This post is part of the series, SmallBusiness.com Guide to Starting a Business: Information, resources and advice about starting a business. You can browse other posts in the series below.
If you’re considering starting a business, one of the first things you’ll need to do is develop a business plan. However, business plans come in various flavors. There’s the plan you develop to prove to yourself and others that your great idea can actually make money. There’s the plan the bank wants to see if they are going to consider lending you money (even if you provide collateral). And there’s the plan you need if you are seeking outside investors (9.8 out of 10.0 degree of difficulty if this is your first start-up.).
No matter what type of business your plan is for, there are certain parts of a business plan that must be included (or followed), according to business plan expert, Tim Berry, founder of Palo Alto Sofware, author of The Lean Business Plan and creator of LivePlan. Here are his four must-haves:
1 | Projections are not important for their actual numbers as much as for their presentation of drivers, relationships between growth and spending, key spending priorities, sales aspirations, and assumptions related to cash flow.
They have to be solid and integrated, but accuracy is much more a matter of transparent assumptions than accurately predicting the future.
2 | All business plans should include these components.
- Essential numbers
- Projected sales
- Direct costs
- Cash flow
3 | All business plans should provide the ability to measure accountability and track results.
4 | All business plans should be reviewed and revised at least monthly.
The review should look for assumptions that need to be changed. The review should analyze the projected results vs. actual results. Revisions should be based on the variation between the two.