What Makes a Good Business Plan

A good business plan isn't just about ticking boxes or impressing investors.

It's about setting your business up for real-world wins.

And it doesn't mean doing proper formatting or getting the grammar correct. Yes, they’re important too. But we're talking about creating a plan that gets you results.

So, what makes a good business plan? What makes them truly effective?

Let's break down seven important qualities that can turn your business plan into a valuable tool for success.

1) The Right Plan for The Right Purpose

Before you begin writing a business plan, think about why you need a business plan in the first place. This is because different plans serve different purposes. So it's important to create one that suits your specific needs.

Also, not every plan needs to be perfect.

As the multi-billionaire entrepreneur Richard Branson puts it:

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Most business plans are meant to help you manage your company, not impress outsiders. They don't have to be fancy or formal; they just need to be useful and easy to update as your small business grows.

Facebook founder Mark Zuckerberg and LinkedIn co-founder Reid Hoffman also expressed similar sentiments.

In a Harvard commencement speech, Zuckerberg shared “If I had to understand everything about connecting people before I began, I never would have started Facebook”.

Next, think about who's reading it.

If you're showing your business plan to potential investors, it needs to look good and be well-written. It needs to clearly explain your idea, team, target market, and other key elements, along with your future exit strategy.

Similarly, if you're using your business plan to explore a partnership or team up with another company, it needs a slightly different focus. It should clearly:

• Show how both sides will benefit from working together.
• Highlight the strengths each partner brings.
• Outline a straightforward plan for achieving shared goals.

2) Can You Actually Make it Happen?

A great business plan is rooted in reality. So, you should aim for goals that you can truly achieve, not just imagine.

For example, a well-crafted written plan is useless if your product can't be built. Or your team lacks the skills to execute it. Similarly, ignoring a major challenge in your plan can lead to serious problems down the road.

In other words, your plan needs to be practical and actionable. Here's how to make sure your plan is built on a solid foundation:

Realistic goals, realistic plans

Whether it's financial projections or your marketing plans, ensure your plans show it's achievable. If you plan to expand into a new market, consider if you have the resources and expertise to do it successfully.

Growth with a plan

Have a strategy for growth, but make sure it's based on realistic steps. If you want to increase your customer base, outline specific tactics to reach new customers, instead of just hoping for the best.

Connect the dots

Link your goals to concrete actions. Show how your plans will lead to results. This makes your projections more believable and demonstrates that you've thought things through.

3) Goals That are Specific and Measurable are Key

Every good business plan should include specific details like tasks, deadlines, predictions, budgets, and ways to measure your progress. This makes it easy to track your plan and see if you're on track.

Ask yourself:

• What are the signs that we're sticking to the plan?
• How can we track our actual achievements and compare them to our plan?
• What indicators will tell us if we're moving in the right direction?

While it's fun to think about big ideas, successful planning also needs practical details, such as:

• Tasks: What needs to be done
• Timeframes: By when does each task need to be completed?
• Responsibility: Who is in charge of each task?
• Budget: How much will each task cost?

These specifics give you a clear picture of how you're doing in reaching your goals.

4) Acknowledge your Employees

Show your employees some love. Include a plan for employee appreciation in your company strategy. A positive workplace culture boosts employee loyalty and helps you keep your top talent.

In fact, employees are a whopping 82% happier at work when they feel appreciated. Moreover, happier employees outperform those in companies without a strong culture. If you're not sure what your company culture should look like, take inspiration from Google.

Google is known for its positive workplace, and part of that is its flexible approach to work. Employees are passionate about what they do and have the freedom to work when and where they want. Plus, remote teams get all the support and training they need to succeed.

You can catch a glimpse of their company culture at their Instagram account @lifeatgoogle.

5) Be Upfront About your Assumptions

Business plans aren't always perfect. They're written by people making educated guesses about the future, and people aren't always right.

So, your plan should clearly outline any assumptions you're making.

• Are you assuming productivity will increase because it has in the past?
• Are you assuming the market will stay the same with no new competitors?
• Are you assuming new technology will cut costs?
• Are you assuming growth in your social media presence?

Explain why you think these things are possible based on past experience, but be upfront that they're still assumptions.

You might need to tweak your plan later on. By highlighting these assumptions from the start, you won't be surprised if things go south. But most importantly, you'll be ready to adjust.

6) Crunch The Numbers

Of course, short and sweet business plans are great for quick overviews. But, at the end of the day, your business needs dollars to run smoothly. And managing your cash flow requires detailed financial plans.

That means creating budgets and tracking your progress.

A good business plan contains financial statements like sales, expenses, profits, and cash flow.

Track those numbers to see how you're doing compared to the goals and budget you’ve set. Watch for changes in things like unpaid customer invoices or inventory levels so you can take action if needed.

Remember, running a business is about making adjustments along the way.  That's why it's important to regularly compare your plan to your actual results.

7) Keep it Simple

Most businesses need a lean business plan. This can include a few pages with bullet points (strategy, tactics, milestones) and tables (sales, costs, expenses, profits, cash flow).

Avoid using your business plan to show off with buzzwords, jargon, or overly complex explanations.

For example: a sentence like “Our platform will deploy a cutting-edge, geolocational algorithm to facilitate seamless connections between dog owners and walking professionals” can be easily written in this way: “Our app connects dog owners with trusted, local dog walkers.”

You’re writing a business plan and not a thesis. So, skip the complex explanations. Investors and bankers have experts to review the details; they don't expect to find everything in your plan.

Conclusion

A good business plan helps you map out clear next steps, even if you're not seeking investors. It can also help you spot potential problems before they become real issues.

So, whether you're launching a new online venture, expanding your current business, or buying an existing one—writing a business plan that fits your specific goals and needs is how you create a good one.

We know writing a plan can be tough, but it doesn't have to be. An AI business plan generator like Bizplanr can help.  Just give them some basic info about your business, and they'll whip up a plan in no time. You can also use their sample business plan template for structure and guidance.