How to Write a Business Plan: Use This Checklist to Keep Yourself on Task

business plan checklist

First, why are you writing a business plan? Usually, the reasons fall into one of the following areas:

  • For idea validation: You have a business idea and just need to get all the details on paper so you can start to really understand whether you have a good business model.  
  • For a bank: Do you need a formal business plan to give to your bank as part of your small business loan application?
  • For investors: Are you seeking funding for your startup from angel investors or venture capitalists?
  • For strategic reasons: Does your company need an internal roadmap for growing and managing your business?

How you format your plan and how detailed it will depend on why you’re writing it and who will look at it when you’re done. If you’re looking to validate an idea, start with a very simple one-page pitch. If you’re seeking funding, you’re probably going to need a traditional, formal business plan. If you want to use your business plan as a tool for strategic management and growth, write a Lean Plan so you can update it easily and often.

Here, you’ll find a checklist for writing each of these types of plans, so you can choose the one that fits your particular needs.

If you have any questions, be sure to reach out to us on Twitter @Bplans and we’ll be happy to point you in the right direction.

1. The simplest business plan: A One-Page Pitch

A One-Page Pitch is the simplest business plan you can write.

There’s not much difference between it and the executive summary in the standard business plan—though of course, as the name implies, it should fit onto just one page.

You can use this version of the business plan to validate your idea (more on that here), or to provide investors with a clear and succinct introduction to your business.

You can also use it to get all of your ideas onto paper and distill your thoughts into the essential business plan elements before you begin writing a standard plan. You can create a One-Page Pitch in LivePlanuse this free templateor follow along with the checklist below.

One-Page Pitch checklist:

  • Describe your business in one sentence (what do you do, and who do you do it for?)
  • Describe the problem your potential customers have
  • Describe your solution to the problem—this is your product or service (how does it solve your customer’s problem?)
  • Explain who your target market is and how large it is
  • Describe your competitive advantage (talk about how your customers are solving their problem currently as well)
  • Describe how you will sell to your customers (will it be directly, or via a storefront, distributors, or a website?)
  • Describe what marketing activities you will use to attract customers
  • Detail your business model—this is how you will make money (what are your revenue streams?)
  • List your major initial expenses—startup costs (don’t go into a lot of detail here—it’s early days at this point)
  • List your primary goals and milestones that you want to accomplish over the next few months
  • Outline your management team and any people you want to hire to help you launch your business
  • List any partners and resources you need to help you launch

The Lean Business Plan Template

2. A Lean Plan: A nimble tool for growing your business

Lean Planning is a methodology that will help you grow a better, smarter business a lot faster.

While you can use Lean Planning to help you produce a business plan document, you should think of Lean Planning as a tool, rather than a path to a finished product. If you’ve heard of a business model canvas, a Lean Plan is really a better, more useful version of that idea.

The goal here is to write a business plan that has more detail than a one-page pitch, but that’s still quite brief. It should be a truly useful tool that you review and update regularly. It’s a great framework for reviewing your financial goals and progress on a regular basis. For more resources on Lean Planning, check out this guide.

Lean Business Plan checklist

  • Write a One-Page Pitch (as outlined above—this is how every Lean Plan begins)
  • Test your idea (get out and talk to your potential customers—make sure you’re on the same page as they are)
    • Do they have the problem you think they have?
    • What do they think of your solution?
    • What’s the best way to sell to them?
    • What marketing tactics will work? What won’t work?
  • Review your results (you will likely do this throughout the life of your business)
  • Review your financial performance if you’re already up and running
  • Revise your plan based on what you’ve learned and set new milestones
  • Set your sales forecast and create a budget for your expenses
  • Once you’re up and running, be sure to hold regular plan review meetings to ensure you stay on track

3. The standard business plan

For most people who are pitching a bank or an investor, a standard business plan will be the required format for the business plan. This is the version of the plan these investors are most familiar with, and the version that will give them the most information. It contains all the needed business plan components that banks and investors expect.

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If you want to increase your chances of getting funded, follow this format. Check out our definitive guide on how to write a business plan. You can also download a free business plan template here, or use LivePlan to walk you through writing an investor-ready business plan.

  • Define the opportunity
    • Go into more detail here about the problem and why it is worth solving
    • Discuss your solution to the problem (your product or service)
    • Talk a little more about how you validated your idea and what your future plans look like
  • Write the market analysis summary
    • Include more detailed information about your market segmentation and your target market segment strategy, key customers, future markets, and the competition
  • Outline how you’ll execute the plan
    • Discuss your marketing plan and your sales plan
    • Include information about your location, facilities, technology, equipment, tools, key metrics, and important milestones
  • Write the company and management summary
    • Write about the organizational structure of your company, the management team, any gaps in the team, and your personnel plan
    • Include information on your company’s history, as well as information about ownership
  • Write the financial plan
    • Arguably one of the most important business plan components, this will include:
  • Write the appendix
    • This is the spot for anything that’s important, but that would otherwise bog down someone reading your business plan for the first time; include extra detail, charts and graphs here
  • Write an executive summary (this goes at the beginning of the plan document, but we recommend you write it last)
    • Talk about the problem you are solving, what your solution is (your product or service usually), the market, the competition, and some key financial highlights

Whatever your reasons are for writing a business plan, you should know that it’s scientifically proven that planning makes you more successful. If you’re looking for more information on how to write a business plan, check out our business plan writing guide.

If you have any questions about writing your business plan, or about what format to use, be sure to reach out to us on Twitter @Bplans.

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Should You Stick to the Business Plan or Change It?

should you stick to the business plan or change it

Is it time for plan B?

The best and most useful kind of business planning is not just a use-once business plan, but rather a continuous process.

The first business plan is just the first step. For the rest of your business’s life, you review the plan once a month. Compare actual results to what you had planned, determine what steps to take to optimize, and revise the plan.

You’ll find that continuous business planning helps in many ways:

  • It helps maintain focus
  • You’ll be able to align the team with priorities
  • You can address changes in the marketplace as they happen
  • It helps you tune strategy and tactics to what’s working and what’s not working

It starts with knowing what happened

Review means comparing what actually happened to what you expected. Business plans are always wrong, so there will always be a difference between the plan and the actual results.

For the actual business numbers, such as sales, expenses, and such, accountants call the difference between the estimates in the plan and the actual results variance. Variance analysis looks at these differences to determine where the numbers are different, and in what direction.

You can do variance analysis on the numbers with a spreadsheet, or with accounting software. LivePlan can link to your accounting software and deliver automatic dashboard comparisons between actual results and the plan, and between actual results and previous results.

The illustration here shows an example:

should you stick to the business plan or change it

The Dashboard in LivePlan.

What’s important here is not the accounting or the calculations, but rather the resulting management. You look for indications of problems or unexpected positives, so you can react.

In the illustration above, revenue is lower than planned and expenses are higher. Operating income is less than planned. Cash and cash flow are improving, which is good news. However, that may be because this company is stretching out its payments, averaging about six months, which is seven times more than in their plan. So accounts payable is 25 percent higher than planned. That’s good because it’s helping with financing and keeping money in the bank, but may also be bad because it could be spoiling reputation and relations with vendors.

The point is the management, not the hard numbers. What should be done, given these results, to make the company better?

The monthly review meeting

The monthly review meeting is absolutely essential to real business planning—Lean Planning. The real value of business planning is the decisions it causes, and the management that results; and for that, you need not just a plan but a regular monthly review to track results and revise as necessary.

And the toughest part of the review meeting is this crucial question: Do we stick to the plan, or do we change it?

That comes up often because in the real world things never go exactly as planned. Business plans are supposed to set goals, tracking, milestones, and expectations.

The review meeting is when you ask:

  • What happened? What went right and what went wrong?
  • If I change the plan, then is my plan (forecast) versus actual result valid?
  • Doesn’t it take consistent execution to make strategy work?

These are valid questions, and there are no easy answers. You won’t find some set of best practices to make this easy. You’ll end up deciding on a case-by-case basis.

Hear more about changing business plans with Peter and Jonathan on the seventh episode of The Bcast, Bplans official podcast:
Click here to subscribe to The Bcast on iTunes »

The arguments for staying the course with your plan

I consider this an awkward, difficult fact about business strategy:

It’s better to have a mediocre strategy consistently applied over three or more years, than a series of brilliant strategies, each applied for six months or so.

Too often, management teams get bored with strategy before it’s had a chance to be effective. I was consulting with Apple Computers during the 1980s when the Macintosh platform became the foundation for what we now call “desktop publishing.” We take it for granted today, but back in 1985 when the first laser printers came out, it was like magic. Suddenly, a single person in a home office could produce documents that looked professional.

What I saw in Apple at that time was smart young managers getting bored with desktop publishing long before the market even understood what it was. They started looking at multimedia instead. They were attracted to new technologies and innovation. As a result, they lost the concentration on desktop publishing and lost a lot of market potential as Windows vendors moved in with competitive products.

That argues for staying the course. Strategy takes time.

The arguments for revising the plan

On the other hand, this is also true:

There is no virtue in sticking to the plan for its own stake. Nobody wants the futility of trying to implement a flawed plan.

Generally accepted best practices have changed over the three decades I’ve been focusing on business planning.

Back in the 80s, business timeframes stretched longer and many business leaders recommended sticking to the plan. But times have changed. You’ve probably dealt with the problem of people doing something “because that’s the plan” when in fact it just isn’t working. I certainly have. That kind of thinking is one reason why some web companies survived the first dotcom boom and others didn’t. It also explains why some business experts question the value of the business plan.

This is sloppy thinking, in my opinion—confusing the value of the planning with the mistake of implementing a plan without change or review, just because it’s the plan.

Download the Business Plan Template today!

How to decide: Stay the course, or revise the plan?

This consistency versus revision dilemma is one of the best and most obvious reasons for having people—owners and managers—run the business planning, rather than algorithms or artificial intelligence. It takes people to deal with this critical judgment.

One good way to deal with it is by focusing on the assumptions. Identify the key assumptions and whether or not they’ve changed. When assumptions have changed, there is no virtue whatsoever in sticking to the plan you built on top of them.

Use your common sense. Were you wrong about the whole thing, or just about timing? Has something else happened, like market problems, disruptive technology, or new competition, that has changed your basic assumptions?

Do not revise your plan glibly. Remember that some of the best strategies take longer to implement. Remember also that you’re living with it every day; it is naturally going to seem old and boring to you long before the target audience gets it. But do revise your plan if it is out of date, inaccurate, or based on false assumptions.

That’s why you have the plan in the first place: to manage your business better.

Note: Some of this material is taken from my latest book, Lean Business Planning, published by Motivational Press in 2015. A LivePlan version of it is available for download free at this link.

This article was originally published in 2015. It was revised in 2018.

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