How to Create a Business Plan - Choose an approach that suits you



Every business should have a business plan. The business plan is your road map to achieving your goals. It lets you know when you are on track and when adjustments need to be made.

Unfortunately, most only write a business plan when it is required - that is when they are trying to obtain financing. Both bankers and investors will expect to see a well thought out business plan before providing funding for your enterprise.

The length of business plans can vary widely but, typically they will run approximately 20 to 40 pages. All business plans contain certain basic elements:

  • a written purpose for your business or a mission statement
  • an explanation of your product or service, why someone would pay money for it and how it is distributed
  • a market analysis including market size, trends, growth, competition, and detailed description of your primary customer prospects
  • an explanation of how your product or service is produced
  • several key, quantified objectives
  • strategies for achieving those objectives
  • action plans and timetables
  • budgets and financial statement
  • a description of the management and organizational attributes that will contribute to success
  • an exit plan

If you are writing a business plan to obtain financing, you will need to state explicitly how much money is needed, what it will be used for and how it will enhance your business’ ability to increase revenue and profit. When looking for financing, the marketing and financial sections of the plan are critical.

When you develop a business plan for your own purposes, it might contain more detail about your business process, hiring plans, operational issues, etc.

A business plan should be realistic and achievable. The process of writing the plan will help you determine if your goals are realistic by requiring you to explain how you will go about achieving them. No plan is perfect. Regular reviews of the plan against your actual achievements should be made on a scheduled basis - monthly, or quarterly. It is a good idea to revise the plan at least annually.

There are several ways you can go about the task of completing a business plan. In selecting an approach, consider your own interest, skills, and available time as well as the cost.

Do-it-yourself

While the out-of-pocket expenditure is low for the do-it-your-selfer, the time investment is high. You will do 100% of the work in this approach. Some people have their accountant help with the financial part of the plan.

There are many sources of assistance in learning how to do a business plan yourself.

~ Go to the library or book store and obtain one or more of the excellent books available on the subject. Books offer information on a range of business plans from very simple to moderately complex. Select one that suits your needs.
Cost estimate: $0 - $25 per book
Business Odyssey Recommendations:


~ Visit the Small Business Administration web site for an outline and explanation of the elements included in a basic business plan. This source might work well for simple businesses with straightforward financing needs.
Cost: $0
Link: SBA Business Planning

~ Search the internet to explore the many web sites devoted to business planning. Many of these are commercial sites selling business planning services and the quality of advice and information can vary widely. For excellent, credible business plan information and examples, try typing “business plan” site:edu into your Google search to limit your search results to web sites of colleges and universities offering business planning information. We've already typed this search into the Google bar below. Just click on the "Search Google" button to give it a try.
Cost: $0
Google

~ Purchase business planning software. Again, there are a variety of packages available. Select the one that’s best for your needs.
Estimated cost: $50 - $200
Business Odyssey Recommendation:

Attend a class or workshop

In a class or workshop, you are led through the business planning process step-by-step by an experienced business planner. You have the opportunity to ask questions and to discuss issues with other business executives in the group. Often, you will be required to purchase either a textbook or software package.

While you will do all of the work yourself, you will be held to a schedule and have someone who understands the process to offer advice and support. Additionally, you will learn how to do future plans and revisions yourself. In selecting a class or workshop, look for a specific agenda, instruction on understanding the various elements in the plan including financial statements, assistance in developing realistic goals and strategies, and direction in developing information and research. At each session, an assignment leading to the completion of the plan should be made If assignments are not completed, the value of the class or workshop is greatly diminished. Workshops are often difficult to find because enrollments are not usually sufficient to justify running them.
Estimated cost: $200 - $1000
Next Business Odyssey Business Plan Workshop : is scheduled to begin September 20, 2007 at the brand new Harding Middle School in Lakewood, Ohio. To register, visit www.lakewoodrecreation.com

Personal coaching

A personal coach will lead you through the steps of developing a business plan during a series of meetings. The perspectives offered by an experienced consultant can be extremely helpful in developing goals and strategies. Look for the same elements that you would expect from a workshop plus a thorough review of the final draft. You should be required to complete assignments leading to the completion of the plan. Failure to complete assignments will delay the completion of the business plan and may add to the cost.

The format and frequency of the meetings should be discussed with the consultant or coach to determine the time requirements and cost. The number, frequency and format of the meetings can be customized to meet your specific needs. Expect to pay from $65 to $125 per hour. Five to ten meetings of 1 ½ to 2 hours each would be typical for a complete business plan. Your assignments might average another four to six hours of your time between each meeting - depending upon the schedule you have negotiated.
Estimated cost: $500 - $2500
In Northeast Ohio, contact Business Odyssey

Have a consultant do the plan for you

While this is the least labor intensive and a good choice for busy people, there is still a significant amount of work involved. You will still have to determine your goals, provide detailed financial information, and do a lot of the “head work” involved in developing things like mission, strategies, timetables, budgets, and so forth. Once again, the perspectives offered by an experienced consultant will be very helpful. In this format, the consultant will do the actual writing and will provide intensive guidance and advice. If you want, the consultant can research your market, trends, etc,. However, this will drive the cost up significantly. The complexity of the plan and the amount of research needed will determine the exact price. Expect to pay from $65 to $125 per hour.
Estimated cost: $1000 and up.
Contact Business Odyssey

Once you have a plan, use it. No matter whether you wrote it for your own internal purposes or to obtain financing, the real power of business planning can only be realized when it is used as an integral part of your business operations. Use it to guide decision making, track your progress, prepare for bumps in the road, and to keep your vision clear and realistic. Your business plan is your most useful tool in making your business what you want it to be.

© 2006 Kathleen Thompson