Introduction to Business Plan Guide: Planning to Plan

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A business plan is, in many respects, the most important document that a business ever creates as it is the "proof of concept", road map for growth and/or carrot to secure external support. This is very evident from the survey findings described in Insights into Business Planning.

Before Starting Your Plan

Before starting your plan, consider the following findings derived from an extensive survey offering Insights into Business Planning conducted by PlanWare:

• Determine the underlying purpose of the plan at the very outset - to raise money, secure approval etc. - as this will largely determine the comprehensiveness and length of the plan, amount of research required, use of external help and overall time scale.
  
  
• Decide on the time horizon to be covered by the plan's 11. Financial Projections and 12. Funding as this will also determine the number of years to be covered by its non-financial projections. In addition, consider setting the start date for all projections to coincide with the likely finish date of the plan. For example, if you are starting to plan in January and expect to circulate the final plan in mid-year, you should consider:
  
  
  • Using an opening balance sheet in 11. Financial Projections for end-June.
  • Drafting 4.2. Progress to Date in 4. Present Status up to end June.
  • Setting July as the start month for all your detailed plans.

  This approach will ensure that your plan is not obsolete by the time it has been written !

• For help with financial projections, see Exl-Plan.
  
  
• Identify who is likely to read the plan (or its summary), e.g. board of directors, potential investors, lending institution, divisional management etc., and think through the issues they would want to see addressed.
  
  
• Decide on the type of plan that is needed:
  

• Basic plans are short (often under 15 pages plus appendices etc.); relatively quick to prepare (under one or two months); use limited external assistance; need few drafts; and require much more researching than writing. They are somewhat more difficult to prepare than anticipated - all parts equally difficult. They are frequently used to assess the viability of a business or for internal/personal use and they are rated as important/useful for the business. See Preparing a Basic/Short Plan.
• Comprehensive plans are longer than basic plans; require some months to prepare; make slightly greater use of external help; and require somewhat more time researching than writing. They are more difficult to prepare than anticipated, especially the financial projections and market analysis parts. They are often used to help raise venture capital/equity or bank loans, and they are viewed as being critically important/useful to the business.
  
  
• Specify the structure of your plan in the form of a detailed Table of Contents. Use this to identify critical issues requiring research and/or external assistance and to set page lengths for each main section. See also Length of Business Plan.

Importance of Preliminary Research

Based on your Table of Contents, create a work program and timetable which allows adequate time for researching, writing and redrafting.

Shortcomings in the concept and gaps in supporting evidence and proposals need to be clearly identified. This will facilitate an assessment of research to be undertaken before any drafting commences. Bear in mind that a business plan should be the end result of a careful and extensive research and development project which must be completed before any serious writing of a plan should be started. Under no circumstances should you start writing a plan before all the key issues have been crystallized and addressed.

The more important the plan, the longer it will be and the longer it will take to complete. For most plans, much more time will be spent researching than writing as demonstrated in the white paper on Insights into Business Planning.

Recognize that the process of researching could be much more difficult than expected and consider seeking external help, sooner rather than later, for the most vital areas. If you do use outside assistance, make absolutely sure that that you don't hand over the planning of your business to external consultants. By all means contract out elements to experts in market research, sales planning, technology, finance and taxation but do not let them take control of the plan. If you do, you will have missed the benefits of the planning process and you may be deprived of the insights needed to effectively present and implement the resultant plan.

To help you get started with your plan, review this Checklist for Preparing a Business Plan. Also, have a look at the Checklist on How NOT to Write a Business Plan to see the things you should not do !

Once your business's background, markets and commercial potential have been assessed, you should initiate the planning process by defining the 3. Strategic Overview. on which your detailed plan will be based.

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