What Makes a Good Plan?

by Tim Berry RR 8 - A
What factors are involved in creating a good business plan? Is it the length of the plan? The information it covers? How well its written, or the
brilliance of its strategy. No.
The following illustration shows a business plan as part of a process. You can think about the good or bad of a plan as the plan itself, measuring its
value by its contents. There are some qualities in a plan that make it more likely to create results, and these are important. However, it is even better
to see the plan as part of the whole process of results, because even a great plan is wasted if nobody follows it.
Planning is a process, not just a plan

A business plan will be hard to implement unless it is simple, specific, realistic and complete. Even if it is all these things, a good plan will need
someone to follow up and check on it. The plan depends on the human elements around it, particularly the process of commitment and involvement,
and the tracking and follow-up that comes afterward.
Successful implementation starts with a good plan. There are elements that will make a plan more likely to be successfully implemented. Some of
the clues to implementation include:
1. Is the plan simple? Is it easy to understand and to act on? Does it communicate its contents easily and practically?
2. Is the plan specific? Are its objectives concrete and measurable? Does it include specific actions and activities, each with specific
dates of completion, specific persons responsible and specific budgets?
3. Is the plan realistic? Are the sales goals, expense budgets, and milestone dates realistic? Nothing stifles implementation like
unrealistic goals.
4. Is the plan complete? Does it include all the necessary elements? Requirements of a business plan vary, depending on the context.
There is no guarantee, however, that the plan will work if it doesnt cover the main bases.
Uses of business plans
Too many people think of business plans as something you do to start a company, apply for a loan, or find investors. Yes, they are vital for those
purposes, but theres a lot more to it.
Preparing a business plan is an organized, logical way to look at all of the important aspects of a business. First, decide what you will use the plan
for, such as to:
Define and fix objectives, and programs to achieve those objectives.
Create regular business review and course correction.
Define a new business.
Support a loan application.
Define agreements between partners.
Set a value on a business for sale or legal purposes.
Evaluate a new product line, promotion, or expansion.
No time to plan? A common misconception
Not enough time for a plan, business people say. I cant plan. Im too busy getting things done. A business plan now can save time and stress
later.
Too many businesses make business plans only when they have to. Unless a bank or investors want to look at a business plan, there isnt likely to
be a plan written. The busier you are, the more you need to plan. If you are always putting out fires, you should build fire breaks or a sprinkler
system. You can lose the whole forest for too much attention to the individual trees.
Keys to better business plans
Use a business plan to set concrete goals, responsibilities, and deadlines to guide your business.
A good business plan assigns tasks to people or departments and sets milestones and deadlines for tracking implementation.
A practical business plan includes 10 parts implementation for every one part strategy.
As part of the implementation of a business plan, it should provide a forum for regular review and course corrections.
Good business plans are practical.
Business plan donts
Dont use a business plan to show how much you know about your business.
Nobody reads a long-winded business plan: not bankers, bosses, nor venture capitalists. Years ago, people were favorably impressed
by long plans. Today, nobody is interested in a business plan more than 50 pages long.
How to write a business plan RR 8 - B
Thinking about starting a business? Great. Have you got a Plan? That's Plan with a capital "P" for Business Plan. If you haven't written
your plan yet, your business is still in the fantasy stages.
That isn't harsh; it's how it is in the real world. A company's business plan is what lenders such as banks and the U.S. Small Business
Administration use in deciding to lend you money. It's the main company document that your employees -- and you -- use to gauge
your company's success and to make decisions about what you should do first, second, or not at all.
If you're starting a home-based business on a shoestring, some of these suggestions probably aren't necessary, but you still should
create a plan that outlines your goals, expected costs, marketing plan and exit strategy. A business plan is your road map for how you
expect to succeed and how you'll measure success.
Here is a quick nine-step guide to what you will need in your company's business plan:
1. An executive summary outlining goals and objectives. The executive summary introduces your business strategy and probably
is the most important section for lending institutions. If you can't persuade a loan officer in the first two or three pages that you've got a
viable business proposal, you're going to leave empty-handed. This summary is also important as a communication tool for employees
and potential customers who need to understand -- and get behind -- your ideas.
2. A brief account of how the company began. Clearly explain the origins behind the company's creation and how you or your
business associate came up with the idea to start your business.
3. Your company's goals. Explain in a few paragraphs your short- and long-term goals for the company. How fast do you think it will
grow? Who will be your primary customers?
4. Biographies of the management team. The management section should include the names and backgrounds of lead members of
the management team and their respective responsibilities.
5. The service or product you plan to offer. A key aspect of this section will be a discussion of how your product or service differs
from everything else on the market.
6. The market potential for your service or product. Remember that you've got to convince lenders, employees and others that the
market you're after is relatively large and growing. You'll need to do some research for this section. If it's a locally based business, you
need to assess the demand for your offering within an xx-mile radius, based on what you determine is a reasonable distance from your
business. If it's a Web-based business or a business that relies on both the Internet and local traffic for revenues, you'll need to
evaluate demand on a local and/or a national basis. A research report from sites such as Forrester Research can cost hundreds to
thousands of dollars. But you may be able to get some basic information simply by using the Web and its many search engines and
directories.
7. A marketing strategy. How do you plan to tell the world you're open for business? Will you rely exclusively on word of mouth (not a
good plan unless you've already got a reputation)? Will you advertise in print, television or on the Web (or all three)? Will you use
online services to get your company listed on search engines and advertised on other Web sites? You'll also need to include how much
you plan to spend on marketing.
8. A three- to five-year financial projection. This section should include a summary of your financial forecasts, with spreadsheets
showing the formula you used to reach your projections. You'll need balance sheets, income statements and cash-flow projections for
the entire forecast period. The summary in this section is also where you would tell prospective lenders how much money you'd like to
borrow to cover your startup costs. The assumptions that you make in this section will make or break your company's success. If you're
unsure about using this kind of financial modeling, find a professional or invest in financial management software. It's worth the money.
9. An exit strategy. All good business plans include a section that lays out the benchmarks you'll use in deciding to call it quits. The
strategy could be based on a dollar figure, revenue growth, the market's reception to your idea, or a consensus among top officers.