The Elements of a Good Business Plan

John Dmohowski:

[Business] plans don’t have to be long but they do have to be comprehensive. Most good plans have the following characteristics:

• 25 - 40 pages written in a professional manner with Executive Summary, Market Assessment, Company Description, Marketing and Sales Tactics, Product and Services, Operations, Management and Ownership, Finance and Use of Funds as the primary sections.
• Logical, cogent, easy to read and comprehend.  It should present the evidence that makes starting a business propitious, an assessment of why a particular market is attractive (it’s buying proclivities, not its size), the competitive and supplier landscapes, identify the fast followers for the product and present believable financials (no hockey stick growth models).
  • Should feel genuine not canned, condensed or off the shelf
  • Should be validated and not rely on unrealistic or unverified assumptions
  • Should focus on addressable markets rather than on service or product
  • Attentive to details, internally consistent and not shoddy, sloppy or casual
  • Thorough awareness of competitors, regulations or trends that may impact operations, position defense or sales.
• Plans are a chance to validate the assumptions leading to business formation and to ascertain customer acceptance of the business products or services being offered.
• Plans define and codify the vision of the founders, the mission of the company and the goals to be realized from starting a company. 
• It provides an opportunity to evaluate and create strategic barriers to entry that will prevent competitors from adopting your tactics or quickly replicating your model.
• It is the first time most founders have thought through and expressed their value proposition.  While simple in concept this is very difficult to do well.
  • Concentration on customer needs (what they want, not what they say they want) and their reasons to select the product or service;
  • What the firm is significantly better at than anybody else - along what dimension of expertise will the company focus their best people;
  • How is the firm positioned in the market and how well can barriers and defense be employed to protect that position; and
  • Who cares?  What makes the product or service offering unique, approachable, understandable, attractive, believable and why do particular customers select your product/service from alternatives.
• And good plans always reflect the passion of the founders.  This element is crucial to effective business planning.  If the founders are not excited and do not share their enthusiasm about the business, the plan will be devoid of the emotion that is necessary for conveying import. 

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