Every business, without exception, needs a detailed business plan. Whether you are starting your own home organization business or opening your own restaurant, a general business concept alone is not enough; you simply cannot hope to succeed without a comprehensive plan. But what qualifies a business plan as “good?” Here are three qualities all good business plans share:
#1: It’s realistic
With a realistic business plan, you can spot potential weaknesses and opportunities and make informed decisions before you commit yourself financially or legally to your business concept. Your investors will also want to know about potential risks, so it pays to be upfront and honest about them from the start. Avoid setting unattainable goals – instead, make them achievable. It is always better to keep conservative goals than it is to fail to meet the expectations of your investors; in this case, if your business surpasses its goals, it looks even more favorable to investors. A good business plan should keep your company headed in the right direction with a broad, realistic perspective of goals.
#2: It’s specific (and measurable)
Every business plan should include tasks, deadlines, forecasts, budgets, and a plan to measure goal performance. This strategic agenda will be the roadmap for your company’s future. It projects your company’s financial return and anticipates future resource needs – details that are especially helpful when trying to secure funding.
When planning for funding, calculate realistic projections for expected profit, overhead costs and other expenses. Projections should be done every month for the first year of business and then quarterly every year after that. Include a detailed breakdown of the company’s expected income and expenses, along with supporting schedules. During your first year, sales will likely be lower than you expect, while operating costs may be higher. You may end up spending more money on marketing and product development than you expected, and your gross margins will probably be thinner than anticipated. This is normal. A specific, measurable business plan will keep your business on the right path, provided the plan is implemented properly.
#3: It’s followed through
Use it or lose it! The best laid plans amount to nothing if they are not followed. However, this does not mean that your business plan should be inflexible. Planning is not about setting a strategy in place once that must be followed to the letter for the rest of the year – planning means anticipating what’s to come and plotting the best course of action in response, reviewing the plan regularly, and revising it as necessary to benefit the business the most.
The business plan must also have commitment from everyone in the business. Everyone has to work toward the same goal. This is easier for a one-person business, but still important.
Whether you are starting a business or improving the one you already own, writing a good business plan is essential. Subscribe to our blog and stay tuned for more tips on preparing a business plan.
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