What matters most for a business plan? When somebody asked on Quora what are the critical factors of a business plan, I came up with these three business plan critical factors:
- Effectiveness. Does it achieve its business goal? Form follows function; does it achieve its business goal? Measure a business plan by its results, and nothing else. You can draw from that basic principle that plans ought not to be measured by academic criteria like perceived comprehension, quality of text, or format. If it’s about steering the business, then does it provide directions, pathways, and track able milestones and metrics? If it’s about raising money, does it help that goal? If it’s about backing up a loan application, does it work for that?
- Realism. Can it be executed? Is it rooted in reality? A pie-in-the sky pipe dream business plan is a waste of time and effort. Is it realistic about resources? Time to execute?
- Concrete specifics. Is it trackable? Does it include actual actions, tasks, responsibilities and responsibility assignments, trackable steps, trackable metrics? Budgets? Forecasts? Built-in accountability?
The business plan itself is far less important than what a business does with it. There’s that mantra:
The plan is useless; but planning is essential.
A business plan ought to be the first step towards a planning process that includes regular review and revision. The goal of business planning is steering the business. If it were navigation, the plan includes the destination as goal and the route as steps toward the goal; but actual navigation includes the GPS positioning and real-time information to fine tune the route along the way, in response to actual traffic, weather, and so forth.