If you're planning a road trip across the country, you've likely researched the routes that best suit your desires for the trip. Perhaps you chose scenic roads with lots of stops along the way, or maybe you decided to take the quickest track. To make it to your destination, you need to know where you're going and how you're getting there.
Preparing a business plan is just the same. Without a clear, objective proposal, you cannot expect your company to evolve successfully. The plan should serve to guide you throughout the startup process.
Brian S. Cohen, an operating partner at Altamont Capital Partners and member of Young Presidents' Organization, a global network of young chief executives, likened the business plan to a road map for the company.
"You don't want to go into any situation blind," said Cohen. "You need a map for how you are going to achieve your objectives. The business plan serves that function."
Based on advice from our expert sources, here are a few specific dos and don'ts to consider while formulating your plan. [See Related Story: 10 Surprising Things Every Business Plan Should Include]
Do share your plan — don't keep it to yourself.
If you want your company to succeed, then all employees should understand the business plan's dynamics. It is not a document that you should lock away.
"The business plan keeps an organization focused, [and] it needs to be shared," Cohen told Business News Daily. "Too many companies treat it as a confidential document to be kept away from the 'prying eyes' of the rank-and-file employees. I believe the business plan should be shared, discussed and amended where appropriate, through an open loop of feedback and insights."
The more people who are involved, the more ideas you can circulate around the company, Cohen said. It is important to consider every worker's input to ensure that the outcome is something that's pleasant to all.
Do follow an outline; don't go overboard.
You don't need to have an over-the-top, elaborate document, fancy formatting or flashy decor. However, much like a road map, it must make sense to you as well as to your company's employees.
Start your plan, said Cohen, by using a specific outline called SWOT, which stands for strengths, weaknesses, opportunities and threats. First, create an executive summary, in which you describe in what field you wish to succeed, and how and why you intend on doing so. And then, list your company's strengths and weaknesses as well as opportunities for growth, and detail the threats to it that might hinder the achievement of those goals.
Do conduct research — don't "wing it."
As with any business project, research is absolutely critical to a solid business plan.
"Research is one of the big value-adds of writing a business plan," said Joseph Ferriolo, director of Wise Business Plans. "Research forces companies to learn what they can expect to make and what the industry trends are."
If the research indicates that your idea is viable, then you can proceed by writing down the goods or services you offer, your marketing plan, how much funding you need and your goals. For more ideas on specific points to include in your business plan, check out this Business News Daily article.
Do put it to use — don't file it away.
Your plan is there for a reason. Don't be afraid to refer to it as much as possible — think of it as checking the map when you've made a wrong turn. There is nothing wrong with using your plan to get back on track or to remain there.
"The biggest mistake people make is this: They prepare the document and then put it in a drawer and never look at it again. That's self-defeating," Cohen said.
Finally, remember that you should revisit your business plan as your company grows.
"Don't just make the business plan and use it for funding — really benchmark your company against it," Ferriolo said. "Reference the plan monthly and quarterly, and revise your research and estimates as you proceed. Being accountable to the vision you set forth will help keep you in line and successful."
Editing and updating is always a good idea, too; you can never make too many revisions. Cohen said that a business plan is "a document that is never complete."
Templates and resources
Additional templates and resources are available at the following sites:
A side-by-side comparison of the best software for writing business plans is available on our sister site Top Ten Reviews.
Additional reporting by Elizabeth Peterson and Katherine Arline. Some source interviews were conducted for a previous version of this article.