What Makes a Good Business Plan? Tips From a LivePlan Business Plan Writer

I speak a lot about the benefits of writing a business plan.

You’re more likely to be successful over the long run if you take the time to plan out your business. You need to write a plan if you’re seeking a bank loan. You’ll be able to invest in your business more confidently if you understand your cash flows and financial outlook. Just to name a few.?

But what makes a good business plan? What are the pieces that stand out in a plan that secures a six-figure loan, or gets an investor to open their checkbook?

Our experienced team of LivePlan business plan writers have collaborated with business owners and entrepreneurs to put together hundreds of funded business plans for successful startups and existing operations. So I asked a plan writer for his opinions on what makes a good business plan.

Here’s what he said.

1. Be thorough, and don’t cut corners

This is the key: Your business plan should have the right amount of necessary information, based on your business, industry, and needs for outside backing.?

“A good business plan must include all of the critical sections and information that a reader expects to see in the document,” explains LivePlan business plan writer David Campbell. “Missing sections in a business plan would be detrimental to securing funding.”

When reviewing your plan, a lender or investor isn’t just trying to form a picture of what you want to do. They’re also looking for your blind spots. If they see you cutting corners in your plan, it could indicate to them where you might cut corners in your business. That could leave you blindsided by a disruption to your business that you could have accounted for with thorough planning.

2. A business plan has the right amount of data, detail, and context

Sure, you need to be thorough. But that doesn’t mean you should write a novel. Depending on the business, you can put together a rock-solid plan in just a few pages.

“A business plan should cover everything it needs to in a way that is not redundant or rambling,” says David.

The right-sized business plan balances thoroughness with engagement. Demonstrating that focus in the plan will show any lender or investor that you’re thinking about the biggest keys to success for your business.

3. An accessible business plan is easy to follow

“Structure your plan so that it is easy to find information,” says David.

Here’s a tip: A business plan isn’t like a book. Whoever reads it probably won’t start at the first page and read straight through to the end.

“A lender or investor will typically skip around a plan to read the information that is the most important to them,” explains David. “Use a business plan template or software that provides all of the needed sections in a logical format. It is also essential to include a table of contents for the reader to find information quickly.”

Your format might vary depending on your plan’s scope, industry, and what you’re trying to accomplish with the plan.

4. Focus on the right things, not irrelevant details

When crafting your business plan, sometimes you’ll need to closely examine an issue in its final details. Other times, you’ll need to zoom out and take a 30,000-foot-view of your business landscape.

The trick when writing a business plan is knowing what perspective and level of detail you need to provide. It can also vary by section. Depending on the audience you’re writing your plan for (including yourself), you may want to take a broad view of the market and your opportunity, but zoom in on the details of your operations plan or financials, or vice versa.

In David’s experience, clients can be prone to agonizing over details that are important to the business but not necessarily to the business plan. David works to help owners shift their focus to the sections that will matter more to lenders and investors.

“I generally see this with the sections important to funding, like the competitor analysis, competitive advantages, and showing that the management team has adequate experience. These sections tend to get glossed over by clients, though they are essential items to have nailed down to get funding.”

5. Include the right forecast for the right reader

Who you show your plan to can influence the right amount of financial forecasting you’ll need to include.

“When seeking outside financing from a bank,” says David, “you typically want to include a 3-year forecast (which LivePlan can help you put together). If you are approaching private investors, they generally expect a 5-year forecast.”

Overall, says David, the right forecast depends on the goals of the client.

6. Just like your business, your business plan needs to be able to evolve

As we mentioned above, different audiences will want to see different things in your business plan. A bank may want one type of forecast and a private investor another. And you’ll likely need something more nimble to actually run your business. A good business plan is one that you have the power to change, not an uneditable document that you never look at as soon as market conditions change.

The big takeaway is not to think of your business plan as a one-and-done document. Think of it as an evolving road map to your success and vision. When you can update your business plan, you can also quickly adapt it based on what you need to do. For example, you can make a version for a banker, another with a lengthier forecast for a private investor, and even multiple scenarios to navigate your business through uncertainty.

Your business plan can and should evolve right along with your business. That way it’s always there to guide you and keep you on track toward the fulfillment of your business goals.