Ten Dos and Don'ts of Writing a Business Plan
A business plan is an essential tool for companies operating in today's fast-paced, detail-oriented world. A well-written business plan provides various audiences with details about how the company will operate and be profitable. Investors are interested in how their funds will be used to grow the business and to be profitable. Employees are interested in how they play a part in helping the company reach its goals. Customers are interested in the company's product and/or services and future plans for the company. Marketers are interested in helping the company reach its target markets and grow its customer base. All of these audiences can gain necessary and valuable information from a well-written, well-designed business plan.
A business plan is not only valuable to others; it is also beneficial to the business owner. During the business planning process, the owner sets a clear vision and goals for the company; doing so causes the owner to think through how to accomplish these objectives. The owner who invests time writing a business plan will be more prepared to unite supporting parties to achieve the organization's goals, giving the owner an advantage over unprepared business owners who choose to forgo writing a business plan.
Both small and large businesses can benefit from a business plan, which easily allows the business to present itself to other parties while demonstrating its preparedness. A business plan serves as a guideline for daily operations to ensure work is conducted smoothly and effectively. Also, business plans define goals for the business and plans on how to achieve such goals. These benefits are essential for any size business, especially in today's hyper-competitive and challenging business world.
In this essay, we will look at ten dos and don'ts of writing a business plan. The first section will outline the five dos, and the second section will outline the five don'ts of writing an effective business plan.
What to Do
While creating a business plan is a vital step in starting or operating a small business, it can often feel overwhelming. Below are five recommendations on what you should do to write an effective business plan. Following these suggestions should help ease the common stress that many people experience when writing a business plan.
- Write Your Own Plan and Seek Input. Since you know your business the best, make sure you create your own business plan. It is just as important to seek input from others for supporting information covered in your plan. Just because you are the author does not mean that you have to write the entire plan by yourself. Ask others for input and feedback to enhance the plan with details on each topic.
- Include all eight sections in your business plan. The business plan outline includes eight sections: executive summary, company information, product and/or service, market analysis, strategy and implementation, web plan, management team, and financial analysis. For more information, see subunit 3.2.
- Conduct research and provide accurate numbers. The information included in your business plan should be as accurate as possible. Use industry averages and market specifics to demonstrate the feasibility of your product and/or service. Use accurate numbers to reflect costs, revenues, financial projections, cash flows, and other financial numbers to demonstrate your company's credibility.
- Explain both strengths and weaknesses of your business. Every business has both strengths and weaknesses. A good business plan explains both your strengths and weaknesses and provides a strategy to overcome or mitigate your weaknesses. By addressing your weaknesses and being thorough, you will gain trust and credibility with your audience.
- Review and update your plan regularly. A business plan is a living document, which will need to be updated as conditions change. Once your initial business plan is created, schedule regular reviews and updates of the business plan to ensure it provides an accurate picture of your business at all times.
What Not to Do
Many people make common mistakes when embarking on the task of writing a business plan. To help you avoid some common mistakes, review the following five recommendations on what you should NOT do when writing a business plan.
- Do not expect to write your business plan in one day. Planning, preparing, researching, and writing your business plan is very time-consuming. Be prepared to spend weeks working on the development of the business plan.
- Do not overestimate or underestimate numbers. The accuracy of your business plan is crucial to the success of your business. By overestimating numbers, your audience will expect you to achieve unrealistic aspirations, which sets your business up for a potential failure. By underestimating numbers, you run the risk of exceeding your budget more quickly than expected and needing more money to continue operations. Try to be conservative and realistic in your estimated projections and figures.
- Do not leave out pertinent details. A detailed business plan demonstrates your dedication to the success of the business. A well thought out and comprehensive plan provides the reader with enough facts to communicate your business product's scope and capabilities and/or services. Keep in mind that a detailed plan does not mean adding fluff to your plan; instead, it means to add applicable facts and information.
- Do not reuse wording from business plan templates or software programs. When using a template or software program to write your business plan, be sure to customize the wording. The template and software program should be used as a guide only. Your final business plan should be tailored to suit the needs of your business and be professional.
- Do not assume your audience members are experts in the industry. Most often, the audience of your business plan will not be an industry expert. Use complicated industry terminology sparingly so that your audience does not get confused. Describe common industry practices so that the audience can easily follow along.
- A business plan is an essential tool for companies operating in today's challenging business world.
- A variety of audiences, including investors, employees, customers, and marketers, use a business plan to obtain valuable information about the business.
- Owners who invest time in writing a business plan are more prepared to address their business questions than owners without a business plan.
- When writing a business plan, you should:
- write your own plan and seek input;
- include all eight sections in your business plan;
- conduct research and provide accurate numbers;
- explain both strengths and weaknesses of your business; and
- review and update your plan regularly.
- expect to write your business plan in one day;
- overestimate or underestimate numbers;
- leave out pertinent details;
- reuse wording from business plan templates or software programs; and
- assume your audience members are experts in the industry.
Source: Saylor Academy
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