The best place to start a business plan is at the end of the planning cycle. I recommend something five years or less. Envision the business you could sell to a third party (non-owner) for the highest reasonable amount. (Understand that at this point a selling owner cannot be an integral part of the business.) Then work backwards. What would the business be doing the fourth year to get to the apex in the fifth year, the third year to the fourth, and so forth? If the market will not support the five year plan, something is not realistic and needs to be changed. Therefore, the market analysis becomes the reality check for the projected business status at the end of the planning cycle. If you then do a business plan for an investor, you will be able to program the investor’s exit as a part of this planning.
Very likely you (a business owner?) are doing a business plan because you think someone (an investor?) will ask for one. It will be more effective if you do the plan for you (the owner) first. The beginning question should be: “How can I develop a business I can sell for top dollar in five years?” In five years you do not have to sell, but you will develop a better business if you have that goal. Then do the business plan (based on the business plan you have done for you) that tells whoever asked for it that your business can meet expectations for that request.
There are a number of ways to construct plans from questionnaires and software; there is nothing wrong with adding structure and detail in that way. Do the marketing and conceptual work first to know if you can go where you want. After you have established this perspective, the details can fall into place. This is not to say that the details are unimportant – they can make you or break you – but they must be within a frame that is realistic and defined.
The purpose of doing a business plan is that it gives you the ability to ask a very important question: “Why didn’t things go as in the business plan?” Answering that question is a valuable business analysis tool. Of course, the plan is the prerequisite to having the analysis tool.
