by
Tim Berry
June 15, 2004
Business planning is about
results. You need to make the contents of your plan match your
purpose. Don't accept a standard outline just because it's there.
What is a Business Plan?
A business plan is any plan that works for a business to look ahead,
allocate resources, focus on key points, and prepare for problems
and opportunities. Unfortunately, many people think of business
plans only for starting a new business or applying for business
loans. But they are also vital for running a business, whether or
not the business needs new loans or new investments. Businesses need
plans to optimize growth and development according to priorities.
What's a Start-up Plan?
A simple start-up plan includes a summary, mission statement, keys
to success, market analysis, and break-even analysis. This kind of
plan is good for deciding whether or not to proceed with a plan, to
tell if there is a business worth pursuing, but it is not enough to
run a business with.
Is There a Standard
Business Plan?
A normal business plan (one that follows the advice of business
experts) includes a standard
set of elements.
Your plan will depend on your
specific situation. For example, description of the management team
is very important for investors while financial history is most
important for banks. However, if you're developing a plan for
internal use only, you may not need to include all the background
details that you already know. Make your plan match its purpose.
What is Most Important
in a Plan?
It depends on the case, but usually it's the cash flow analysis and
specific implementation details.
-
Cash flow is both vital to
a company and hard to follow. Cash is usually misunderstood
as profits, and they are different. Profits don't guarantee
cash in the bank. Lots of profitable companies go under
because of cash flow problems. It just isn't intuitive.
-
Implementation details are
what make things happen. Your brilliant strategies and
beautifully formatted planning documents are just theory
unless you assign responsibilities, with dates and budgets,
follow up with those responsible, and track results.
Business plans are really about getting results and
improving your company.
Can you
Suggest a Standard Outline?
If you have the main components, the order doesn't matter that much,
but here's the outline order we suggest in Business Plan Pro
software:
-
Executive Summary:
Write this last. It's just a page or two of highlights.
-
Company Description:
Legal establishment, history, start-up plans, etc.
-
Product or Service:
Describe what you're selling. Focus on customer benefits.
-
Market Analysis:
You need to know your market, customer needs, where they are,
how to reach them, etc.
-
Strategy and Implementation:
Be specific. Include management responsibilities with dates and
budget.
-
Management Team:
Include backgrounds of key members of the team, personnel
strategy, and details.
-
Financial Plan:
Include profit and loss, cash flow, balance sheet, break-even
analysis, assumptions, business ratios, etc.
An expanded plan outline
We don't recommend developing the
plan in the same order you present it as a finished document. For
example, although the Executive Summary comes as the first section
of a business plan, we recommend writing it after everything else is
done.
About the Author
Tim Berry is a business planning expert, author of several books and
planning software packages such as
Business Plan Pro.
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