In their book Write Your Business Plan,
the staff of Entrepreneur Media offer an in-depth understanding of
what’s essential to any business plan, what’s appropriate for your
venture, and what it takes to ensure success. In this edited excerpt,
the authors describe four different types of plans you could write and
what you'd use each one for.
Business plans can be divided
roughly into four distinct types. There are very short plans, or
miniplans, presentation plans or decks, working plans, and what-if
plans. They each require very different amounts of labor and not always
with proportionately different results. That is to say, a more elaborate
plan isn't guaranteed to be superior to an abbreviated one. Success
depends on various factors and whether the right plan is used in the
right setting. For example, a new hire may not want to read the same,
elaborate version of your plan that might be important to a potential
investor.
The Miniplan
The miniplan is
preferred by many recipients because they can read it or download it
quickly to read later on their iPhone or tablet. You include most of the
same ingredients that you would in a longer plan, but you cut to the
highlights while telling the same story. For a small-business venture,
it’s typically all that you need. For a more complex business, you may
need the longer version.
The Presentation Plan
The
advent of PowerPoint presentations changed the way many, if not most,
plans are presented. And while the plan is shorter than its
predecessors, it’s not necessarily easier to present. Many people lose
sleep over an upcoming presentation, especially one that can play a
vital role in the future of their business. But presenting your plan as a
deck can be very powerful. Readers of a plan can’t always capture your
passion for the business nor can they ask questions when you finish. But
in 20 minutes, you can cover all the key points and tell your story
from concept and mission statement through financial forecasts.
Remember
to keep your graphics uncluttered and to make comments to accentuate
your ideas rather than simply reading what's in front of your audience.
While
a presentation plan is concise, don’t be fooled: It takes plenty of
planning. The pertinent questions who, what, where, why, when and how
all need to be answered.
The Working Plan
A
working plan is a tool to be used to operate your business. It has to
be long on detail but may be short on presentation. As with a miniplan,
you can probably can afford a somewhat higher degree of candor and
informality when preparing a working plan. In a plan you intend to
present to a bank loan committee, you might describe a rival as
“competing primarily on a price basis.” In a working plan, your comment
about the same competitor might be “When is Jones ever going to stop
this insane price-cutting?”
A plan intended strictly for internal
use may also omit some elements that you need not explain to yourself.
Likewise, you probably don’t need to include an appendix with resumes of
key executives. Nor would a working plan especially benefit from
product photos.
Internal policy considerations may guide the
decision about whether to include or exclude certain information in a
working plan. Many entrepreneurs are sensitive about employees knowing
the precise salary the owner takes home from the business. To the extent
such information can be left out of a working plan without compromising
its utility, you can feel free to protect your privacy.
This
document is like an old pair of khakis you wear to the office on
Saturdays or that one ancient delivery truck that never seems to break
down. It’s there to be used, not admired.
The What-If Plan
When
you face unusual circumstances, you need a variant on the working plan.
For example, you might want to prepare a contingency plan when you're
seeking bank financing. A contingency plan is a plan based on the
worst-case scenario that you can imagine your business surviving—loss of
market share, heavy price competition, defection of a key member of
your management team. A contingency plan can soothe the fears of a
banker or investor by demonstrating that you have indeed considered more
than a rosy scenario.
Your business may be considering an
acquisition, in which case a pro forma business plan (some call this a
what-if plan) can help you understand what the acquisition is worth and
how it might affect your core business. What if you raise prices, invest
in staff training and reduce duplicative efforts? Such what-if planning
doesn’t have to be as formal as a presentation plan. Perhaps you want
to mull over the chances of a major expansion. A what-if plan can help
you spot the increased needs for space, equipment, personnel and other
variables so you can make good decisions.
What sets these kinds of
plans apart from the working and presentation plans is that they aren’t
necessarily describing how you'll run the business. They're essentially
more like an addendum to your actual business plan. If you decide to
acquire that competitor or grow dramatically, you'll want to incorporate
some of the thinking already invested in these special purpose plans
into your primary business plan.