What Makes a Good Business Plan?

A good business plan is not just about writing style or formatting; it’s about achieving results. To create a successful business plan, you need to focus on 10 key qualities that can lead to a more prosperous business.

1. It Fits the Business Need

Business plans should be tailored to meet the specific needs of the business. Whether it’s for internal management or external investors, the plan should serve its intended purpose effectively.

Not All Business Plans Have to Be Pretty

While some plans need to be polished for external presentation, others are more functional for internal use. The key is to make the plan work for you and your business.

Write It for Your Audience

Consider who will be reading your business plan and tailor it to their needs. Whether it’s investors, lenders, or internal stakeholders, the plan should address their concerns and expectations.

2. It’s Realistic and Can Be Implemented

A good business plan is grounded in reality and achievable goals. Setting unrealistic expectations or ignoring key challenges can lead to failure.

For example, financial forecasts should be based on current performance and realistic growth projections. Incremental progress is more sustainable than sudden leaps in revenue.

3. It’s Specific and Measurable

Every business plan should include clear tasks, deadlines, and metrics for tracking progress. This allows you to monitor your performance and make adjustments as needed.

Ask yourself how you will know if the plan is being followed, how you will track results, and how you will measure success along the way.

4. It Clearly Defines Responsibilities for Implementation

Assigning clear responsibilities to individuals ensures that tasks are completed effectively. Each important function should have a designated owner to drive implementation.

Avoid sharing responsibilities among multiple people, as this can reduce accountability and lead to gaps in execution.

5. It Clearly Identifies Assumptions

Business plans are based on assumptions about the future, and it’s important to address these upfront. Acknowledging that your plan is built on educated guesses can help you adapt as circumstances change.

By identifying key assumptions, you can better understand the risks and uncertainties that may impact your business.

6. It Defines Strategy and Tactics

A good business plan outlines the strategy for achieving your goals and the specific tactics you will use to execute that strategy. This ensures that every action is aligned with your overall business objectives.

Strategy should be clear and concise, while tactics should be detailed and actionable. Make sure that each tactic directly contributes to your strategic goals.

7. It Incorporates a Monthly Review Schedule

Regularly reviewing and updating your business plan is essential for staying on track and adapting to changing circumstances. Anticipating the need for monthly reviews helps keep your plan current and relevant.

8. It Includes Essential Numbers

Financial projections are a critical component of any business plan. Sales forecasts, expenses, profits, and cash flow projections help you monitor your financial performance and make informed decisions.

Tracking essential numbers allows you to identify trends, monitor progress, and make adjustments to your plan as needed.

9. It’s Clear and Simple

A good business plan should be clear, concise, and easy to understand. Avoid unnecessary technical jargon and focus on communicating your ideas effectively.

Keep the plan simple and to the point, using bullet points and tables to convey key information. Make sure the document is well-organized and easy to navigate.

10. Easy to Communicate with the Right People

Tailor your business plan to your audience, whether it’s internal team members or external stakeholders. Present the information in a format that is professional, easy to read, and appropriate for the intended audience.

Security is also important when sharing your plan with others. Ensure that sensitive information is protected and only accessible to authorized individuals.

Ongoing Planning Process: It’s About the Management It Causes

While a business plan is important, the real value lies in the management processes it inspires. Regular reviews, updates, and revisions are essential for keeping your plan relevant and effective.

Remember, the purpose of a business plan is not just to have a document but to use it as a tool for guiding and managing your business.

By following these key qualities, you can create a business plan that is strategic, actionable, and effective in driving the success of your business.