Ten Characteristics of a Successful Business Plan
An effective business plan is essential to achieve your goals, obtain a business loan or attract outside investors. However, may entrepreneurs regard writing a business plan as an exercise that must be endured if they want to move their company to a higher stage of development. However, after completing a plan, many entrepreneurs regard the process of writing the plan as an enlightening exercise for management.
While business plans vary greatly in length and scope, winning plans share several characteristics, all stemming from the research that is done in preparing them and the analysis and presentation of the plans themselves.
The 10 characteristics of successful business plans are as follows:
1. Clear, Realistic Financial Projections. Readers of business plans often start and end their review of your plan here. The financials must be in a standard format and presented clearly. Users usually want summaries of performance to date, and then, in a similar format, cash flow, income statement, and balance sheet forecasts. A written narrative must accompany all significant items.
2. Detailed Market Research. Show you know your customers and the problems you are solving for them. Know the size of your market and its trends. To whom are you appealing? How many potential customers are there, and can they be reached with marketing? Are they good at paying?
3. Detailed Competitor Research. Everyone has competitors, and you have to know and respect them in order to run a company effectively. Get their pricing and promotional materials, know how big and successful they are, learn everything about their products, and find out how many employees they have and what their financials look like.
4. Management, Management, Management. If you have holes in your management team, start lining up people to come on board and include them in your plan.
5. A Great Summary. A great summary starts with a statement of what the company is seeking (goals, a business loan, an equity investment, etc.) and continues with a clear description of the market, the company's management and products. Keep in short - two or three pages - and include summaries of your year-end income statements for your performance to date and projections. Add market numbers, and the experienced reader will have a summary of your business at a glance.
6. Proof of Vision. Put enough detail in each section so that your reader can follow your plans and see that your goals are attainable. Demonstrate that you know how to sell and distribute your products, that you have thought through your hiring needs and that you know the kind of company you want to grow.
7. Good Formatting and Clear Writing. A successful plan should be interesting to read, well-written, and smooth and flowing. It should also be well-organized, so that the reader can look at the table of contents and find what he or she needs.
8. Keep the Plan Short. Fewer than 40 pages is a good goal. There are stories of companies that were funded on the basis of three pages. But most companies can not be summarized in any meaningful way in such a short document.
9. Design for the Bottom Line. In the text of your plan, explain clearly your intentions, your goals, why you need financing, what kind of financing best suits the company, and how the bank or investor would be repaid. If you are seeing a bank loan, show how you intend to repay and where you will get the money. It is also important to show that you have invested in the company. You should not ask someone else for money if you have not put your own in first.
10. Make the Plan Your Own. When faced with writing a plan, you may be strongly tempted to hire an outside writer for help. But beware. Many plan-writing consultants do not have the patience to guide you in making your own decisions, and they may end up making decisions and interpreting data for you, effectively inventing your business for you. That can be a bad idea when it comes time for you to implement the plan. Always, create the business plan first by yourself. Then, if you need help, go to a consultant, who can help by pointing out week points, helping to find data, and writing your best ideas in the order and manner best suited for your intended audience.
Included in our Business Transformation Workbook is a structure to create a business plan to achieve extraordinary business results.