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Top Ten Do's and Don'ts of Writing a Business Plan

The primary value of your business plan will be to create a written outline that evaluates all aspects of the economic viability of your business venture including a description and analysis of your business prospects.

Business plans can vary enormously. Libraries and bookstores have books devoted to business plan formats. This course is a starting point. You can then go on to design one that would be ideal for your particular enterprise.

Be aware now that most start-up entrepreneurs are reluctant to write down their business plan. It is, therefore, strongly recommended that you complete each segment of the plan as you progress through this course.

Your business plan will become your roadmap to chart the course of your business. But at the outset you cannot predict all of changing conditions that will surface. So after you have opened for business, it is important that you periodically review and update you plan.

Why business plan?

Your business plan is going to be useful in a number of ways

• First and foremost, it will define and focus your objective using appropriate information and analysis.



• You can use it as a selling tool in dealing with important relationships including your lenders, investors and banks.



• Your business plan can uncover omissions and/or weaknesses in your planning process.



• You can use the plan to solicit opinions and advice from people, including those in your intended field of business, who will freely give you invaluable advice. Too often, entrepreneurs forge ahead ("My Way!") without the benefit of input from experts who could save them a great deal of wear and tear. "My Way" is a great song, but in practice can result in unnecessary hardships.

Business Plan format:

The Business Plan format is a systematic assessment of all the factors critical to your business purpose and goals.

Here are some suggested topics you can tailor into your plan:

• A Vision Statement: This will be a concise outline of your business purpose and goals.



• The People: By far, the most important ingredient for your success will be yourself. Focus on how your prior experiences will be applicable to your new business. Prepare a resume of yourself and one for each person who will be involved with you in starting the business. Be factual and avoid hype. This part of your Business Plan will be read very carefully by those with whom you will be having relationships, including lenders, investors and vendors. Templates for preparing resumes are available in your library, Kinko's, bookstores and the Internet under "resumes."

However, you cannot be someone who you are not. If you lack the ability to perform a key function, include this in your business plan. For example, if you lack the ability to train staff, include an explanation how you will compensate for this deficiency. You could add a partner to your plan or plan to hire key people who will provide skills you don't have. Include biographies of all your intended management.

• Your Business Profile: Define and describe your intended business and exactly how you plan to go about it. Try to stay focused on the specialized market you intend to serve.



• Economic Assessment: Provide a complete assessment of the economic environment in which your business will become a part. Explain how your business will be appropriate for the regulatory agencies and demographics with which you will be dealing. If appropriate, provide demographic studies and traffic flow data normally available from local planning departments.



• Cash flow assessment: Include a one-year cash flow that will incorporate your capital requirements (covered in Session 8). Include your assessment of what could go wrong and how you would plan to handle problems.



• Include your marketing plan and expansion plans.

Refer to helpful government Web sites such as the Small Business Administration. See "Resources" on the home page of this Web site.

Top Ten Do's and Don'ts:

TOP TEN DO'S

1. Prepare a complete business plan for any business you are considering.

2. Use the business plan templates furnished in each session.

3. Complete sections of your business plan as you proceed through the course.

4. Research (use search engines) to find business plans that are available on the Internet.

5. Package your business plan in an attractive kit as a selling tool.

6. Submit your business plan to experts in your intended business for their advice.

7. Spell out your strategies on how you intend to handle adversities.

8. Spell out the strengths and weaknesses of your management team.

9. Include a monthly one-year cash flow projection.

10. Freely and frequently modify your business plans to account for changing conditions.

TOP TEN DON'TS

1. Be optimistic (on the high side) in estimating future sales.

2. Be optimistic (on the low side) in estimating future costs.

3. Disregard or discount weaknesses in your plan. Spell them out.

4. Stress long-term projections. Better to focus on projections for your first year.

5. Depend entirely on the uniqueness of your business or the success of an invention.

6. Project yourself as someone you're not. Be brutally realistic.

7. Be everything to everybody. Highly focused specialists usually do best.

8. Proceed without adequate financial and accounting know-how.

9. Base your business plan on a wonderful concept. Test it first.

10. Skip the step of preparing a business plan before starting.

About the Author
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