My opinion is that the owner of any business, along with the employees, should develop an annual business plan. In most cases, if you are applying for a loan, you will need to present a business plan to the banker.

Completing a business plan can seem overwhelming. I have many clients who tell me the operations of the business are in their head and yet cannot develop a logical, cohesive formula to put on paper. More often than not, unless you purchase a business plan template, you are going to be overwhelmed by the sources of business plan outlines on the web. All of them are good because like every business, each business plan is unique. There is no right or wrong way to do a business plan. There is no ”standard” length of a business plan. But all plans should contain the same basic information.

Here is an outline that I find most useful and one that I hope can help you. Please understand that it can be used for about any business in any industry. However, you should tailor it to your needs. For instance, if you are a start up, the plan does not need a section for Age, Size, and Past Performance. Here are some useful hints:

Include a Table of Contents.
Number the pages.
Write for your audience. If the plan is going to a loan officer assume the person knows nothing about your industry. Do not use technical language or if you must, explain it. Do not use industry acronyms unless they are spelled out the first time you use them in the plan.
In the Executive Summary the plan should state what the purpose of the plan is. Is it for a SBA loan, is it to be presented to investors, or is it an annual plan for the team?

 

I.          EXECUTIVE SUMMARY

A.  What the organization is and does

B.  Who will purchase the product or service

C.  Why am I uniquely qualified and skilled in managing the business

D.  What are the financial results expected

E.  How much capital is required, what will it be used for, and the sources of capital

F.  Assessment of risks

II.         BUSINESS CONCEPT

A.  Describe the unique qualities and value to customer of product or service provided

B.  Age, size and past performance of business

C.  Vision, along with short and long-term objectives with milestones

III.       PRODUCTS AND SERVICES

A.  Description

B.  Product life cycle

C.  Intellectual property

D.  R & D activities

IV.       MARKET ANALYSIS

A.  Industry Analysis

      1.  Future outlook and trends

      2.  Current business conditions – national, regional, specific market

B.   Identify target market

C.  Analysis of competitors    

D.  Market test results

E.  Regulatory environment

V.        MARKETING PLAN

A.  Marketing philosophy/organization

B.  Advertising and promotion

C.  Product price and sales terms

D.  Production capacity

E.  Distribution

VI.       OPERATIONS

A.  Location of business and special facility equipment needs

B.  Steps involved in producing product or service

C.  Suppliers

D.  Costs to produce product or service

E.   Personnel requirements    

F.   Licenses and permits needed

VII.      OWNERSHIP, MANAGEMENT AND ORGANIZATIONAL PLAN

A.  Organizational structure

B.  Key managers, functions and qualifications

C.  Legal form of ownership

VIII.     FINANCIAL DATA

Include a narrative of Financial Assumptions. How did you come up with the sales numbers, are there any extraordinary expenses, etc.?

A.  History, if applicable

B.  Income statements (projected)

C.  Cash flow forecasts (if you are going to present this to a lender or investor the cash flow forecast is most critical)

D.  Balance sheets (pro forma)

E.   Breakeven analysis

F.  Working capital analysis

G.  Source and applications of capital

IX.       CRITICAL RISKS

A.  Potential problems that could arise and their likelihood

B.  Plans to manage problems

X.        EXHIBITS

Once again, this is not the “right” outline, but rather, one that I find useful. I hope it helps you.

After years in senior level consulting positions, and creating hundreds of business plans, we have found the secret to a successful business plan.  The critical business planning secret, is asking the right questions.  As the business founder, you need to be asking the questions that an investor, banker, potential partner, or customer would ask.

Whilst a high grade consultant can assist you by asking these questions, this approach can be quite cost prohibitive for many businesses, with plans costing upward of k USD.

We have pioneered a new approach to business planning called “Question Led Business Planning”.  This approach leverages our experience in building hundreds high end business plans for clients.

Marcus Tarrant, CEO of Business Planning HQ says

“We know the questions that need to be asked to prepare a quality business plan and our clients know the answers.  Why not take the cost out of the planning process by populating those answers directly into the business plan?”

This approach has been proven to:

Improve the clarity of message – by just answering specific questions, the content is far more targeted than what most people are able to achieve when writing freeform

Accelerate the business planning process – For most businesses it will take at least 5 days of effort to prepare a business plan with high level financials.  The Business Planning HQ approach reduces the effort required to less than 4 hours, and provides a simple guided structure.

Remove the burden of sentence structuring – The requirement to clearly structure sentances can distract a non-professional writer from the core messages they are trying to communicate.  By simply answering a question, the requirement for sentence structuring is much reduced.

Eliminate the need for consideration of the document structure – Many businesses will spend days even weeks, just settling on the right structure.  With Business Planning HQ structural issues are taken care of by experts that have created hundreds of plans.

Enable an automatically generated Pitch Pack – Because the answers to questions are the source of content in a question led approach.  These answers are highly re-usable in a variety of forms, from one page overviews, to an entire pitch pack.  This approach provides the flexibility to automate much documentation associated with the business planning and presentation process.

 

There are a number of different reasons why people create business plans. Understanding the reason for your plan can help you better target your message.  Whilst all plans are largely similar, the key areas of focus should differ slightly based on the reason for building your business plan.  The business plan should clearly articulate the opportunity represented by your business and the approach you propose will best capitalize on the opportunity.  Investor focused plans should also include an explanation of the proposed exit approach.

Business Plan Reason#1: Finding an investor
A Business plan, often referred to as an information memorandum is usually the foundation document on which an investment is made.  Investors have specific requirements of a business plan, and have a desire to see how they will realize a return on their investment. A clear exit strategy provides a an understanding of how the funds will be returned to the investor.  Each investor may have a different investment horizon and the plan should reflect a return in that investment horizon.  The best place to start with preparing an investment business plan is to identify your potential investors first.  Understand as much as possible about their investment criteria before you start writing.

Business Plan Reason#2: Obtaining a loan

Obtaining a loan requires formal documentation of the business opportunity, prospects and financial implications.  Loans usually require a higher level of certainty than investors.  These plans should be realistic with clearly documented rationale and assumptions.  There needs to be as much focus on solid numbers as there does on the business vision and strategy.  Bankers often have set criteria for investment and as much as possible should be understood about approval guidelines as possible before the plan is constructed.

Business Plan Reason#3: Demonstrating Compliance

Obtaining required operating licenses and permits can drive the creation of a business plan.  These audiences are looking for effective processes and governance associated with the successful execution of these processes.  Whilst the document needs to contain similar information to other forms of business planning, more emphasis is placed on the “Operations” section.  Who will be conducting key activities and how will it be managed.  What processes are in place to ensure that any issues or errors are corrected quickly.

Business Plan Reason#4: Recruiting partners, staff and directors
A recruitment business plan needs to be a strong sales document.  Particularly in the early stages of venture creation, little is known about the business.  The purpose of the plan is to clearly describe what the business will do and why it is likely to be successful in delivering value to stakeholders.

 

A consultant can help you to better define your business strategy and succinctly outline this in plan.  Whilst you may believe that a consultant led planning process may deliver an improved result, is it worth the cost?

Business Planning Key 1 – How clear is your business strategy?

If you are unclear about how you intend to enter or grow your market, then consulting assistance can help with your planning process.  Sometimes business owners are too close to the issues and a series of carefully worded questions can help the owner to “see the wood for the trees”.  This consultative approach usually involves asking a series of questions about the business which potentially highlight inconsistencies in logic.  Addressing these logical inconsistencies makes for a clear and concise business plan.

Business Planning Key 2 –  Do you know enough about the criteria your target audience will apply when assisting your business plan?

When writing any communication, often the best place to start is with an understanding of your target audience and what they might like to see in your document.  For those that have not raised capital or sought a loan previously, obtaining an in depth understanding of the target audience “hot buttons” can take too long.  This is where a consultant can assist.  They will pre-empt many of the questions the target audience might raise.  By answering these questions throughout the construction of the business plan, the target audience will more warmly receive the communication.

Business Planning Key 3 – Obtaining the best of business plan consulting without the cost

Business Planning HQ.com has created a unique approach called “Question Led” business planning that offers you the benefits of using an expensive consultant for not much more than the cost of purchasing a template.  To create this proven approach we have built hundreds of different business plans for clients in a wide range of industries.  The audience for the business plan generally has a fixed series of questions about the business.  Through experience we have managed to boil down hundreds of business plans and identify their key success criteria.  Our clients are able to leverage this experience and simply build their plan by answering a simple series of questions in their own time.

 

There are a number of things to consider when either engaging a consultant to build your business plan, or purchasing a business planning template.  A primary reason for looking online for assistance is to reduce the cost associated with the development of a business plan.

Sites such as Elance offer the ability to post your specific business planning requirements online.  Interested consultants then respond to your business plan enquiry, often providing a quotation for business planning services.

Selecting a consultant online

Consider the end objective of your business plan.  Business plans are usually developed for a specific purpose, such as finding an investor, partner, loan provider or obtaining compliance certificates or government grants.

Ensure that your consultant is familiar with your specific target audience, and have experience in delivering successful outcomes to this audience.  With the internet, it is possible to hire a consultant from anywhere in the world for your business plan.  For some plans this can substantially reduce the cost of planning, without compromising your intended outcomes.

For specific purposes such as grant funding, a local business planning consultant may be able to better target your plan to the requirements, thereby improving the rate of success.  However not all business planning requirements call on the need for a consultant.  For some applications sophisticated and standardised templates can provide some structure and guidance to your planning process.

Selecting a template online

There are a variety of business planning templates available online.  Both free templates and paid templates can offer some level of assistance with your business planning process.   Whilst templates are often criticised for being overly simple, and too generic, for some business plans they can offer the appropriate level of assistance at an affordable price.  If possible try to find a template that has been developed specifically for your purpose.  Often banks will provide business planning templates for free to assist clients in structuring their plans to meet the core requirements of the loan.

The key issue iwth templates is that they are often quite general and do not assist you in clearly developing and structuring your business.    They work to help you put words to your current strategy which may incorporate inconsistencies.  They do not help with the business design process which is, in our view a core element of the business planning process.

Other approaches

Business Planning HQ.com has created a unique approach called “Question Led” business planning that offers you the benefits of using an expensive consultant for not much more than the cost of purchasing a template.  To create this proven approach we have built hundreds of different business plans for clients in a wide range of industries.  The audience for the business plan generally has a fixed series of questions about the business.  Through experience we have managed to boil down hundreds of business plans and identify their key success criteria.  Our clients are able to leverage this experience and simply build their plan by answering a simple series of questions in their own time.

 

Business planning involves more than just writing a lengthy document.  Much of the core value in a business plan is derived from the business strategy, business model and the effective communication of these to the intended target audience.

After consulting on the creation and development of hundreds of business plans, Business Planning HQ has developed a faster approach that the vast majority of businesses can now afford.

A survey of businesses involved in the business planning process revealed some sobering statistics.  Most first time business planners spend 2-3 days just deciding on the format their business plan should take.  As first time planners are not usually experienced writers, they tend to struggle with developing concise content set format plans.  The process of getting the language right can take almost as much time as developing the key concepts and strategy.

Business Planning HQ has developed a set of questions, the answers to which automatically populate a business plan.  Our clients believe that this approach a far simpler, more structured and efficient approach to creating a business plan.

The question led business planning approach was developed by Business Planning HQ to embody all the best of a consulting approach with the efficiency of an automated template.  All the language and logic of the plan already exists, and the answers to the questions act to help the business planner clarify their thinking, and ensure that the business model is internally consistent.  The questions are answered in their own time, and are provided in a simple excel based document.

These questions can be shared with collaborators, partners, or suppliers to ensure the best possible input is provided into the planning process.

Once the questions have been answered (usually taking less than 4 hours) the information is then automatically used to create either a business plan or a business concept pitch.

Question led business planning can reduce the usually time a first time business planner would spend from more than a week to less than 4 hours.