When Is the Best Time to Write Your Business Plan?
You don't need to drop everything to put together a business plan. Instead, it should be a constant work-in-progress. Here's how.
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If you're serious about starting your business -- even if you don't have anything down in writing -- you've already started to plan.
So how do you find time to write a business plan? You don't. You are always planning. Your plan is never done, but your planning process is your key to good management.
Your plan is for you first. Don't make it for anybody else. Do it because it helps you divide and manage big goals into practical steps. Instead of looking at it as a document, think of your business plan as a place on your computer where you collect ideas, useful stories, lists and numbers. It's a place where you keep track of the market, your milestones, goals and projections.
Planning is a process that includes review and revision. There's always a latest version and it lasts just a few weeks.
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All your business plan really needs at the early stages is:
- Milestones: What's supposed to happen, when, and who's responsible.
- Basic numbers: Simple spreadsheet projections for sales, costs and expenses.
- Strategy: Strategy is about deciding how to focus a business offering on a key target market. It can start with just bullet points. I've seen it done well with pictures. It's mostly a reminder for you and your team.
- Cash flow: Because profits don't guarantee enough cash to pay your bills, you need to manage cash from the beginning. Month by month, account for what you spend and what you deposit -- not profit as it appears on the books, but money as it shows in the bank.
- Review schedule: Set aside time for a plan verses actual review once a month to compare what you planned would happen in your business to what really happened. Be brief and practical.
Keep track of these main elements and grow your plan organically as your business grows. By recording what is supposed to happen you'll be able to better manage why, when and how things go wrong. And you'll be able to set performance metrics and develop accountability for different tasks and milestones.
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You'll add some thoughts about mission statements and mantra when you want. You'll add plans for organizational growth and structure as they become necessary. Don't bother with the parts you won't use -- like descriptions of yourself, your product and your team -- until there's a business purpose for them. This is not a term paper; it's a plan.
Sooner or later you're also going to want to share what's supposed to happen with a partner, employee, vendor, bank or investor. When you are communicating with someone else and need your business plan in one place, you can spin it out from its components to a document. At that point, you should take the trouble to do a summary, add descriptions of the business entity, history, team and market.
Tailor the document to its business purpose. For example, banks will want a lot of financial history and investors will want more on market validation and team experience. Dress up a plan for special viewing only as necessary.
Don't confuse that document with your business plan. It's just output -- a picture of what your plan was on the day you created the document. It's going to be obsolete the next day, week, or month.
Keep in mind what leaders like Napoleon and Eisenhower said: The plan is useless, but planning is essential.
Related: The Wrong Way to Set Business Goals