Part Three - How to Write the Best Business Plan (5 Major Points)
Note: This is the third and last article in a 3-part series about Writing the Best Business Plan. There are literally millions of articles, courses, outlines, and information available, both free and priced. In fact, the information available is so overwhelming, that it is very difficult to know where to begin and what to trust! These articles are designed to give practical, useful, and valuable advice about how to get it done.
The 5 Major Points About Writing The Best Business Plan In Part One, we looked at purposes and types of formal business plans; the purpose dictates the type of document to construct. All executives, bankers, investors, and business leaders agree that every business should have a formal business plan that is tailored to the desired purpose and result.
Many new businesses - and many entrepreneurs - do not understand how to properly prepare to write an effective plan. The rule of thumb is this: "Proper planning prevents poor performance!" There are 5 Major points to consider in preparing to write a formal business plan:
1. Know your outcome and content. Who is the Business Plan being written for, what is the proper scope, content, resources, and what is the desired result? These points were covered in Parts One and Two of this article series:
a. Is it to attract an investor? Plan should be a "brief sales piece" geared directly towards the questions an investor will ask.
b. Is it for a bank loan, SBA-backed loan, or other commercial loan? The plan should then cover the information a banker would want.
c. Is it just for the business owner and to serve as a road map?
d. Is it for multiple purposes, or to be used for various ends? Consider a "parent" plan or targeted plan(s).
e. With each type of business plan, seek preparation that fits exactly within the purpose, desired result, and industry
f. Various business plan templates are freely available at the SBA website.
2. The writer. Be sure that whoever writes - or is hired to write - your business plan is the right person for the job. The same way you would seek an experienced carpenter of construction contractor, you should seek a writer; ask questions, view samples, get references, etc.
a. If the writer does not ask you about the audience and intent of your plan right at the start, throw up a red flag! This is not a good sign.
b. If the writer is a large corporation, chances are very good you will not get enough personalized service; often you are just another account and you do not want a "cookie-cutter" business plan at all. Be very careful about hiring a big company.
c. If the writer does not have personal business experience, or specializes in a certain area, or does not have a comprehensive knowledge of your business variables, do not hire him or her.
3. The Financials. This is yet another piece that so many new businesses and entrepreneurs get wrong! Every plan should have supporting Financials as one dedicated section of the business plan. However, which financial documents to create and include depends upon the audience and purpose (or type) of the plan. What is great is that a lot of the very best resources for building financial reports are completely free!
a. If the business plan's purpose is a capital investor, or to get a commercial loan of some kind, my advice would be to seek the advise of a SCORE representative, and/or someone with direct knowledge of the requirements!
b. At the very least, a Sales Forecast, Cash Flow Projections, Income Statement, Balance Sheet, Key Performance Ratios, and Break-Even Analysis should be provided.
c. Additionally, most often investors and bankers are going to desire private financial information on the owner(s) as well. They might also want to see a spreadsheet or chart showing the Funds Required and Timing, and perhaps Revenue Calculators based upon the products or services of the business.
d. Double check to ensure that all references made to performance numbers (in the body of the plan) match exactly to the supporting financial documents!
4. The Appendices, Exhibits, and Addendums. The rule here is don't over do it! Perhaps you might include a library of direct competitors, or a website abstract, or Terms and Conditions, or a related legal document. Even so, only provide documentation directly supporting the plan. Too much is not necessarily a good thing.
5. The Executive Summary. The Executive Summary is the first section of a great business plan, and yet very often its vital importance and effectiveness is overlooked.
a. I recommend that this section is written last and then inserted at the beginning.
b. As the document is written, notes, information, and data can then be set aside (copied) that are perfect for inclusion in the Executive Summary.
c. The Executive Summary is like a mini business plan and should directly serve the purpose, plan type, and result desired. It should be as brief as possible, and yet as inclusive and persuasive as possible.
In conclusion, in this article we have taken a look writing a formal business plan and pulling all the data together. Once again I will state that it is my suggestion is to carefully research when hiring someone for this important job.
As with anything positive, it is best to consider your desired result before taking action. The task of preparing and writing a business plan can seem like a daunting project. However, if it is taken piece-by-piece, and assembled with care - using readily available resources and tools - then it is not such a huge undertaking and can definitely help to serve your purpose.
Kurt Turrell ([http://www.KurtTurrell.com]) is a business consultant, lifestyle coach, entrepreneur, and author. With over 20 years in hotels, management, education, and life skills development, Kurt is an authority on many areas of business, management, sales and marketing, and business streamlining, as well as helping individuals to achieve abundance and success in all areas of life/living. Go to: [http://KurtTurrell.com] to get "Lifetime Success in 6 Simple Steps" completely free.