Sometimes in these days of twittering and instant messaging, it is tempting to question whether business plans are obsolete. The answer is a resounding no. Without a business plan, your ideas, financial planning and basic strategy almost certainly will be vague in parts - and any business pitch you make will lack the strong foundation needed to attract serious attention from prospective investors, business partners and others whose support is required.
Let's consider some planning fundamentals and determine what a plan will do for you and for your business.
A road map
A good business plan is your road map. It establishes your starting point, the things you must do before hitting the highway, the reason for the trip, the steps and the best direction you need to take, an estimated time of arrival and so on. In this way, a basic plan will generally require that you have researched the following prior to starting out:
- A well-defined product or service
- An estimate of the size and purchasing power of the target audience
- Assessment of competitors or issues that impact purchasing decisions
- Unique selling points or competitive edge your product/service offers
- Projected growth rates
- Sales forecast
- Marketing tools
- Calendar showing time frame for measurement and assessment of planÂ¬ís progress against stated goals and objectives
- Budget projections (start-up costs, cash flow estimates)
- Skills and expertise of the management team
A good plan is articulate, concise and to-the-point. Developing the plan is a means to an end, not a project that requires months of drafting, revising and editing. However, it is vital that a business plan shows you know your targeted market well, that your financial planning is good and that your strategy includes measurable goals.
Dos and Don'ts
- Recognize that the business plan is the basis for your future presentations and pitches. Write it based on the research that shaped your strategy. Without a business plan, you will be stumped for an answer if your audience challenges any budget estimates or sales and marketing assumptions.
- Keep it simple and as short as possible. Avoid ambiguity, industry buzzwords or any kind of jargon or unexplained acronyms. If you are uncertain about something, do more research. Above all, don't try to impress people with complicated language. Your audience will pick up on any lack of clarity or wild guesses immediately.
- Anticipate change and revisions. Review the plan regularly. The basic components might need revision along the way, but they will still be an integral part of the overall plan. Short-term goals and projections might have to be revised and management might need to change intermediate priorities in order to meet the long-term objective.
- Be skeptical if someone tells you to bypass the business plan and go straight for the business pitch. Even if the people you are pitching to do not seem interested in your business plan, experienced analysts back at their office will take a hard look at it.
Bottom line: though the pace of business has accelerated and change is constant, entrepreneurs still need to develop a basic business plan before charging ahead. The effort and dollars required to draft a plan are a good investment and a major factor in business success.