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What kind of plan is best for you?

All business proceeds on beliefs, or judgments of probabilities, and not on certainties.
- Chinese proverb

How do you start? What will you say?

You've gone over the idea a hundred times in your mind, so this should be easy. Yet, the written description of your business is often the most challenging to prepare. You stare at a blank screen unsure of your next step. Or you may not understand how to assemble the necessary components into a complete and cohesive document. The elements of a business plan consist of two parts: the narrative and financials.

The narrative covers where you are now, where you're going, who the managers are, how you're going to get there, and why the reader should believe you.

The financial projections add up what your business will cost to start and run until you make a profit. How much money will you need? When will you start to show a profit. What might the return to an investor be? You also want to consider including a "Sensitivity Analysis" so you can estimate what the 'Best' and 'Worst' case scenarios migh be. A good software program will address all of these areas and make this easy for you.

First, how much business plan will you need?

Usually, at first you need just an Executive Summary and basic financial projections. As you can imagine, before anyone writes a check, they'll want more. A lot more.

There are typically three types of business plans you may need:

A Complete Business Plan is necessary when you need a significant amount of funding. You'll need to explain your business concept in detail to potential backers, strategic partners such as major corporations, or potential buyers of your company.

A Summary Business Plan is a shorter format that contains the most important information about your business and its direction. A summary plan is great when you're in a hurry. It's usually about 10 to 15 pages long and is perfect for many bank loans or simply to gauge investors' interest. A summary plan is also good for attracting key employees or to convince friends and relatives to invest a few thousand dollars.

An Operational Business Plan is the internal planning document for an ongoing business. It's excellent for focusing the talents of key managers toward a common goal, and therefore should be updated at least annually. Plus, a good operating plan can do wonders for any executive's career.

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