Characteristics of a Good Business Plan
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"To start your journey in having your own business, whether in Brazil or in the United States, it is essential that you have a clear view of the market conditions in which you will be established in order to make objective decisions, calculate risks and have success. The business plan is the first step in this journey. It is the instrument that will allow your plans to become clear and concrete actions."
Characteristics of a Good Business Plan
Every entrepreneur needs a way to organize and present information explaining how he plans to establish, grow and manage his business. The business plan is the perfect tool for this. When well built, such a plan catches the attention of investors and other stakeholders, encouraging them to support the project. And although potential customers and suppliers will likely never see that plan, it will have a great impact on how they perceive the company. When viewed in this way, a business plan becomes the foundation of any successful business.
Here are 7 essential characteristics for that foundation:
Abrams*, outlines how to make a business plan both solid and attractive:
1. The written document must make a good first visual impression;
2. The executive summary, the financial statements and the description of the management team must inspire sufficient confidence in the reader, to the point that it makes him want to invest in the enterprise;
3. The plan must contain a minimum of 15 and a maximum of 35 pages; on average, 20 pages are sufficient; it should cover a period of about five years, containing monthly statements for the first two years and semi-annual or annual for the following years;
4. Subjective observations should be avoided. Examples: "We believe ...", "We hope ..."
5. Always use well-recognized business and financial terminology. Examples: Market Share, Break-even Point, etc;
6. Always use numbers expressed in graphical form (citing references); for each data type, there’s an ideal format:
- Bar graphs - work well for making comparisons;
- Line graphs - are useful for demonstrating trends and making comparisons;
- Pie charts - ideal for indicating market share, sales, etc;
- Flowcharts - serve to represent processes, standards and organization charts.
7. The document must be visually appealing, that is, be sure that the font is adequate, that the layout is not confusing to the reader, and that the document is professionally bound, for example.
Preparing the business plan will help you to evaluate whether your idea is viable. You might decide to seek more detailed information about your industry, the products and services you will offer, your potential customers, competitors, suppliers and, perhaps most importantly, about the strengths and weaknesses of your business. In addition, it will serve as a support to obtain financing, new partners and investors, or to establish partnerships with suppliers and customers. However, the main user of your plan is you.
*All the planning strategies mentioned in this article were taken from the “Entrepreneurship Guide - Opportunities in the North American Southeast” offered by the BACC -SE Brazilian-American Chamber Commerce of Southeast in an article titled “Capacitação e Preparação para Iniciar o Empreendimento.”
*This guide is offered in Portuguese. If you’d like further information, but don’t speak Portuguese, please contact us at the BACC; we’re glad to assist!
*ABRAMS, Rhonda M.Business plan: Segredos e estratégias para o sucesso, 1994.
