Here's the hard part, right at the beginning: the value of a business plan is measured in money. That's hard for
me at least, maybe not for you, but for me. As a genuine ex-hippy baby boomer entrepreneur, I like touchyfeely
do-gooder measurement systems. But that's not the real case. Like just about everything else in business,
the value is money. Money inthe bank.
The actual calculation is pretty hypothetical. You take the money in the bank with the business plan and
subtract money in the bank without the business plan, and that's the value. One of the two is just a guess. But
there it is a cold hard (although hypothetical) number.
With that in mind, here are some of the qualities of a good business plan, in order of importance:
1. It fitsthe business need
We simply can't look at business plans as generic. You have to start with whether or not the plan achieved its
business purpose. Some plans exist to get investment. Some are supposed to support loan applications. Those
are specialty uses that apply to some business situations, while almost all businesses ought to develop
management-oriented business plans that exist to helprun the company, not to be presented to outsiders.
Obviously form follows function. The business plan used internally to manage the company doesn't have to
polish and present the company to outsiders, so it probably lives on a network, not on paper. But the plan as
part of high-end startup looking for VC or angel investment does in fact have to present the business to
outsiders. These are verydifferent plans. Some of them have sales objectives, selling an idea, and a team, and a
market, to investors. Some have a support objective, reassuring a lender about risk, usually with assets. My
favorite business plans are about managing: starting and growing a company. A plan that might be great at
selling the company might be bad at supporting a loan application, or for managing a company.So point one, what makes a good business plan, is that it fits the business need. Does it achieve the business
At this point it's hard to avoid going into branches. I'm going to resist the temptation to write about what
people look for in investment-related plans, and then the plan for lenders, or the operational plan. There are a
lot of branches on that tree. Factors likereadability and ease of navigation and covering all the main points
depend a lot on whether those qualities affect achieving the plan's business objective.
So it's entirely possible to have an excellent business plan that's never been printed, that isn't edited, that
contains only cryptic bullet points that only the internal management team understands.
And it's also possible to have a well written,thoroughly researched, and beautifully presented business plan
2. It's realistic. It can be implemented.
The second measure of good or bad in a business plan is realism. You don't get points for ideas that can't be
implemented. For example, a brilliantly written, beautifully formatted, and excellently researched business
plan for a product that can't be built is not a goodbusiness plan. The plan that requires millions of dollars of
investment but doesn't have a management team that can get that investment is not a good plan. A plan that
ignores a fatal flaw is not a good plan.
3. It's specific. You can track results against plan.
Every business plan ought to include tasks, deadlines, dates, forecasts, budgets, and metrics. It's measurable.
Ask yourself, asyou evaluate a business plan: how will we know later if we followed the plan? How will we track
actual results and compare them against the plan? How will we know if we are on plan or not?
While blue-sky strategy is great (or might be, maybe), good planning depends more on what, when, who, and
4. It clearly defines responsibilities for implementation
You have to be able to...