Advice on Creating Business Plans: Small Business Planning

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Streetwise Tips on Creating Plans

* People, people, people
In seeking equity money from venture capitalists or other outside investors, you will increase your chances of success if you get someone committed to your management team who, if not known personally by a potential investor, at least will have a recognizable name. If you can’t manage this, you should consider getting one or more people on your Board of Directors whom potential investors may be familiar with.

Alternately, you can include as exhibits to your plan any positive media clippings you can find, such as items from trade publications, about members of your management team. If you don’t have any clippings, try contacting relevant publications to get media coverage—perhaps about your start-up business proposal.

* Keep the tone of your business plan factual
Don’t use hyperbole or generalizations to describe the potential of your business plan. Investors and lenders don’t want to hear phrases like “this business has incredible potential.” They want to use the more factual information you present to reach their own conclusions.

* Keep your plan succinct
Whether creating a business plan to raise money or an annual plan to run your business, keep it succinct. People tend to use too much detail when creating plans. If a business plan is too long, it might be skimmed. If an annual plan is too long, focus on what is really important might be lost.

* Involve everyone
Both for business and annual plans, you need to have key employees create their area budgets. Then work with them until you are satisfied. Have key people get together to get the plan in sync and to get any disagreements out in the open. The more input people have in creating the plan, the more responsibility they will feel toward it.

* Annual plans are not just budgets
If an annual plan includes any financial projections, I find that almost everyone tends to focus on them almost exclusively, de-emphasizing the qualitative aspects of planning. While you do need to use numbers to run a business, numbers alone lead to a shallow plan. Companies run just by the numbers lose direction, drift from their strategy, and never realize their full potential. It is essential to the planning process to articulate clearly what the direction of the company will be for the coming year and what the role of each person will be in supporting the direction of the company overall.

* Use the annual plan to improve performance
In the real world nothing ever goes exactly according to plan but your annual plan gives you a way of measuring your company’s actual performance against projected performance. Meet with key people at least once a month to review how the company is performing relative to the plan. The emphasis should not be on browbeating those managers whose areas are under performing, but on how performance can be improved in the future.

* Source Streetwise Small Business Start-Up

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