Best Business Planning Practices
What separates a weak business plan from a good plan? Or a good plan from a great one? As with any reliable roadmap, a powerful business plan clearly lays out a course and provides alternatives to follow should any roadblocks appear.
A business plan is an important tool for internal planning in any business and for garnering support from external sources. Use the business plan best practices here to create a solid plan for your business.
Build the plan around its audience
A business plan can be used for many purposes and should be created with its use and audience in mind. You might create a plan as a tactical rollout guide for a new product or market, as an annual strategic guide, as a tool to lure investors, or as a way to get your organization excited about the coming year. The way you’ll use the plan should shape its focus. A plan aimed at raising money needs to focus on the talent and experience of your team to boost investors’ confidence in your company. It should also be slickly produced, printed and packaged. A strategic guide for internal use, on the other hand, might focus more closely on the steps required to roll out a new product. Multiple versions of your plan may be required if you have more than one audience and purpose.
Focus on finances
A strong business plan demonstrates that there is a financial impact related to all strategies, ideas, and assumptions. In one way or another, every section of your plan needs a financial bent – How will marketing generate income? How will the competitive environment impact your ability to make money? What will production of a product cost and how will that impact profitability?
Be realistic in your enthusiasm
While it is natural for a business plan to reflect a belief that your offering or approach is superior to anything else on the market, remember to temper your zeal. In creating each section of the plan, ask yourself what a sceptic would be concerned about regarding your statements and assumptions. For example, if your plan concerns a new product introduction, ask yourself about the barriers to acceptance. Always return to the “why” – Why would customers switch allegiance to you? Why would companies outsource a service to you, etc? You can put a plan to the test by sharing a rough draft with someone you know who has a sceptical nature.
Segment whenever possible
No small business can be all things to all people. Focusing on specific market segments will improve the accuracy of your planning, since you will be able to build your financial assumptions around the specific needs of those segments. Don’t limit segmentation just to your marketing efforts – the habits and values of your target audience will likely influence everything from product development to pricing.
Whether you are sharing a business plan with staff only or a discriminating outside resource, features such as charts that clearly illustrate a point, statistics that back up an assertion, or judiciously-placed graphics can increase the likelihood that your audience will be receptive to your message. Once your plan is complete, have it proofread by two different people to ensure that mistakes don’t undermine its effectiveness. Also, consider the appropriate way to package a plan. A plan for bankers, partners or investors should be printed on high quality paper and bound. You can cut some corners with an internal document, but be sure your document reflects the effort you put into it.
Revise, revise, revise
A business plan is a “living” document that requires periodic review and continual improvement. Your plan may be your company’s roadmap, but your business can quickly be thrown off course by market downturns, shifting buying habits, or even better-than-anticipated sales. Review your plan regularly to see if you’re on track and adjust budgets and priorities accordingly.