs to get to the point, notes Kim Ann Zim­mer­mann, of BusinessNewsDaily.

You par­tic­u­larly want your Ex­ec­u­tive Sum­mary to be con­cise. Al­though the Ex­ec­u­tive Sum­mary comes first in the ta­ble of con­tents of your busi­ness plan, write this last. That’s be­cause the sum­mary is a brief (two pages at most, prefer­ably one) dis­til­la­tion of every­thing you’ve de­tailed in the plan. It’s the „sell” that might get a po­ten­tial in­vestor to read more, or a „bird’s eye view” of your com­pany to give a new sup­plier. Be as clear, con­cise and to-the-point as possible.

Eric Markowitz, a re­porter for Inc.com, rec­om­mends that you ask a 5^th grader or any other non-in­­vestors to read the plan. If they can ex­plain what your com­pany does, that’s a great sign. If they can’t, con­sider it a warning.

Once you’ve got a busi­ness plan that works for your busi­ness, your em­ploy­ees and your part­ners, chances are it will work in the real world, too. The ef­fort you put in here will pay off. Which, of course, is the whole point.