I’ve been working with the team at Palo Alto Software on a series of videos to help you with business planning. This video answers the question “What Type of Business Plan Do I Need?”
So the question is: what kind of a business plan, what do I really need?
It comes up a lot and it’s hard to answer specifically but I kind of like asking you back, well, what are you going to use?
Reflecting on the case-by-case nature of business plans and business planning, people unfortunately think of the business plan as some hard to do, ponderous formal document with a recipe, that you have to start with the Executive Summary and go through and it has
to have this and this and that, and I say no.
Wait a minute. It’s business.
Form follows function means that your business plan should contain, should include, what you need to run your business better.
So then you look at what the needs are. Some people are in a growth or startup mode where they need a business plan as a way to communicate with potential investors, or bankers, or partners, or employees. “Here’s what we want to do with this company.” And then you create kind of a general summary.
And you might actually print it out as a document that somebody can read, or it becomes kind of the script of doing a pitch presentation or what have you. But, the distinction is important. The vast majority of us running a business, what we need for a plan is to keep track of the key elements of our strategy, and think through the steps that we’ll have to take to reach our goal, and assign metrics and tasks of dates and deadlines for our team members, and project sales and costs and expenses and assets and liabilities and capital so that we can then manage cash flow, which is critical of course. And as we manage that cash flow, well, we’ll be using our planned versus actual results, comparing plan to actual so that, if sales are lower than expected, well then we have to adjust expenses and costs, or our cash will be in trouble. And if sales are higher, then we want to adjust so that we have the benefit of more resources to go into our priority areas. And we want to be able to predict cash flow based on the nature of our business, our flows, like sales on credit and receivables and inventory and payables, and things like that.
So what kind of a plan you need? You need the plan that will help you run the
business better. That’s what business planning is for.
And that document that you fear? Might or might not be required output for your plan. It might be that your plan stays on the computer and the output is the management meetings, the plan versus actual, the management that flows from your plan. So that’s my kind of framework for deciding what you need. It depends on how it’s going to be used. And some of us need to have that document that’s not the plan, it’s just a snapshot of what the plan was at one point, and some of us never really need to spin out a document, but we may need to spit out an elevator speech or a management meeting, or an operational tracking of plan vs actual or whatever.
That’s how you determine what kind of a plan you need.
How LivePlan makes your business more successful
If you're writing a business plan, you're in luck. Online business planning software makes it easier than ever before to put together a business plan for your business.
As you'll see in a moment, LivePlan is more than just business plan software, though. It's a knowledgable guide combined with a professional designer coupled with a financial wizard. It'll help you get over the three most common business hurdles with ease.
Let's take a look at those common hurdles, and see how producing a top-notch business plan sets your business up for success.Click to continue