How to Write a Business Plan That Works

All successful business plans have certain things in common. They are easy for everyone to understand, they get specific about details, and they allow for success even with unexpected changes. Let's look at how to write a business plan that will succeed.

Before You Begin

Write out your main goal and make the rest of your business plan support that goal. Details should include a list of objectives, a timeline for those objectives, the reasons why you think those objectives are realistic, and the ways you will accomplish those objectives.

Clarify Your Goals

The best business plan example begins with clarification of goals in how things work, who does them, and when they need to be done. These things should be as clear as possible. Be realistic about how much each person can handle and how long each task takes.

Don't just write, "We need to do this." Make sure your new business plan states why each task should be done and how it fits into the plan.

Clarify the Details

When you write a business plan, the next step is to provide clear and concise details about your product or service. Who will use your product or service? Where and how will they use it? What else can you say about it? Who are your competitors?

Business plans should also be confidential. You don't want your trade secrets in this document. Give your readers just enough detail to outline what makes your product or service able to succeed in today's market.

Market Analysis

Starting a business should always include researching your market. Why will people buy your product or service? How will you convince them to do that? Who else is doing or has done something similar? Did they succeed or did they fail? What makes you special? You need to develop your Unique Selling Proposition (USP).

If you don't know what's unique or special about your product or service neither will your potential customers. If you aren't unique, why would potential customers buy from you. Don't bother starting a business if you can't identify your ideal customer and your USP that brings true benefit to that customer.

Your USP needs to be documented and be the core of your business proposal. Business plans should be based on fact, not emotion, not the feeling that you or your product is the "best" and so everyone will just want to buy from you. Determination and good intentions are not enough. Show them your USP and the numbers that result from actual research.

Clarify Your Strategy

Making a business plan also involves strategic planning. How much time will you need to get things going? What are you going to do if you run into trouble? What systems will you use to monitor progress? What will you do with an unexpected windfall, or shortfall?

Make a timeline with detailed milestones on it. Again, clarify the details of who is responsible for what and how everyone will work together to achieve the goals.

Estimate Your Cash Flow

A key part of your business plan are your financial projections. Successful business plans always illustrate estimated financial statements - your income statement, your balance sheet, your cash flow estimates, your break-even analysis, and relevant ratios. You should be able to justify all of your estimates.

If you have investors or lenders involved, they will expect to see this information on an annual basis for three years into the future. The first year will need to be done monthly as cash flow is critical and years two and three will be annual projections. These projections will form your first year budgets.

Take the time to create charts and graphs, and make it easy for the readers to understand your projections. This may seal the deal for you. Remember, be realistic with them. They will know if you are exaggerating your expected bottom line. And why fudge the numbers. You too need to know if you can make it or not. Too many businesses fail so don't set yourself up for failure.

Making a business plan doesn't need to stop here. As you grow your business, circumstances will change, and you will need to revise some aspects and update the business plan.

Keys to Remember

- Do be detailed.

- Do document your USP and ideal customer.

- Do review and revise as necessary.

- Do cite all sources used in your research.

- Do get a second pair of eyes, preferably an expert in your field or a professional.

- Do outline your contingency plans.

- Do pay attention to presentation and how you will be perceived.

- Do include qualifications of all key people involved in your business.

- Do base your estimates on reality.

- Don't hide your weaknesses.

- Don't extend your projections past three years, they never hold up.

- Don't skip the research and go on a gut feel.

- Don't assume that everyone will automatically want your product or service.

- Don't be afraid to discover problems.

- Don't want to start a business so badly that you ignore the results of your planning.

Take your time and be clear about whether this idea you have will work. Understand who that ideal customer is and how you will meet their desires or solve their problem.

Know your USP and test it before you start. Don't be so married to an idea that you pursue it even when there is no basis. The time and money involved are too important to be thrown away for lack of good judgement.

Use this business plan format to get your business off to the best possible start. With the right funding and clear goals, you can travel on the path to success!

by Steven Schlagel - June 18, 2009

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