The Making of a Good Business Plan
by Carrie Hinkel on February 1st, 2008
The difference between a good and bad business plan could mean getting a loan and not getting a loan, or a successful expansion and an early closing. A business plan is a powerful tool and the opportunity to create one that is detailed and guiding shouldn’t be wasted.
But what makes a business plan good? Well, it’s not measured by the number of pages or creative graphics used. A good business plan is informative, factual and detailed – able to accurately forecast sales, growth, and expenses. A good business plan should leave readers – whether a banker, venture capitalist, private investor, or company manager – fully satisfied with the information they just read. In other words, not needing additional information, financial statements or growth charts. Every question should be answered; and every potential hurdle should be addressed.
The elements of a good business plan
Easy to Understand – You and your business colleagues may be familiar with industry terms and technological jargon, but don’t expect potential investors to be. A good business plan should be written so that someone who is completely unfamiliar with your product or service can easily read and understand your business plan. If you find you are having a hard time putting your information into a more simplified language, you may want to seek the help of a technical writer with experience in your industry.
Thoroughly Researched – Nothing makes a business plan fizzle faster than estimations on sales, costs and growth based solely on a “gut feel”. It cannot be stressed enough that every aspect of a business plan should be built from actual data. Even if your business is still in the “idea stage”, you can base sales off of your competition and costs by calling suppliers and service providers. Yes, this entails time and effort – but no one said a good business plan was quick and easy to create.
Detailed information – Readers of your business plan want specific, detailed information. What is your cash flow each month? Who are your direct competitors? What are your monthly sales? How much do you plan to spend on advertising each month? Who is responsible for expanding the sales force? This is not the time to be lazy – remember, a good business plan leaves no question unanswered.
The different uses of a business plan
There are many different types of business plans; some are shown to people outside of the company, while others are used internally to strengthen the company. Here are some examples of what a business plan could be used for:
* Obtain start-up cash for a business idea
* Secure funding for business expansion
* Determine the feasibility of a business idea
* Layout goals and specific objectives for the upcoming year
* Creation of a marketing strategy and budget
In the end, a good business plan is one that helps you to achieve your objective – whether that’s to secure financing, define company goals, or create a marketing or expansion strategy. There’s no doubt that the time you take to make your business plan a good one is time well spent!