A business plan can serve many goals – it can help you land investors or it can help you guide your employees towards one direction. But like any other important document, a business plan needs careful planning and ample brainstorming for it to be of value to the people who will be using it.
While you can come up with a business plan by just scribbling on a piece of paper, a business plan worth presenting is well-written. It doesn’t have to be long (some companies have one-page business plans), but it should have the parts needed depending on the audience using it.
To make it easier for you, here are five criteria that you can use to evaluate your business plan.
Like what was said earlier, you don’t have to write a 30-page business plan. In fact, there are companies that prefer having 1-2 pages only. This is because the purpose of a business plan is not to explain everything. This means that you don’t have to enumerate the role of every person in your company. You don’t also have to put the historical background of your business.
As generic as it may sound, having the basic parts of a business plan will already be enough. These basic parts are the vision, company description, products, long-term and short-term goals, market analysis, strategies, and financial statements.
When it comes to writing a business plan, your tone follows the audience. For example, if you will be using the business plan to get investors to fund your business, then naturally your plan should focus on them getting their investments back in the shortest time possible.
It’s important to note that when you are giving this to investors or venture capitalists, you should be able to capture their attention by showing the feasibility of your business. However, you should be careful not to oversell your business.
To supplement your business idea, you have to show the market research you made. No, you don’t have to fill the business plan with percentages and pie charts. All you have to do is show that there is a market for your business idea.
This part should also show your positioning in conjunction with your competitors. What makes your idea different from the rest? To be able to present this part successfully, focus on sustainable competitive advantage. A sustainable competitive advantage refers to your business assets, supply chain, or attributes that allow you to have a long-term advantage over your competitors. It can be anything from culture, operations, and strategy.
Now that you’ve done your research and you proved that there is a market for your product, it’s now time to check your strategies. Are your strategies detailed enough for investors or business partners to understand?
On the other hand, if your business plan will serve as a roadmap for your employees, are the strategies realistic? Do they contribute to the long-term goals that you have set at the start of the business plan? If the answer is no, then you have to think of new strategies. The best way to go about this is to start with your vision, down to your mission, and then to your long-term goals. Once these things are set in stone, you can now start asking, “What are the strategies that help me reach these goals?”
Last, but definitely not the least is the feasibility. This is the part where you’ll show financial projections regarding sales, costs, and your profit (whether it’s negative or positive). If you’re showing this to investors, your financial statements should reflect profits after 2-3 years. Remember, don’t oversell. It’s always better to show realistic computations than big profits but unrealistic calculations.
At the end of the day, your business plan should be the document that helps you get investors or guides your company to achieve its business goals. These five criteria will help you evaluate your business plan and if one of them is not met, then you have to revise until it does.
Ideally, business plans are not meant to be stagnant because they can be revised once the vision changes or the direction is changed. Nonetheless, it should be a good mix of your short-term and long-term goals and strategies.