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What Does a Business Plan Really Need to Include?

What's really necessary to include in a business plan?
Tim Berry answered February 22, 2011
URL: http://www.entrepreneur.com/answer/222256

Form follows function. What's really necessary in a business plan is what it takes to manage your business better. That means that a lot depends on what you're doing with your plan. Consider these possibilities:
 


  1. If your plan is just to manage your business better, not to show to outsiders, then there's no need for carefully edited or formatted descriptions of your business or products or management team, or, for that matter, those executive summaries. Instead, you just stick to the core: your strategy, your review schedule, your assumptions, your specific tasks, assignments, and milestones, and basic projections including sales, cost of sales, expenses, and profit and loss. Then the key to success is to understand you're going to want to review the plan monthly, check for plan vs. actual results, and make course corrections.

  2. If your plan is part of the process of seeking outside investment, then you need to dress it up more, with everything in point No. 1 above plus an excellent executive summary and good descriptions of the company, history, product or service, market analysis, management team, cash flow, use of funds, and exit strategy.

  3. If your plan is part of the process of applying for commercial credit, then you need to start with what's in point No. 1 and add most of what's in point No. 2, but not necessarily an exit strategy, and more on credit history and collateral.


With these three examples I want to emphasize that you look first at the business purpose of this plan, then use that purpose, and the needs of the people reading it, to decide what's necessary.

And for most business plans, used to guide and manage the business, you don't need to edit and format and print it out. Leave it on your computer.

Tim Berry is the president of Palo Alto Software Inc., based in Eugene, Ore., which produces business planning software. He is also the author of 3 Weeks to Startup and The Plan-As-You-Go Business Plan, published by Entrepreneur Press.