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How to Write an Effective Business Plan
By Ginger Young
February 2009
The rise in self employment and small
business startups is creating an interest in the "How-to" process of
writing effective business plans. You may have heard of the
popular saying "Failure to plan is planning to fail." This is the
primary reason behind writing business plans.
Here are some analogies for a business
plan:
- A Business Plan is a road map. It
gives you a path and a focus.
-You want to go to a destination
point, and the business plan provides you a map on how to get there.
-It is a view of the future based on
the past and the present.
-It is a process of gathering
information to keep you focused on the right direction and get you
there.
-It is a planning tool, a living
document that will keep evolving as you gather more information and more
experience.
My favorite analogy of a business
plan is that of a trip planner. The content of your planner will
detail where you want to go (vision and mission), how you will get there
(strategy). It will depend on how much money you have to spend and
how much time you have. Your vehicle dashboard (cash flow and
financial statements) tells you how you are doing, how much fuel you
have.... as you travel and meet obstacles, you will need to make changes
and adapt....
Format and Content
The typical business plan runs
approximately 20 pages in length, with an Appendix for supporting
documents such as photos, clippings or articles.
The first part of the Business Plan is the narrative portion which
describe the physical business - the structure of the company, the
product or service description and the target market; and a presentation
of the company's marketing and operations plan.
The second part of the Business Plan is the financial portion which
includes a cash flow and financial statement projections showing
breakeven points, profit margins and sales and net income expectations
for a time period usually a two to five year forecast depending on the
age of the company.
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