Planning to Plan

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A business plan is, in many respects, the most important document that a business ever creates as it is the "proof of concept", road map for growth and/or carrot to secure external support. A business plan is, in many respects, the most important document that a business ever creates as it is the "proof of concept", road map for growth and/or carrot to secure external support. This is very evident from the  survey findings described in the online white paper Insights into Business Planning.

How to Make the Most of Free-Plan

The Free-Plan Business Plan Guide & Template may appear intimidating due to their length and detail. A cynic might say that the Guide is longer than the plan it aims to assist! However, bear in mind that Free-Plan was designed to cover a diversity of situations. It will be much less intimidating once you have edited its contents and adjusted it to reflect your specific needs as explained in Using the Free-Plan Template and Table of Contents.

We make no apology for the detail in Free-Plan as the launch or development of a substantial business is not a task for the fainthearted. When starting to prepare a business plan, be mindful that:

The planning process (thinking, exploring, researching, consulting and discussing) will be at least as important as the written plan.
It is far easier to correct errors of judgment or explore new options when researching a business plan than when actually operating the business.
A sound business plan is not a sure-fire route to success or a "get rich quick" recipe but it should help anticipate and resolve problems and to point the best way forward.

Even if you are planning a very small or home-based business, the Free-Plan Guide & Template will help prepare a basic/short plan and, by virtue of its logical approach, may broaden your thinking and raise your sights for the business.

Some business plans, like war plans, may not survive "first contact with the enemy" (i.e. with market/ competition) but, even in these circumstances, they can provide the basis for recognizing the existence of a problem (e.g. sales lower than planned) and the starting point for a solution (e.g. double sales expenditure). If there were no sales forecasts and no expenditure budgets at the outset, it would be very hard to formulate a solution. You do not want to be like Lewis Carroll's Alice in Wonderland:

Alice came to the fork in the road.
"Which road do I take?" she asked.
"Where do you want to go?" responded the Cheshire cat.
"I don't know," Alice answered.
"Then," said the cat, "it doesn't matter."

In developing this release of Free-Plan, we have assumed that the initial audience for the resultant plan is its author and close associates. Accordingly, it has been structured to help them do their "homework" and to comprehensively research and explore all the key issues, ideas and numbers. This means that the initial "final" plan produced with the Free-Plan Template may be (a lot) more detailed than the version that would be distributed to third parties.

As will be seen, we have put a lot of emphasis in the Guide on the presentation of plans and assumptions in simple tables that can be supported off-plan in detailed working papers and used to feed into financial projections towards the rear of the plan. Bear in mind that a business plan should come across as a straightforward, business-like and professional document - it is not a novel, academic thesis or philosophical paper.

From the outset, recognize that your plan may not be completed in one or even two drafts. For more on this, see PlanWare's online white paper on Insights into Business Planning and the latest results from its ongoing online survey on Preparing a Business Plan.

While this Guide and the Template contain numerous pro-forma tables, charts etc. as samples, it will be necessary for you to construct and use spreadsheet-based models to generate your financial projections. As this can be a very difficult task even for a spreadsheet or financial expert, we recommend that you consider acquiring a copy of Exl-Plan, our Excel-based range of financial planners - for more information see Introducing Exl-Plan for Financial Projections and Using Exl-Plan with Free-Plan.

Once your plan has been completed using the Free-Plan Template, it can be easily shortened for presentation to third parties while retaining the Template's basic structure or, alternatively, by cutting/pasting into an entirely new structure.  For example, if participating in a business plan competition that specifies a precise format for entries and limits page numbers, you can edit and copy/paste your draft plan to suit. 

In all cases, review the length of your final draft plan, and if its body (excluding appendices) is much above 30 pages (even for a substantial business) consider some serious scaling back. Be sure to retain the final draft as a backing document to underpin your shorter distributed plan. For more guidance on this, see Length of a Business Plan and Preparing a Basic/Short Plan.

To get going, see Getting Started with Free-Plan and Using the Free-Plan Template.

Before Starting Your Plan

Before drafting your plan, consider the following findings derived from an extensive survey offering Insights into Business Planning conducted by PlanWare:

Determine 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.
Decide on the time horizon to be covered by the plan's 11. Financial Projections and 12. Funding as this will also determine the number of years to be covered by its non-financial projections. In addition, consider setting the start date for all projections to coincide with the likely finish date of the plan. For example, if you are starting to plan in January and expect to circulate the final plan in mid-year, you should consider:
Using an opening balance sheet in 11. Financial Projections for end-June.
Drafting 4.2. Progress to Date up to end June.
Setting July as the start month for all your detailed plans.

This approach will ensure that your plan is not obsolete by the time it has been written!

For help with financial projections, see Financial Projections with Exl-Plan.
Identify who is likely to read the plan (or its summary), e.g. board of directors, potential investors, lending institution, divisional management etc., and think through the issues they would want to see addressed.
Decide on the type of plan that you need:
Basic plans are short (often under 15 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. See Preparing a Basic/Short Plan.
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 viewed as being critically important/useful to the business. Note that the Free-Plan Guide and Template are primarily for preparing a comprehensive plan.
Specify the structure of your plan in the form of a detailed Table of Contents. Use this to identify critical issues requiring research and/or external assistance and to set page lengths for each main section. See also Length of Business Plan.

Do Research Before Writing

Based on your Table of Contents, create a work program and timetable that allows adequate time for researching, writing and redrafting.

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 result of a careful and extensive research and development project that 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.

The more important the plan, the longer it will be and the longer it will take to complete. For most plans, much more time will be spent researching than writing, as demonstrated in the online white paper on Insights into Business Planning.

Recognize that the process of researching could be much more difficult than expected and consider seeking external help, sooner rather than later, for the most vital areas. If you do use outside assistance, make sure that you do not hand over the planning of your business to external consultants. By all means, contract out elements to experts in market research, sales planning, technology, finance and taxation but do not let them take control of the plan. If you do, you will have missed the benefits of the planning process and you may be deprived of the insights needed to effectively present and implement the resultant plan.

To help you get started with your plan, review this Checklist for Preparing a Business Plan. Also, have a look at the Checklist on How NOT to Write a Business Plan to see the things you should not do!

Once the background, markets and commercial potential of your business have been assessed, you should initiate the planning process by defining the 3. Mission, Strategies etc. on which your detailed plan will be based.



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