The following is a guest post from Janet Wilkinson (Three Times Three) on the topic of putting together a business plan for the uninitiated.
Inevitably there is no single answer to the question ‘what do I need to include in my business plan and how long should it be?’ and a Google search on the two words business plan suggested that there are about 1,640,000,000 results.
The key here is not the number it is the word ‘about’. A business plan is:
- About the thing you are going to develop – your idea, your organisation, services you will provide, products you will make or sell and the names/brand you are going to give them. The origin of the idea and ownership of any intellectual property to the idea or product need to be covered in the plan too.
- About you and the other people who are going to work to be able to deliver the project, idea or enterprise. This is crucial to demonstrate your experience, expertise and ability to engage others in the plan.
- About the finances for the business: what money is required for the idea to be developed initially and where is it going to come from? How will money flow into the organisation and when? What will you have to spend money on and when will you have to spend it? Is there a gap between the money flowing in and the money flowing out (and who will cover this)? How much risk is there in developing the idea (now and in the future) and who is taking this risk?
“Would you tell me, please, which way I ought to go from here?” said Alice
“That depends a good deal on where you want to get to” said the Cat.
“I don’t much care where….” Said Alice
“Then it doesn’t matter which way you go” said the Cat.
Alice in Wonderland, Lewis Carroll
Ultimately, business plans are about direction. One of the main purposes of having one is to communicate your intentions to the outside world (where you need to include them). They are for communication to anyone who is investing in the project or organisation, lending money to it, funding it or is responsible for delivering the goals or results for it. Overall, though, I’ve always felt that it is the process of business planning that is the output rather than the document itself. The time taken to plan what you are doing is invaluable and the decisions you make about your intentions and how the logistics, finances and people involved are going to make it happen are all part of the business planning process.
Similarly, understanding how the money is going to flow in and out of the organisation to make sure you have enough to do what you want to do in the coming years and sustain your idea development is a crucial part of the process. When I came across the following quote a few years ago it helped to set my practical understanding and experience in some context.
In preparing for battle I have always found that plans are useless, but planning is indispensable.
Dwight D. Eisenhower
So, does it need to be 200 pages or will it work on the back of an envelope? Inevitably the answer is somewhere in between and it depends upon the audience who will receive and read your plan. Keep the content and size of your plans appropriate to the size of the organisation or idea, think about who is going to receive them and keep them realistic (particularly the numbers) with threads of ambition, drive and future focus throughout – thinking about how the idea and organisation will be sustained beyond the lifetime of the plan.
Also, think about how you are going to communicate the plan to others – will you be sending it to them to read or presenting it in person? Regardless of the size of your idea it is useful to think about how you’d summarise it in 2-3 pages and/or 20 slides. Putting this kind of framework on your business plan enables you to concisely to explain your plan, purpose, people, product and finances to others.
Typically you will want to cover:
- The title or name of your idea
- What your idea or organisation is about
- The people who will be making it happen and their areas of expertise in relation to the idea and/or running the organisation
- The people who will be users, consumers or customers of the idea (and how you are going to reach them)
- What might exist already in the environment you plan to operate it (and whether these are competitors or potential collaborators)
- What the longer term plans are for your idea or organisation
- How much money do you need to get started (and where will it come from)
- How will the money flow in and out of the organisation in the next 1, 3 or 5 years?
- How much money you are likely to need in the future for expansion or development of your idea and where will it come from.
As with all writing and plans it is important to start somewhere. Business plans can be put together initially from your areas of strength working towards the ‘unknowns’ where further research and information gathering can be done. So, start on the back of an envelope even if it needs to be 200 pages in the end!