There are a very few reasons why you would want to write a business plan.

1. To evaluate initial startup costs.

2. To establish the fundamental viability of a project

3. To define your products, services and customers and assess competitors.

4. To map out the business model, the goals and the strategy used to achieve them.

5. To communicate to others (banks, investors, partners, etc.) the business idea.

A simple business plan can be written very quickly by just completing the following easy 10 step formula.

1. I am…

Introduce yourself. Tell the reader of your business plan who you are, your background, education, professional experience, your successes to date.

2. My product or service is…

Tell them what product or service is, what it does for the customer, any unique features or facets, how it is produced, etc.

3. My customers will be…

Describe your target customers and why you have chosen to market to these customers. Use any back-up evidence from your experience, reports, white papers, market research, etc.

4. My customers will buy from my business because…

Describe any unique selling points or advantages you have. Are you providing better value, guarantees, superior quality, reduced risk, better location, etc?

5. My customers will pay…

Explain how much your customers will pay for each of the products or services you will provide. Describe any up-selling or cross-selling opportunities and how many times a customer will buy from you in a typical year.

6. I can make…

Explain how many products you can produce or services you can provide in a typical year. Back this up with whatever evidence you have to support this.

7. To make each unit of product costs…

Explain how much each unit of product costs to produce. If your business is a service business describe how much it costs to provide the service.

8. The start-up investment I require is...

Detail how much start-up investment the business will require and what you require it for.

9.I have a viable business because

Explain why your business is viable and what evidence you have to support this claim. This will require some market research to demonstrate their is a viable market for your product or service.

10. In summary…

On a single page, list the main points of you plan in bullet point form. This is single most important part of your business plan. It will be read first by all readers of your business plan and will determine if they will read further and ultimately support you business idea or not. Write this summary last but put it at the front of you plan.

Now that you drafted a simple business plan you are in a great position to assess the initial viability of a business at a very high level. You may want to consider fleshing out this simple business plan into a more standard, detailed business plan format before presenting it to potential investors, partners or banks. They will want to see some detailed financials also – Income Statement (Profit and Loss), Cashflow Statement and a Balance Sheet.

How many of you have prepared formal business and/or strategic plans? Possibly, you have prepared business plans when you were seeking financing for their start-up, growth, or an acquisition. Some of you may have developed a business plan as a road map to follow, and measure their results against it. But generally, surveys indicate that, unless it is done to acquire financing, business plans are not done.

Business plans are generally prepared for a three-to-five year period. The scope will define the start-up, expansion, or acquisition costs. Specific markets, products, marketing plans and organization for the company will be outlined. An implementation process will be outlined with dates and assigned responsibilities (milestones). Sales projections are absolutely necessary, and will be the basis for the financial forecast which will include balance sheet and cash flow forecasts as well as the profit and loss forecast. Those financing the company will want to see how they are going to get paid back; investors will want to see what their return will be.

Your city/state economic development departments, SCORE (Service Corps of Retired Executives), the banks, and various resources on the web can give you formats that you can use to develop your business plan. While business plan development can be done internally, I generally recommend using outside help. They will ask the tougher questions and will do a much more through job of market analysis because they have no “insider” bias.

Strategic plans are significantly different than business plans, and I doubt very many companies have even attempted one. Strategic plans are much broader in scope, as they start with defining the vision and goals of the company and can be developed for as long as 20 years, with adjustments being made as often as necessary as the business environment changes. Strategic plans are much more visionary and are focused on ongoing improvements and building market share. Plans may be modified, but the vision should never change. Goals are always established before the company takes any action steps.

Strategic planning does yield success. Studies have proven that companies with plans are 12% more profitable, and 64% state that they do a better job of meeting their short term goals because these goals are fully aligned with the company vision. Generally, annual budgets (if you do these) are too short term and are focused on the current situation, not the future vision. Approximately 80% of all INC 500 companies actively use strategic planning.

While there are many examples of business plans on the internet, there are not as many examples for strategic plans. The formats vary significantly, but the approaches are generally consistent. They can be anywhere from a one page plan to a complete document. Generally, there are no financial schedules. Specific financial targets are important, but strategic plans are much broader in scope and are more sales or market focused.

One of the most critical steps in developing a strategic plan is the SWOT analysis (strengths, weaknesses, opportunities, and threats). Once that is done, keep it close by and refer to it often. Update it as conditions change. Next develop your core values; these should never change as long as the company exists. The core value defines the company’s purpose – why it is in business – the heart of the company. Then define the actions that must be taken to comply with these values. The next, and most important step, is to develop your BHAG (big hairy audacious goal) – the “why” of the company for the long term.

Once these longer term goals are established, the next step is to define the intermediate targets that will be required to meet those goals. These intermediate targets should cover three to five years and should use key performance indicators (KPI’s) to measure progress on achieving the goals. The intermediate goals are further broken down into more specifically-focused annual goals and measurements. The next step is to define quarterly goals and measurements. And keep the number of goals limited. KPI’s should be measured routinely to insure that the company is achieving its goals.

The focus of strategic planning is to develop the base values and goals of the company. These are the foundation of the company, and should never change. All additional goals and KPI’s will be developed to define the shorter term steps that will support this base. The process is designed so that the quarterly and annual goals can be updated as the company progresses, and to adjust for environmental changes (which will happen). The strategic planning process is a well-defined building block process that will result in a better focused and more profitable company.

A business plan guide is a great place to start when you are getting ready to start a new business venture. Perhaps you have found a book about writing business plans, or are following a template, but chances are, these materials will only focus on the steps necessary to create your written report and will fail to point out the critical mistakes that most new business owners make. So let’s ignore the step-by-step tutorial for a moment and focus on the real world mistakes you need to avoid.

1. Don’t Put it Off.

Yes, writing a business plan can be a monumental chore. It’s easy to procrastinate while you focus on the more exciting processes of your business. Many new business owners will wait until the day before their scheduled meeting with the bank — and then frantically try to write a plan overnight. You can imagine the results.

Don’t wait until you have more time. There will never be more time. You need to clear your calendar for a week and make your planning a top priority. Or if that isn’t feasible, schedule a certain period of time each day to work specifically on planning. No doubt you have heard the old saying: “If you fail to plan, you are planning to fail”.

2. Don’t Confuse Profit With Cash Flow.

Unless you have an accounting background, you are very likely to define the success of your business in terms of profits. A simple definition of Profit would be Sales minus Expenses equals Profit. But in the business world, profits do not equate to cash. Your profit formula does not take into account the amount of cash you have tied up in production costs for products that have not yet sold, or the customers who still owe you money for sales that have already been made. Your business can look quite “profitable” while your bank account is over-drawn.

In your written plan, make sure you include a table that addresses cash flow. Ideally, you should detail the monthly cash flow for the first two years of the business and annually thereafter.

3. Don’t Fall in Love With Your Idea. Too many business plans blabber on for pages about the “newness” and “uniqueness” of the idea. But the truth is, investors want to invest in people, not ideas. It is only the people who can execute the systems necessary to bring the idea to life.

Instead of waxing poetically about your business idea, focus your energy, and your reader’s eyes, on the ways you plan to implement this great business idea.

4. Don’t Succumb to Fear and Dread.

If you have never written a business plan, the process may loom like Mount Everest. But, like most new challenges, writing your plan isn’t as hard as you have imagined it to be. You aren’t writing a doctoral thesis or the next great novel. If you have invested in a business plan guide, use it. You can easily find helpful resources such as books, software programs and templates. Remember, you eat an elephant one bite at a time, so start chewing.

5. Don’t Over Sell.

Skip the vague and meaningless business phrases such as “best ever”, “highest quality” and “unsurpassed customer service”. You will lose your reader’s interest and respect if you engage in hyperbole that isn’t supported by measurable facts. Remember that the objective of a plan is its results, which require tracking and follow up. Focus your goals on specific dates, management responsibilities, budgets, and measurable milestones. Think fewer words and more numbers.

6. Don’t Engage in One-Size-Fits-All

Business plans can have many different purposes and they should be written to reflect the specific purpose at hand. You may be using your plan to start a business, or just run a business better. Your purpose may be simply to sell an idea for a new business to one particular business partner. Your plan may be intended to secure a small business loan, or it may be needed to secure millions of dollars of venture capital. Each of these purposes would require different information, presented in different ways to meet the needs of different readers. Keep a picture of your intended reader firmly in your mind and your business plan will stay focused as well.

7. Take Off the Rose Colored Glasses

Optimism is a wonderful resource. Without it, a business owner would find it difficult to summon the energy necessary to launch a new venture. However, this is not the time to engage in unbridled projections. If your company’s growth chart is based on an “industry average” of fifteen-percent annual growth, you should certainly be prepared to prove that assumption. Provide supporting data and, when in doubt, be less optimistic.

By using a good business plan guide, and avoiding these common mistakes, you can prepare a plan that almost guarantees your business success. Best of luck!