Guidance on How to Make a Business Plan

Planning Leads to Success

A Business Plan is a document that outlines the future course of a business, usually the next 3 to 5 years. The document explains the company's goals, describes the strategies that will be used to reach the goals, and projects what profits the company will earn as a result of achieving the goals. Entrepreneurs often prepare a business plan to present to prospective investors in their venture, but it is also valuable as a blueprint for the management team to follow in guiding the company toward success.

Instructions

1. Start with an outline. If you have never written a business plan before, the task can seem enormous---20 pages or more of narrative and also numerous spreadsheets with complicated financial projections. If you outline the sections of the plan, you can break the project into smaller writing tasks. You can also gain a feeling of accomplishment as you complete the first draft of each section. Don't be concerned if the first draft of the document seems very rough or even poorly written. Get as many ideas as you can down on paper and worry about revising and refining the document later.

2. Describe why the market needs your product or service. Critical to the success of any venture is offering the marketplace a product or service that is clearly superior to what competitors are currently offering. You must answer this question with confidence and clarity: Why will the customer make the decision to buy from you rather than from someone else?

3. Emphasize the skills and experience of the management team. Investors' evaluation of the management team is the most critical factor in the decision of whether or not to put money into the venture. Investors look for management teams with prior business success. Don't just include resume type material in the plan. Describe why the management team, as a group, has the combination of skills necessary to succeed.

4. Write the plan in an enthusiastic tone. The business plan is like a marketing brochure. But instead of convincing a customer to purchase a product, you are trying to convince the investor that your venture will have a bright future. You are excited about your venture. You believe it will grow and be profitable. Make sure you convey this energy and confidence through the way you write the plan.

5. Present realistic financial projections with clear assumptions. Even though investors discount the projections they see in entrepreneurs' plans, presenting numbers that are outlandish can cause the entrepreneur to lose credibility. Make sure you explain the assumptions you used to create the financial models, so the reader of the plan can see you have thought through the numbers logically.

Tips & Warnings

• Prepare an executive summary of the plan, two to three pages in length, to introduce your venture to prospective investors. Include a cover letter with the summary.

• Involve all the members of your management team in the preparation of the plan.

• Before you send the business plan to venture capitalists, have several experienced business people read the plan and critique it. They will be able to spot mistakes, flaws in your reasoning, or areas where the document is incomplete.

References

• SBA: Business Planning Advice