Maybe you’re staring at a blank white sheet where your business plan should belong. Or your existing business plan is looking a little sparse and not moving your business forward. In any case, every business plan can probably use a little boost.
Writing a stellar business plan can take hours of research and revisions, but you’ll know you have a winner when you’ve explored every element through and through.
“Good plans are like a baseball player who hits the ball over the fence and out of the park,” Mike McKeever, author of How to Write a Business Plan, says. “It is not a home run until he touches all the bases.”
Try these five tips to create a business plan that not only touches all the bases, but wows.
1. Put the money front and center. Though making a profit is at the center of every business, many owners shy away from putting money at the center of their business plans.
Ellen Rohr, founder of the venture capital and consulting company Bare Bones Biz, says many business owners wrongly assume that it’s acceptable for their businesses to lose money while they get off the ground. Rohr says good business plans find ways to make money right away. Usually the best way to do this is to provide some kind of service that doesn’t require much or any initial capital.
To make it easier to make money and write a successful business plan that does so, McKeever says you must really understand how your money flows through, or will flow through, your company so you can estimate how changes will affect results.
“For example, what happens to your profits if your sales are 20 percent lower than you think? You can answer that question if you know how money flows through your business," he says. "My experience is that lenders and investors will ask you to demonstrate that knowledge when they talk with you."
2. Research first, write later. To understand the aforementioned cash flow, entrepreneurs need to devote much more time to research than they usually do, says Dave Lavinsky, founder and president of Grow Think, a business planning and strategy consulting company.
Too often owners create business plans by writing the sections that don’t require much work, Lavinsky says, such as those on growth strategy and the management team bios. From there, they’ll conduct market, customer and competitive research to formulate their business strategy. But according to Lavinsky, this method is backwards.
“Successful business owners do the opposite,” he says. “They conduct the research first and use the findings to re-strategize their business. They are willing to alter their growth plans, marketing strategies and HR plans in order to best capitalize on market opportunities they uncover in their research.”
Rohr says by planning and researching extensively, business owners can improve their financial position, because their budgets and projections are more accurate and thought-out instead of being just hopeful guesses.
3. Get an objective point of view. Whether it be from a consultant or someone else on the outside, business owners should always get an objective point of view on their plans. Often, fellow employees, family members and friends aren’t separated far enough from the plan to give good feedback and find problems.
Rohr says a good consultant is like the Supernanny, the reality TV star who goes into the homes of parents who haven’t been able to control their children. As an objective third party, she won’t raise the kids for the parents, but she’ll assess the situation, find holes in the parenting and make some recommendations.
Don’t have enough money to hire a consultant? McKeever recommends shifting your point of view when you’re drafting your plan.
“Always try to see your business from the outside,” he says. “Pretend you are a customer, an employee or a supplier and try to make your business better from their perspective. You'll be more likely to meet your goals that way."
4. Abide by the three C’s. Good business plans that procure venture capital funds are usually three things: clear, concise and compelling, Lavinsky says.
“Show your plan to a stranger,” he says. “If that stranger can repeat back to you what your business does and why it’s unique, and gets excited and asks, ‘How can I get involved in your business?’ then you have passed the three C’s test.”
Don’t be afraid to get a little more creative with your business plan, especially if in doing so, you better represent your company. Rohr says the form the business plan takes is just as important as what it says—be it written down in a three-ring binder, on the iPad or as a vision board. There’s no set rule on how it should be formatted, so don’t be afraid to veer away from what you might think is standard.
Adapt as you go. The best business plans are solidly researched, but still quite flexible in that they can be modified easily to improve the business strategy, Rohr says.
Lavinsky says successful businesses create plans annually, and revisit as often as every month. By doing so, businesses update their strategy for the coming year to ensure they’re on track to achieve their annual goals. While many business owners paint very rosy pictures of their projections, setting realistic monthly goals is an important and helpful tool to keep businesses on track.
“Without an updated business plan, you’ll quickly lose sight of the big picture and spend your days fighting fires, rather than spending your days executing on the plan that results in the thriving business you deserve,” he says.
What are your secrets to a successful business plan?
Image by OPEN Forum