Insights: Crafting a business plan that works
Don’t ask Robert Mittelman to write your business plan for you. The School of Business professor has often been asked to write plans for business owners and he has turned down every opportunity. That’s because writing a business plan is an important step every owner should take themselves to better understand their venture. He offers five tips to writing a plan that will work long after your grand opening.
Plan versus the planning process
Writing a plan is important, but the planning process holds more value than the plan itself. You write a business plan based on assumptions and everything could change the day you open your doors. That’s why a good business plan matures and evolves. It’s a tool to be used to prepare for launching a business, but also to grow a venture over time. Reviewing and updating a business plan is a chance to reflect on what is and isn’t working for your organization, as well as insert actual numbers into the plan to improve your projections. You should never really be finished writing your business plan.
Use a template but don’t be constrained by one
There is no one right way to craft a business plan. Your plan should reflect you and your business, and focus on what makes you different. That being said, using a template to get started is recommended (Futurpreneur and BDC are good sources) to ensure you asnwer four big questions. You need to spell out:
- what will be done (or the operations side of your business)
- who will do it (the management and people)
- what it will cost (the financials)
- how you are going to get to your customer (marketing)
People want to invest in and do business with people they believe in so make sure your plan is reflective of your team and how you will do business. Most investors would rather invest in a top team with an average plan than a great plan with an average group of people.
Know your audience
You need to be very clear about who you are writing the plan for. Is it just for you, or an investor or a bank loan officer? Investors will want to see opportunities for growth and cash generation, while the bank is more likely interested in your repayment plan. If you are planning for you, it’s important to be realistic. It is easy to get wrapped up in the excitement of your idea, but make sure you set achievable goals.
Don’t shy away from weakness
No idea, plan or team is perfect. If you don’t have all of the skills you need, acknowledge your weaknesses and come up with a strategy to deal with that. It’s fine to not have everything in place, but you should show how you will address any shortfalls.
The most important part of any business plan is the executive summary. You need to boil down to the essentials in one page. It should be short, accurate and appealing. That one page needs to address who is doing what, the scope of the business and what it is going to cost. Be very clear about what you want.