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Business Planning Tips: The Plan


These business plan tips are updated regularly.
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Lessons to be Learnt from Business Plan Survey

Lessons about business planning derived from an extensive survey conducted by PlanWare include the following:

  1. Decide the underlying purpose of the plan at the very outset - to raise money, secure approval etc. - as this will largely determine the comprehensiveness and length of the plan, amount of research required, use of external help and overall time scale.
  2. From the outset, specify the structure of the plan in the form of a detailed table of contents. Use this to identify critical issues requiring research and/or external assistance.
  3. Create a work program and timetable which allows adequate time for researching, writing and redrafting.
  4. Recognize that the process could be much more difficult than expected and consider seeking external assistance, sooner rather than later, for the most vital areas.
  5. The more important the plan, the longer it will be and the longer it will take to complete.

For more detailed guidance on preparing a plan, check the white paper on How to Write a Business Plan and Free-Plan, free 150-page Business Plan Guide and Word-based Template. Also, refer to the 30-point Checklist for Preparing a Business Plan.

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How NOT to Write a Business Plan

Here are some suggestions to follow if you want to write a truly dreadful business plan, or to avoid if you wish to write a good plan:

  • Don't include a contents list, don't number any pages and don't follow any consistent approach for section heading etc.
  • Do write the plan's summary before you write the plan, or, better still, don't include any summary.
  • Do develop your business strategies and ideas progressively as you write the plan. It will draw readers into the process and make the ending more unexpected !
  • Do start the plan with your financial projections - the more detail and tables the better !
  • Don't summarize the projections - let readers figure out the full-year totals, profits, cash flows and so on for themselves.
  • If you include projected balance sheets, make sure that they don't balance.
  • Don't produce any separate cash flow forecasts, just rename the P&L or income projections.
  • Do ensure that your financial projections indicate 40% profit margins in the third year. If raising external capital, do explain that the projected return to investors will exceed 100% per annum within three years.
  • Do mention in the marketing section that your proposed offering has no competition. This will save you having to do any market analysis.
  • Do base the plan's marketing section around a few quotes from research reports that you found on the web.
  • Don't consider customer behavior, needs or trends unless you wish to present a series of supportive (unresearched) theories that will support your plans.
  • Do base your sales projections on the presumption that you will gain, at least, a 1% share of the total market and don't bother with any market segmentation.
  • Do pad out your sales plan with lots of buzz words like customer-driven, first-to-market, market-led. Do underpin it with a disproportionately small (or large) marketing budget but don't be too explicit as to how, where and when it will be spent.
  • Don't include any background to your business idea/invention, progress to date or current status.
  • Do spend at least ten pages describing your offering - do make this as detailed and technical as possible to impress your readers. Don't mention any benefits as these should be obvious !
  • Do anticipate technical breakthroughs and new offerings but don't discuss related costs or risks.
  • Do include a 6-8 page CV for yourself but don't worry about building a management team or sorting out operational issues like production, delivery etc. Do make some heroic assumptions about these matters and do pledge to address them at a later date.
  • Do spend as little time as possible on the plan but do make sure that it runs to at least sixty pages even if this entails lots of padding and inclusion of superfluous or irrelevant material.
  • Do use as wide a variety of font types, sizes and colors as possible to add style to your plan and don't bother using a spell checker.
  • Don't let a qualified outsider see your emerging plan and don't bother with reading over or redrafting.

More seriously, if you reverse each Do and Don't, you'll have a useful guide for preparing a sound business plan. You can get this list in a printable checklist format at Checklist for Better Business Plans. For further help, see Insights into Business Planning, Business Plan Guide and the white paper on How to Write a Business Plan.

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Your Business Plan - First Impressions Count

Once your business plan has been drafted, you should turn your attention to its presentation. First impressions can be very important and it is essential that your plan makes a good initial impact. Here are some suggestions:

  • Convey a quietly professional impression. Your plan should not come across as either dry academic thesis or as a glowing promotional brochure. Aim for something in between.
  • Add an attractive cover page. A color picture of your proposed offering would help distinguish the plan and serve as an introduction to your products or services.
  • If the plan is longer than about 30-40 pages, consider dividing it into two volumes. Use the first volume for the main plan and place detailed, backup material in the second volume.
  • Get a trusted, experienced outsider to read your plan to check that it makes good business sense, reads well and is clearly presented. Don't be resentful of any criticism - use it to improve the final plan.
  • Make sure that pages are numbered and that the plan contains a contents list.
  • Be sure to spell check the plan once it has been finalized.
  • Use easy-to-read fonts and sizes. Print on one side of pages. By all means use color but in a restrained, business-like way.
  • Double check the 2-3 page summary of the plan to ensure that it is interesting and reflects the plan's detail. Remember, many recipients will use this summary to determine whether your plan merits further examination.
  • When binding your plan, use a system that allows pages to be opened flat.

For further help, see the Checklist for Better Business Plans, Business Plan Guide, Writing a Business Plan and Insights into Business Planning.

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How to Wrap Up your Business Plan

Once you have completed the main parts of your business plan, insert a section entitled "Conclusion" and use it to wrap up your plan and to leave the reader with a warm and positive view of your business and its plans. Briefly, review what the business does and expects to achieve. Indicate why it will succeed and why it should be supported by investors etc. Be very positive and confident to encourage favorable reactions and draw on some of the strengths and opportunities identified in earlier parts of the plan dealing dealing with Mission, SWOTs, Strategies etc.

Confine your Conclusion to a few carefully-drafted paragraphs and write it once the plan is almost complete. At this stage, get someone to read a near-final draft plan to check that it makes good business sense, reads well and is clearly presented. Ideally, that "someone" should be a detached, independent person involved in business with experience of your industry and/or business planning. Hopefully, they will be able to see "the wood from the trees" better than you can. Don't be resentful of any criticism - use it to improve the next draft. If your plan is lengthy or important, anticipate several drafts.

Key questions you should be asking yourself at this wrap up stage include:

    1. Is the plan nicely presented - bound, page numbered etc.?
    2. Has the plan been spell checked in its final form?
    3. Is the plan's length appropriate to its purpose ?
    4. Have the business's (funding) needs been clearly stated ?
    5. Does the plan's summary stimulate interest ?
    6. Have all key questions been anticipated ?
    7. What likely objections remain unresolved ?
    8. Will the plan provoke the desired responses?

For further help, see the Business Plan Guide, Writing a Business Plan, Insights into Business Planning and Checklist for Better Business Plans.

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Get Free Business Planning Software

PlanWare offers an interesting range of free business planning software which can be useful to cash-strapped entrepreneurs wishing to launch businesses on a shoe-string and to students doing B School or college projects. The following items are likely to be most useful:

  • Exl-Plan Free - Excel-based, fully-integrated, business finance planner suitable for high-level, short term projections.
  • Free-Plan - 150-page Business Plan Guide and Word-based Template.
  • Business Plan eGuides - compendium of easy-to-read, informative papers on business planning matters.

Get more details of PlanWare's free stuff here.

PlanWare's paid-for software includes Exl-Plan (comprehensive multi-year financial projections), Cashflow Plan (detailed, rolling, 12-month cash flow projections), Plan Write Business Planner (stand-alone, comprehensive business plan writer) and Quick Insight (expert system for evaluating business ideas and new ventures)..

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Time Required to Produce a Business Plan

How long should it take to write a business plan and how should the time be allocated?

Some useful answers to these questions can be gleamed from an ongoing survey being conducted by PlanWare amongst people who have prepared written business plans.

Based on over two thousand responses, more than one-third (38%) of the respondents spent less than a month on their plan; a similar proportion (37%) worked on their plan for 2-3 months; and the balance (25%) spent several months on the task. More detailed analysis of these findings indicated that:

  • The elapsed time to prepare comprehensive plans was considerably longer than that for basic plans.
  • Over one-third of all plans compiled within an elapsed time of one month were used to seek bank loans or approvals from shareholders/directors, or they were compiled for internal/personal use.
  • About one-third of all plans used to raise venture capital/equity took least three months to research and write.

The survey also showed that the task of actually writing the plan was usually the least time consuming part of the planning process as almost two-thirds (63%) of respondents spend more time researching than writing their plan. For a fifth (21%) of respondents researching and writing times were about equal. Only a small minority (16%) undertook little or no research before drafting their plan.

For more findings, see a detailed analysis of the survey findings and the latest survey results.

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When Writing your Business Plan

Twelve things to do when writing your business plan:

        1. Create a framework for the plan e.g. table of contents.
        2. Identify possible appendices, attachments etc.
        3. Estimate page lengths for each key section.
        4. List main issues and topics to be covered within key sections.
        5. Assign work programs based on the framework and lists.
        6. Draft all key sections in a logical sequence.
        7. Check the preliminary draft for completeness and plug gaps.
        8. Stand back and take a detached overview of the draft.
        9. Let an outsider or adviser critique the latest draft.
        10. Redraft, fine tune and spell check.
        11. Write the executive summary and plan's conclusion.
        12. Get an independent assessment of the final draft.

For further help, see the Business Plan Guide, Writing a Business Plan and Insights into Business Planning.

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Never Outsource your Business Plan

Here's the summary of a planning tip contributed by Intuitive Life: A Business Weblog by Dave Taylor:

 

A book I'm reading recommends that businesses consider outsourcing their business plan development because they'll "get a better business plan, faster, and at lower cost" than doing it in house. This is absolutely wrong-headed thinking: if you outsource your business plan process, your company will be more likely to fail, not less.

It's the process of creating the plan that's important not the end document. When you share your business plan with an investor or venture capital firm, they want to see something coherent and learn about a smart business, but just as importantly, they want to know that your team can sit in a room and hammer out a single, unified vision of your company, one that covers all the major bases, from marketing to defending your intellectual property, cost of sales analysis to partnership ideas. And yet, pop over to Google and you'll find hundreds of companies advertising that they'll write your business plan for you, that they'll "help you clarify your business goals" and that they'll "help you get funded with a rock-solid business plan." Reject these companies. All of them. The only part of business plan creation you can safely outsource is unbiased analysis. Once you're done with your plan, it can be a darn good idea for you to run it past a professional business startup consultant, because they can give you the investor's view of your plan. Expect to pay at least $1000 for this service.

It's really like a Zen Koan because the journey is the reward. If you think that having a beautiful printed business plan, perfect bound and with color illustrations is going to impress an investor more than one that your team has sweat over, fought over, and hammered out over time, you're wrong. It's the implementation, not the idea that investors are paying for: if you can't even own your business planning process, the odds of you getting your product out the door, executing on your plan and generating a return on investment are pretty darn low.

So here's some free advice from a serial entrepreneur and management consultant who's been there and read hundreds of business plans: write your own business plan. Fight your own fights with your partners, argue about sources of revenue, debate income projections, and force yourselves to figure out enough of Word and Excel to capture that moment of your company's life. Because business planning is all about process, not destination.

You'll find Dave's full tip here. To use Word and Excel for your plan, you can get our tools for planning the text and for crunching the numbers.

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Ideal Length of a Business Plan

What is the ideal page length of a business plan? Well, what is the length of a piece of string? The answer really depends on the purpose and scope of the plan - are we talking about a basic or comprehensive plan. See the tip below on Decide on your type of Business Plan at the Outset.

Analysis of findings from an ongoing survey about business plans by PlanWare indicates that the main parts (i.e. the body of plan excluding appendices etc.) of many basic plans are under ten pages long whereas comprehensive plans are often 10-25 pages long. More specifically, the analysis found that almost half of all comprehensive plans were at least 26 pages long as compared with just one-tenth of basic plans (see Fig 3 below).

image003

When budgeting your plan's length, go for the shortest possible plan consistent with your business's scale, objective of the plan etc. - aim for quality rather than quantity! Bear in mind that the overall length of the plan is likely to increase as writing progresses. If your plan gets too long, do some ruthless editing and redrafting. If it is any consolation, it should be much easier to shorten a long plan than to lengthen a short one!

Based on the suggested section lengths in our Business Plan Guide, the length of a comprehensive plan could range between 27 to 47 pages (excluding cover, contents list and appendices). This works out at a minimum of about two pages for each main section within the plan. Obviously, this length should be scaled back to about ten pages or so for a new or established business (of almost any size) preparing a basic plan by excluding sections and scaling back the length of remaining sections.

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Decide on your Type of Business Plan at the Outset

Before you put "pen to paper", decide the type of business plan you need:

  • Basic plans are short (often under 10 pages plus appendices etc.); relatively quick to prepare (under one or two months); use limited external assistance; need few drafts; and require much more researching than writing. They are somewhat more difficult to prepare than anticipated - all parts equally difficult. They are frequently used to assess the viability of a business or for internal/personal use and they are rated as important/useful for the business.

  • Comprehensive plans are longer than basic plans; require some months to prepare; make slightly greater use of external help; and require somewhat more time researching than writing. They are more difficult to prepare than anticipated, especially the financial projections and market analysis parts. They are often used to help raise venture capital/equity or bank loans, and they are viewed as being critically important/useful to the business.

Based on a survey of over 400 business plan writers, the following table characterizes "typical" plans written for different purposes:

Purpose of Plan Type of Plan Approx Pages * Elapsed Months ** External Help ? Number of Drafts Parts of Greatest Difficulty
Internal/ personal use Basic 10 <2 No 1-3 Market analysis
Raise bank loans Comprehensive 15 1 Probably 2-4 Financial projections
Seek venture capital/ equity Comprehensive 20+ 2-5 Probably 2-5 Market analysis
Assess viability of business Basic 10 2 Possibly 2-4 Market analysis
Secure approval from shareholders/ directors Comprehensive 15 2-3 Possibly 2-6 All parts equal
* Main sections only - excludes appendices, attachments etc.
** Covering research, writing & redrafting.

For more information on the survey results, see Insights into Business Planning and for the latest survey results see Views on Preparing a Business Plan.

For detailed guidance on compiling a plan, review the white paper on Writing a Business Plan, Free-Plan (free 150-page Business Plan Guide and Word-based Template) and the Checklist for Preparing a Business Plan.

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Before Starting to Write a Business Plan

Before any detailed work commences on writing a comprehensive business plan, you should:

  • Clearly define the target audience
  • Determine its requirements in relation to the contents and levels of detail
  • Map out the plan's structure (contents page)
  • Decide on the likely length of the plan
  • Identify all the main issues to be addressed.

Shortcomings in the concept and gaps in supporting evidence and proposals need to be clearly identified. This will facilitate an assessment of research to be undertaken before any drafting commences. Bear in mind that a business plan should be the end result of a careful and extensive research and development project which must be completed before any serious writing of a plan should be started. Under no circumstances should you start writing a plan before all the key issues have been crystallized and addressed.

Get lots more tips and suggestions here.

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