What’s a good business plan? A business plan is as good or bad as its results. The decisions it causes.
Divide this into two parts: First, how can you tell a good business plan after the fact, after time, after the business has been running with it. Second, how can you tell a good business plan before the fact, as just a plan, before the fact, valuating the plan alone without the execution that is supposed to follow.
After the fact:
First and foremost, you value a business plan by its results. Measure its value by the management it causes. Was it easy to follow, track, review, and revise? Were the milestones useful? Were the assumptions reasonable and the results in line with expectations? Were you able to make realistic progress, see the progress as it happened, and adjust for what’s working and what isn’t?
For those business plans used to show to bankers or investors: Did it work? Was it enough? Did it serve its business function? Did you get the approval you sought?
Before the fact:
However, realistically, that’s after the fact and your question is about how to judge the plan before the fact. So, here are factors to look for. A strong business plan…
- A good business plan includes concrete specifics you can track and measure so you can tell how its working at any time. That means major milestones, metrics, tasks, responsibilities, dates, deadlines, etc.
- A good business plan manages the essential numbers based on drivers and realistic assumptions: Sales, costs, expenses, and cash flow. Are projections complete? Are they based on drivers and realistic assumptions? Are you able to track the numbers month by month, and adjust on the fly?
- A good business plan aligns strategy and tactics and execution.
- Includes regular scheduled dates for review and revision.