8 Factors that Make a Good Business Plan

By | 26.10.2016

Organizations around the globe develop strategic plans. They carefullycreate a vision of their future and the strategies needed to get there.But many fail to realize their vision and fail to deliver the expectedstrategic results. Unfortunately, executive teams cannot pinpoint thereasons for this dilemma so they repeat the strategic planning cycleover and over, always hoping that the next strategic planning sessionwill bring better results. And of course it doesn’t. In our experience,there are 8 critical factors that will ensure your strategic plans aresuccessfully implemented.

8 Factors that Make a Good Business Plan

What makes a good business plan?

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 foryou, but for me. As a genuine ex-hippy baby boomer entrepreneur, I liketouchy-feely do-gooder measurement systems. But that’s not the realcase. Like just about everything else in business, the value is money.Money in the bank.
The actual calculation is pretty hypothetical. You take the money inthe bank with the business plan and subtract money in the bank withoutthe 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 fits the business need

We simply can’t look at business plans as generic. You have to startwith whether or not the plan achieved its business purpose. Some plansexist 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 businessplans that exist to help run the company, not to be presented tooutsiders.
Recommended: The Basics on How to Develop a Business Plan

Obviously form follows function. The business plan used internally to manage the company doesn’t have to polish and present the company tooutsiders, 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 infact have to present the business to outsiders. These are very different 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 areabout managing: starting and growing a company. A plan that might begreat at selling the company might be bad at supporting a loanapplication, 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 objective?

At this point it’s hard to avoid going into branches. I’m going toresist the temptation to write about what people look for ininvestment-related plans, and then the plan for lenders, or theoperational plan. There are a lot of branches on that tree. Factors like readability and ease of navigation and covering all the main pointsdepend a lot on whether those qualities affect achieving the plan’sbusiness objective.
So it’s entirely possible to have an excellent business plan that’snever 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 that’s useless.
Recommended: Funding a Business: How to Get Startup Money

2. It’s realistic. It can be implemented.

The second measure of good or bad in a business plan is realism. Youdon’t get points for ideas that can’t be implemented. For example, abrilliantly written, beautifully formatted, and excellently researchedbusiness plan for a product that can’t be built is not a good businessplan. The plan that requires millions of dollars of investment butdoesn’t have a management team that can get that investment is not agood 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, as you evaluate a business plan: how will we know later if we followed the plan? How will we track actual results and comparethem 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 how much.
Also read: 8 Steps To Turn You Idea Into A Business

4. It clearly defines responsibilities for implementation

You have to be able to identify a single person will be responsiblefor every significant task and function. A task that doesn’t have anowner isn’t likely to be implemented. You can go through a business plan and look to see whether or not you can recognize a specific personresponsible for implementation at every point.

5. It clearly identifies assumptions

This is very important because business plans are always wrong.They’re done by humans, who are guessing the future, and humans guesswrong. So business plans must clearly show assumptions up front becausechanged assumptions ought to lead to revised plans. You identifyassumptions and keep them visible during the following planning process.
Also read : 5 Necessary Legal Steps for Starting a Home Business

6.  It’s communicated to the people who have to run it

At this point we leave the discussion of the plan itself, as if itwere a stand-alone entity, and get into how the plan is managed. Thefirst five points here are about the plan. You can deal with them as the plan develops. This and the following two are about the management ofthe plan.
I know that’s kind of tough, because it means that a plan that isn’t managed isn’t a good plan. But I can live with that.

So a good plan is communicated. Up above, where I suggest that thequalities of writing and editing are not essential for all plans, and Ireference cryptic bullet points that only the team understands: I stickwith that here. If only the team understands them it, it can still be agood plan; but it has to be communicated to that team.
We’re judging the plan by the business improvements it causes; insome sense, by the implementation it causes. So people in charge have to know and understand the plan. Plans in drawers, or locked on a singlecomputer, only work when it’s a one-person organization and nobody elsehas to know the plan.

7.  It gets people committed

Here too it’s about the process surrounding the plan, more than theplan itself. The plan has to have the specifics in point 3 andresponsibilities as in point 4, but the management has to take them tothe team and get the team committed.
For the one-person business that’s easier, but still important.
Definition of commitment: in a bacon and egg breakfast, the chicken is involved, and the pig is committed.
Also read: 7 Tips to Writing a Perfect Business Plan

8. It’s kept alive by follow up and planning process

Sadly, you can have all seven of the above points, and if you dropthe ball — the plan in the drawer syndrome — then the plan still isn’t a good plan. It has to bring the planning process with it, meaningregular review and course correction.

No business plan is good if it’s static and inflexible. Planningisn’t about predicting the future once a year and then following thatpredicted future no matter what. Planning is steering and management. It takes a process of regular review and course correction.

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