Plan to Grow: How to Write an Effective Business Plan
Sandy A. Summers, Assistant Director, Louisiana Small Business Development Center at Southeastern Louisiana University
Running or starting a business without a business plan is comparable to walking in the dark without a flashlight. Both can be done, but operating this way leaves you open to the risk of something getting in your way that you won’t see until it’s too late.
A good business plan provides you with a unique opportunity to define details about your business and allows you to review the hard, clear facts that are needed to make strong and successful business decisions, even if it means making big changes.
Instead of giving you a list of items describing how to construct your business plan, I am going to mention a few common business planning mistakes and mention what NOT to do.
DON’T Be Vague
A business plan should not read like a novel. If a fairly intelligent person with a high school education can’t understand your plan, then you need to rewrite it. If your business involves
highly confidential material, processes or technologies, then show people your executive summary first. If they’re interested in learning more about the business, have the parties sign non-compete and nondisclosure agreements before showing them the entire plan.
DON’T Be Unrealistic
Business plans should highlight critical assumptions and provide some sort of rationalization for them. Avoid burying assumptions throughout the plan so no one can tell where the assumptions end and the facts begin. Market size, acceptable pricing, customer purchasing behavior, time to commercialization– these all involve assumptions. Wherever possible, make sure you check your assumptions against benchmarks from the same industry, a similar industry or some other acceptable standard. Tie your assumptions to facts.
DON’T Say You Have No Competition
I cringe when I hear potential business owners say or write that they have no competition. If you truly believe this, you should really step back and reevaluate your business model. Every successful business has direct and indirect competitors. If you can’t find any competitors today, try to imagine how the marketplace may look once you’re successful. Identify ways you can compete, and accentuate your competitive advantages in the business plan.
Writing a business plan can be tedious, but it is certainly worth the time and effort. The process will dramatically increase your odds of succeeding as an entrepreneur.← News and Insights