Writing a Living Business Plan
Writing a Living Business Plan
More than a bunch of facts and figures, it's an explanation of your company: Where you want it to go and how you'll get it there
I've heard how important it is to have a business plan before you start a business, whether or not you are seeking outside funding. How do you write a workable plan? I don't want to create an encyclopedia of facts and figures. —I.H., Chicago
No business plan (BusinessWeek.com, 1/7/08) has to be a dull, dense tome. The more readable and exciting you can make it, the more effective it will be in helping secure you funding and serving as a workable blueprint for your business venture.
Frank Fiore, author of Write a Business Plan in No Time, says your plan should answer a series of questions about your new business concept, including:
•What is your business, and what problem does it solve? The answer will include your company's mission and goals, an explanation of your product or service, and an introduction to you and your management team.
•What niche will you occupy, and how will you be successful? "This is where you describe your marketplace, craft your marketing strategy, list your distribution channels, describe your competition, and outline the risks and opportunities of your business," Fiore says.
•When will you launch, and how much will it cost? In this section, you create your implementation and financial plans and explain your capital requirements in detail.
Dave Skibinski, president of strategy firm QuantumMethod, recommends you find a business plan template online and narrow it down so you're including crucial sections and discarding those that don't apply to your company. "Keep the scope of your plan to three years at most, and make it specific," he says. "Don't provide a laundry list of potential marketing strategies and tactics. Instead, write down three or four, why you chose them, and how you will implement them."
Create an Adjustable Operating Plan
To make your plan easy to implement, consider making a companion "operational plan" in the form of a list of strategies you intend to employ. Alongside each strategy, list who will be responsible for it, a target deadline, and a proposed budget. "This will be a living document that you will revise and adjust," Skibinski says. "What you plan to do will surely be adjusted. If you make those adjustments in an operational format, you are more likely to be successful."
If you aren't seeking outside investment, and will use the business plan as an internal guideline, you may not need to go through the formal plan-writing process. An informal business plan can be a short assessment of where your business is now, followed by a realistic set of goals for the near future.
Many entrepreneurs say that just doing the assessment and planning is the most valuable part of the process. Rhonda Abrams, president of The Planning Shop, a Northern California entrepreneurial book publisher, says the annual business plan her company puts together has been its key to success. "Writing a plan is really a misnomer. It should be called developing a business plan. Look at it as a strategy for recognizing what's going on in your industry and in the world, and responding to that in your business," she says. "The process will save you a lot of money by liberating your firm from unfruitful directions and setting your priorities for the year."
Abrams and her staff set aside two days each year to work on their plan. An office manager collects crucial financial data and industry trends and projections, and all employees are asked to submit key issues. In a series of meetings, they compare the company's performance to previous years' goals and hash out ideas for the future. "Make the process strategic, so you're thinking through larger business issues, not dealing with day-to-day operations. And make sure you discard good ideas that just aren't right for you, or aren't possible to pursue, so everyone can focus on the agreed-upon goals you set collectively," she says.
Karen E. Klein is a business journalist who covers small-business issues for several national publications. She writes her Smart Answers column twice a week.