o

t
w
o
H
The book
Hand

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tips
series

BusinessPlan
a step-by-step guide to
ensure business success
Bagged with Entrepreneur Magazine Not for sale separately
Issue 03 October 2007
www.entrepreneurmag.co.za

defining the business model

smart business pl an tips

01 Plot Your Path

Do you know where youre going and how to get there? Planning where you want
to be can impact every business decision you make

any entrepreneurs get into

business without clearly
considering why they want
to run their own business and how
big they intend the business to be in
the future. This can be debilitating. If
you dont know where you are going
and why you are choosing that route
you are likely to strive for aimless
revenue growth that may cause you
to end up in a place you never intended to be. It is therefore essential
to take stock along the way on your
entrepreneurial journey and define
what your aspirations are and why

2 s m a r t t ip s s e r ie s

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they are important to you.

An entrepreneurs aspirations can
range from survival, to lifestyle, to
growth, to extremist revolutionary.
A survivalist is a person who goes
into business just to create enough
money to meet their basic needs.
Their ambitions are to feed and
clothe themselves and their families
and as long as those goals are met
they are likely to be satisfied. Spaza
shops and independent car wash
operations are very often survivalist
type businesses.
A lifestyle entrepreneur is
a person who runs their own
business so that it can provide them
with a certain lifestyle. Being an
independent business owner may
provide flexible working hours or
the opportunity to live in a coastal
town. Such entrepreneurs can very
often be found running franchise
operations or single retail stores.
Growth entrepreneurs are business owners aiming to create a
growing enterprise, an operation
that develops past a single location and has a regional or national
footprint. Examples of growth

entrepreneurs include restaurant

chains, national logistics companies
or multiple location consulting firms.
Extremist revolutionaries are
those people who aim to create an
organisation that will one day be listed
on a stock exchange and have a global
impact. They take on large amounts of
risk to facilitate high growth and often
need substantial amounts of capital
to make their business models work.
Examples of extremist revolutionaries in South Africa are Adrian Gore
(Discovery), Stephen Saad (Aspen
Pharmacare) and Pam Golding (Pam
Golding Estates).
These different types of entrepreneurial businesses can be viewed
on a continuum from survivalist at
the one end (low risk, low return) to
extremist revolutionary at the other
end (high risk, high return). Knowing
where on the continuum you hope to
end up can make a substantial difference to the amount of capital you
need to raise, the business strategies you
employ, the management team you recruit
and the marketing
plans you put into place.
Mapping out where you want to be
can therefore help with making
decisions about many other
aspects of the business.

Write a
good
executive
summary
of no more
than
two pages

Greg Fisher

All business owners, new and old,

should take some time to write down
what it is that they want to get out
of running their own business and
allow those reasons to inform their
medium- and long-term plans for
their business. This can create relief
for some business owners who may
realise that they dont need to grow
exorbitantly to meet their needs;
it can also provide inspiration and
motivation for those entrepreneurs
who want to change the world.
Strong alignment between the
entrepreneurs reasons for running
their own business, their growth
plans for the future and the strategy
and tactics they employed in managing the enterprise, will mean that
the organisation is far more likely to
serve its purpose and flourish as it
does so.
By Greg Fisher, educationalist, speaker and
entrepreneurship expert. Entrepreneur
magazine SA. All rights reserved.

PUBLISHING CREDITS

publisher Andrew Honey

managing editor Nicole Lombard
copy editor Lesley Lambert
art director Nikki Warfield

ENTREPRENEUR SOUTH AFRICA

is published under licence from
Entrepreneur Media Inc. by Smart
Business Solutions (Pty) Ltd, a
KreditInform Group Company
www.entrepreneurmag.co.za

s m a r t t ip s s e r ie s 3

defining the business model

smart business pl an tips

02 Know Thyself

Thinking of starting a business, but not sure which path to follow?

Take a few minutes to do a personal inventory of your goals and resources.

ake a few minutes to do a

personal inventory of your
goals and resources. Think
about what it is that really lights
your fire. Passion is a driving force
in our lives, and thats never as
true as in business ownership. If
you have a passion for your work,
itll carry you far.
If you need help assembling
this personal evaluation information, sit down with a trusted
friend, an advisor, your spouse or
someone you know with business
experience, and outline your
resources, strengths, weaknesses
and your resources (including
financial resources). Talk through
the concept and listen carefully.
You need a reality check here.
Dont necessarily accept what you
hear, but take it into account.
What type of business activities
play to your strengths? Can your
advisor see you pursuing a certain
type of business? Would you be
better suited for a business-tobusiness sales situation or a retail
setup? Are you good with people,
a good public speaker? Are you
detail-oriented? Can you afford to
4 s m a r t t ip s s e r ie s

03 Hiring Outside Help

many financial institutions and investors caution against hiring a consultant to

prepare a business plan on your behalf. carefully evaluate the benefits and perils.

our business plan isnt a standalone document; its you, your

business and your promise.
You have to know every date, every
deadline, every last word, and every
number in your plan. Investors
invest in people, not plans. They
buy the jockey more than the horse.
Expert help cant change this fundamental principle. It must be your
plan, yours down to your bones, and
it must not be the consultants plan.

maintain a
clear focus
on your
fundamental
interests

Andrew Caffey

run a business? Can you afford to

fail? Whats your level of risk tolerance? This information will be very
helpful when you start to narrow
your franchise search.
By maintaining a clear focus on
your fundamental interests, you
wont be pulled off track by the
distractions you encounter during
your quest.
By Andrew Caffey, an internationally
recognised specialist in franchise and business
opportunity law. Entrepreneur Media, Inc.
All rights reserved.

the benefits
A professional plan review. Does
your plan cover the most obvious
points? Does it have any obvious
logical holes? Is it easy to read
and is it easy to find the most
important information? Ask an
expert to review it.
Help with the financials. You
dont have to be an MBA or accountant to plan your business,
but some of the underlying math
and financial principles can be
daunting. The ideal is doing it
yourself with an expert looking
on and coaching.
General planning coaching. An
outside expert can facilitate your

The worst
element
of outside
consulting
is the
consultants
who let
you think
that paying
their fees
will get you
investment,
when in fact
theyre just
going to give
you advice.

Tim Berry

thinking and planning by guiding

discussion towards key issues.
Industry-specific coaching.
Dont reinvent wheels when you
can leverage off of an experts
experience.
the perils
Misunderstanding the
deliverables. Dont pay for vague
promises. Business-plan review,
coaching and help with the financials are credible deliverables, but
getting your plan financed isnt
credible because that depends on
you, not your plan.
Wanting a turnkey business
plan. That just wont work. If a
consultant wants to go away
without you and come back with a
plan, you go away first.
Not checking references. Always
ask for references of previous
clients and talk to those people.
Paying in advance. Some
consultants need to ask a fair
payment up front, but not 100%.
By Tim Berry, the president of Palo Alto
Software Inc,which produces the worlds
leading business planning software, Business
Plan Pro, as well as other popular planning
applications for businesses.

s m a r t t ip s s e r ie s 5

defining the business model

smart business pl an tips

04 Crafting A Business Plan

Create your business plan for the all-important purpose of determining the
sustainability of your venture.

usiness plans are often seen

as the silver bullet to success
when creating a new venture.
Too often, aspiring entrepreneurs are
under the misconception that a beautiful, well presented business plan is
the key to attracting loads of venture
capital funding and so look for a secret
formula for writing a winning business
plan. In the end a business plan is only
ever worthwhile if it communicates a
good business idea in a realistic way.
It has been said that a business
plan is out of date the minute it
comes off the printer. It is true that
a business plan is a dynamic document that is likely to change as you
learn more about the industry and
the venture, but the process of
writing it does serve an important
purpose in the establishment of a
sustainable venture.
Writing a business plan is an opportunity for the founders of a business
to discuss, debate and decide on the
direction of their new venture and to
communicate that so that outside parties understand the proposed venture.
Launching a new business is risky
and it is a wise entrepreneur who
understands how to mitigate that risk.
6 s m a r t t ip s s e r ie s

Get the
entire
management
team
involved in
devising and
discussing
what should
be in the
business
plan
Greg Fisher

Entrepreneurial risk can be moderated

if all the people involved in launching
the business agree on the business
opportunity and how it should be
exploited. A business plan is merely a
tool to get them on the same page in
this regard.
If you want to speak the language
of investors and make sure you
have addressed the key issues before setting out on the most daunting journey of a business persons
career, you should aim to craft a
business plan that focuses on the
following key issues:
1. the people
Who are the people driving the business? What do they know? Who do
they know? How well are they known?
2. the opportunity
Why does this industry and market
pose an attractive opportunity? What
is the market need? How big is the
market? How quickly is the market
growing? Who are the customers?
Who are the suppliers? Who are the
competitors? What are the substitute products? What are the barriers
to entry?

3. the business model

What business model will be employed
to exploit this opportunity? What are
the sources of revenue and timing
of cash inflow? What are the drivers
of costs and timing of cash outflow?
What is the total investment required
to make the model work? What are
the critical success factors for this
business model? How long will it take
to break even? How long will it take to
reach a positive cash flow?
4. the strategy
How will the business create sustainable competitive advantage? How
will the company market the product
or service? How will the operations of
the business support the strategy?
5. the context
What are the key macroeconomic
factors affecting the business? How
do factors such as regulatory issues,
interest rates, exchange rates,
demographic trends and inflation affect the business?
6. risk and reward
What are the key risks facing the business and what processes have been put
in place to mitigate these risks? What
return can shareholders expect? What
could possibly go wrong in launching

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this business? What is the probability of

negative events happening? What processes do we have in place to mitigate
such negative events?
This framework does not provide the
kind of winning formula proposed by
many current how-to books and software programme for entrepreneurs.
Instead it is a framework that requires
the entrepreneur to systematically
assess the six interdependent factors
critical to every new venture by getting them to answer a series of probing questions. The answers to these
questions should be portrayed in a
plan that is well laid out in a logical
order, easy to read, not too long and
avoids complicated technical jargon.
The plan should be agreed upon and
clearly understood by all the founders of the business. It should also
be reviewed by potential investors
or financiers without input
from any of the founders.
Every traveller knows that
a journey is a lot less risky
when you have a map and
directions; a business plan
serves as a map for entrepreneurs, reducing their risk and
aligning their actions.
By Greg Fisher, educationalist, speaker and
entrepreneurship expert. Entrepreneur
magazine SA. All rights reserved.

s m a r t t ip s s e r ie s 7

defining the business model

smart business pl an tips

05 Make it Great

06 Building a Strategy Pyramid

Entrepreneurial start-up expert, Greg Fisher, highlights the key components

of a great plan.

ood business plans weave

a story that is understandable, believable and makes
sense to the reader. All elements
of the story must link together in
a coherent way: if the marketing
plan provides for a product launch
event, the costs of that event must
be evident in cash flow forecasts;
if the sales forecast provides for a
ramp up in sales in month four, then
the marketing plan must provide
something to spur that increase and
the operations plan must provide for
the increase in production in month
three and four.
A great business plan is short,
sharp and to the point. You need
to capture and hold attention by
including only what is relevant
and will assist in the evaluation
of the proposal.
A great business plan has a very
strong opening that captures the
essence of the idea in a few paragraphs. Few people ever get past
page two of a business plan so you
need to make your point early and
position the concept powerfully.
Writing a business plan forces
the management team of a grow8 s m a r t t ip s s e r ie s

Get one
person
to write
the final
business
plan to
ensure
consistency
and
coherence

Greg Fisher

ing venture to come together and

talk about where they are taking
their business and how they plan
to get there. Very often people in a
fast-growing business have different ideas about the overall strategy
of the business and therefore begin pulling in opposite directions.
Going through the task of writing
a business plan compels the management team to align the different
elements of an enterprise and to
begin to work together to achieve a
specified outcome.
Writing a business plan forces an
entrepreneur to test whether reasonable assumptions translate into positive cash flow and, ultimately, profit.
If one needs to adjust too many
assumptions to create that, then you
need to evaluate whether the new
assumptions are reasonable. If you
cannot achieve positive cash flow
with reasonable assumptions, this
highlights a major risk for the business. Such a risk will only come to
the fore as a result of the pain of
preparing a business plan.
By Greg Fisher, educationalist, speaker and
entrepreneurship expert. Entrepreneur
magazine SA. All rights reserved.

Need help implementing your ideas? This approach may provide you with the
structure you need.

arketing guru Seth Godin

recently addressed alignment in a piece about iTunes
falling over its own words and intentions. After reading it, I did a quick
Google search on strategic alignment, which brought up a lot of results and a lot of different meanings.
To me, strategic alignment means
lining up the details on the ground
with the strategy up in the sky. For
example, suppose a retail computer
business says it focuses on service

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planning and
implementation
guidelines

seeker small businesses. Revamping the physical location to create a

long and inviting service counter is
strategic alignment. Staffing it with
friendly technicians in white service
coats, like the auto dealers, is strategic alignment. Buying a white van
with a huge sign on the side saying,
Installing Another System, is strategic alignment. Doing nothing but
talking about it at meetings is not
strategic alignment.
It was strategic alignment, or the
s m a r t t ip s s e r ie s 9

defining the business model

smart business pl an tips

lack of it, that led me to develop

the strategy pyramid back in the
mid-80s. I was consulting with the
Latin American group of Apple Computer, led by Hector Saldana. I had
done the groups annual business
plan for three years when Saldana
issued a challenge: We want you
to manage our annual plan again
this year, but with a difference. This
year we want you to sit with us the
rest of the year and make sure we
actually implement it.
The repeat business was, of
course, good news, but there was
a catch. The Apple Latin America
group at that time was a collection
of a couple of dozen young, well
educated, brilliant people. Saldana
and I were the only ones over 30
years old. It was hard to keep that

Dont
allow
your plan
to exceed
25 pages

Greg Fisher

group focused. Strategy takes boring consistency to implement. The

strategy was desktop publishing,
but wed been working with that for
so long that multimedia was much
more interesting to the managers, but not to the market.
So I came up with the strategy
pyramid, which made it possible to
track implementation and work on
strategic alignment. We used it to
build a database of business activities that we called programmes
and track them back up through
tactics and strategy. One strategy,
for example, was to emphasise
desktop publishing. Tactics used
included advertising, pricing of
bundles and distribution channels.
The detailed programmes were
things like advertising insertions,

STRATEGY
TACTIC
PROGRAMME

TACTIC
PROGRAMME

TACTIC
PROGRAMME

PROGRAMME

From Business Plan Pro. Reproduced with permission from Palo Alto Software, Inc.

10 s m a r t t ip s s e r ie s

seminar marketing, bundling of

hardware and software, and distributor pricing. Each programme
had a manager responsible, a
start date, an end date and a budget. Sometimes the budget was
zero, but there was room in the
database for the amount.
The result was strategic alignment. The next year we were able
to sort and manage programmes
according to strategies and
tactics. We could show a spending pie divided into pieces representing each of our strategic
priorities. We could also track
implementation to the level of
specific tasks assigned to specific managers, with performance
on start date, finish date and budget. In some cases we could even
track sales back to projections in
the plan. So seminar programmes
that began with sales projections
had to live with sales results.
You can use the strategy pyramid in your own planning. Focus
on three or four main strategic
priorities and build a conceptual
pyramid for each one. Dont sweat
the details like definitions of strategies and tactics; just make it work
for you, in your business, with your
pyramid. Do sweat the details like

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guidelines

making programmes with specific

responsibilities, budgets and projected outputs when possible.
You dont have to be a big company. Apple was a huge company to
me in the mid-80s, because it had
more than 1 000 employees; yet
the Latin American group had less
than two dozen people. We made the
pyramid work because we wanted
to make it work; we wanted to build
strategy, not just great parties.
By Tim Berry, the president of Palo Alto
Software Inc,which produces the worlds
leading business planning software, Business
Plan Pro, as well as other popular planning
applications for businesses.

s m a r t t ip s s e r ie s 11

defining the business model

smart business pl an tips

07The Numbers in Your Plan

Do words like cash flow, balance sheet and sales forecast make you cringe? follow
this easy guide to understand the figures you need to make your business plan count.

was a wordsmith first before

I went to business school and
discovered that some things
cant be explained with words alone.
Even with all the great thought youll
put into the text portions of your
business plan, a good business plan
depends on numbers to make it all
real. Without the numbers, its only a
rough draft at best.
An effective business plan has
to include at least three important
pro forma statements (pro forma
in this context means projected).
Theyre based on the three main
accounting statements:
The profit or loss, also called
income statement shows sales,
cost of sales, operating expenses,
interest and taxes. The statement
shows performance over some
specific time period, like a month,
a year or a quarter.
The balance sheet shows assets,
liabilities and capital (assets less
liabilities). This statement shows
a companys financial position at a
specific time.
The cash flow statement projects
how much money is in the bank
12 s m a r t t ip s s e r ie s

avoid
excessive,
detailed
financial
projections
and Dont
be overly
optimistic
in your
projections
you
will lose
credibility

Greg Fisher

and will be in the bank.

The three critical accounting
statements are so well linked that
you could prepare the balance
sheet automatically if you had
already prepared your income and
cash flow statements.
I also recommend that you add
at least two additional tables
highlighting specific portions of the
main tables: a sales forecast and
a personnel plan. In addition, Id
suggest you start the balance sheet
with either starting costs or past
performance, depending on whether
youre creating a business plan for a
start-up or an existing company.
You dont have to know the
subject of finance inside and out to
create a business plan. You do have
to understand that if you dont
know how to prepare the main
financial projections, you should
get help. If youve got the budget,
you can hire somebody to do this
for you, but then that makes it their
plan, not yours. The better way is
to get help from books, websites,
software, or friends and family so
that you can do it yourself. High

finance is a career, but projecting

your own business finances is
something you can do yourself as
long as you have the patience to
take it step by step. (You may have
to learn at each step, but its good
for you.)
If you have the budget to hire
consultants, take advantage of that
and bring some experts on board,
but be sure you have them show
you how to prepare the projections
rather than just have them do it for
you. You want to understand your
business numbers when questions
come up. Ideally, consultants or not,
you should be able to review and
revise your numbers at any time,
day or night.
Expect to have to make some
educated guesses. Dont waste your
time complaining that you cant
possibly know how much sales or
expenses will be because yours is a
new business every business that
ever started was a new business,
and the good ones had estimates
to work with. You can do this
everybody else does, and youre no
different. Nobody likes to forecast,
but nobody is more qualified than
you to forecast your own business.
Regardless of how you do it,

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to construct
budgets and
manage cash
flows

dont expect to go through the

numbers once, from step one to
step whatever, and be finished. It
doesnt work like that. Any revisions
you make in one table will affect
the others. And as you develop your
plan, your numbers will change.
Whatever tools you use
(obviously were talking about
software and a computer), make
sure it all flows together.
s m a r t t ip s s e r ie s 13

defining the business model

smart business pl an tips

08 What Investors Look For

Heres some of the interdependence
you need to deal with:
Starting balances affect cash flow
and all other balances.The sales
forecast affects profits, cash flow
and the balance sheet.
The personnel expense forecast
affects profits and loss, cash flow
and the balance sheet.
Many of the things you do in cash
flow directly change the balance
sheet, such as taking out a loan,
taking in investment or paying
dividends.
The balance sheet can affect the
cash flow. For example, increasing
accounts receivable or inventory
decreases the cash balance while
increasing accounts payable
increases the cash balance.
When it comes to timeframes, do
your numbers for the first 12 months
of the plan in monthly detail, then by
year for the following two to five years.
Normally, three years is long enough,
but some plans involving longer cycles
will require five years total. You can add
highlights for 10 years, and you can
talk about time periods even longer
than that in the text.
By Tim Berry, the president of Palo Alto
Software Inc,which produces the worlds
leading business planning software, Business
Plan Pro, as well as other popular planning
applications for businesses.

14 s m a r t t ip s s e r ie s

Starting Balances
and Start-up Costs

When it
comes to
timeframes,
do your
numbers
for the first
12 months
of the plan
in monthly
detail, then
by year
for the
following
two to five
years.
Tim Berry

Although theres no fixed

sequence in a process like
this, because the statements
are so interdependent, I
recommend you order the
tables in a way that leads
toward the final results and
builds on the source tables:
Sales forecast
Personnel expenses
Profit and loss
Cash flow
Balance sheet

Understand that you cant

get to the last step without
a lot of revision of earlier
steps. What you discover in
the profit and loss will change
your personnel expenses, for
example, which will further
change your profit and loss
statement, which affects your
cash flow and balance sheet.
Just keep adjusting until it
seems right.

Heres what your business plan needs to include to catch the eye of start-up investors.

lthough you definitely need a

business plan to find investors,
your plan alone no matter
how good it is isnt enough to attract investors. The investment decision depends on a lot of other factors:
A management team with a
proven track record. Yes, that
often means they wont fund
your plan because you dont have
experience, but you dont have experience because they wont fund
your plan. Deal with it. If this is the
case, look for private investors or
friends and family.
A defensible product with a competitive advantage. Its easier to
predict the success of a tangible
product than it is a service, which is
why service businesses are rarely
interesting to venture capitalists.
Reasonable valuation. Divide the
amount you plan to take as investment by the percent of ownership
youre offering to give in exchange.
For example, offering 50% of a company for R5 million means youre
valuing your company at R10
million. An outrageous valuation
shows investors you may still have
your head in the clouds.

Whether
youre one of
the very few
start-ups
that land
venture
capital
investment
or youre
taking
investment
from angel
investors,
friends or
family, work
closely with
an attorney
to be sure
that any deal
you do is
structured
properly.

Tim Berry

A clear statement of the investment offering. Check with your

attorneys about the
legality of your offering, including how
much equity for how
much money youre
planning to offer this
time through, and the
planned future dilution for
later rounds of investment.
other things that interest
venture capitalists include:
A shot at increasing the value of
the company from whatever they
think it is now to about 100 times
that in three to five years.
A plan that has several other similar investors ready to invest at
the same time. Venture capitalists
find safety in numbers so they
dont want to be the only investor
in a deal.
A clearly stated exit strategy.
Investors like to see that youve
thought ahead to how theyre
going to get their money back.
By Tim Berry, the president of Palo Alto
Software Inc,which produces the worlds
leading business planning software, Business
Plan Pro, as well as other popular planning
applications for businesses.

s m a r t t ip s s e r ie s 15

defining the business model

smart business pl an tips

09 Common Mistakes to Avoid

Steer clear of these 10 blunders when crafting your business plan.

keep it current with your business.

Of course, youll soon realise that
your plan may never be done, but
the important thing is, youre planning. You should always be planning your business.
2. dont confuse cash
with profits.
Theres a huge difference between
the two. Waiting for customers to
pay can cripple your financial situation without affecting your profits.
Loading your inventory absorbs
money without changing profits.
Spending most of your money buying inventory doesnt affect profits,
but cash flow is much more important than profits because profits
are an accounting concept and
cash is money in the bank you
dont pay your bills with profits.

n the more than 30 years Ive

been involved with business
planning, Ive seen styles and
fashion of plans change a lot, but
the fundamentals remain fairly
constant. To help you craft a plan
that hits all the right notes, heres
a list of some of the more common
business planning mistakes you
should avoid:

16 s m a r t t ip s s e r ie s

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sample
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mag.co.za to
access business
plan templates

1. dont put off writing a plan.

Dont wait until you have enough
time, dont wait until you have the
right people, and definitely dont
wait until theres an urgent reason
you suddenly need a plan. Instead,
just do it now. Recognise that you
need a business plan and that your
first step is to prepare your first
plan. Get a draft up and running
and then continue updating it to

3. dont dilute your priorities.

A plan that stresses three or four
main priorities is a plan with focus
and power. People can understand
three or four main points. A plan
that lists 20 priorities doesnt really
have any.
4. dont overvalue the
business idea.
What gives an idea business value

Write From an Audiences Perspective

The starting point for any business plan
should be from the perspective of the
audience. What is the purpose of the plan?
Is it to secure funding? Is it to communicate
the future plans for the company? The writer
should tailor the plan for different audiences,
as they will each have very specific
requirements. For example, a potential
investor will seek clear explanations
detailing the proposed return on their
investment and time frames for getting
their money back.

write a
business
plan that
shows you
building a
business
around a
great idea,
or forget it.
An idea alone
does not
make a great
business.
Tim Berry

is not the idea itself but a business

thats already built on top of it. It
takes employees having shown up
every morning, phone calls being
answered, products being built,
ordered and shipped, services
being rendered, and customers
paying their bills to make an idea a
business. Either write a business
plan that shows you building a
business around that great idea,
or forget it. An idea alone does not
make a great business.
5. dont confuse a plan with
the act of planning.
You need both to succeed. And
your planning process doesnt end
s m a r t t ip s s e r ie s 17

defining the business model

smart business pl an tips

Understand The Competition

An integral component to understanding any business
environment is understanding the competition,
both its nature and the basis for competition within
the industry. Is it a competitive
environment, or one that
lacks competition?
Including a thorough
understanding of the
basis on which you intend
to compete is vital; can you
compete effectively with the existing players?
when your plan is done. The value
of a plan is in the implementation
it causes, and implementation
starts the day you settle on the
main points of your plan. Understand that your business plan is
never really done youre always
revising it, or should be, because
reality is always pressing forward.
Without a plan setting markers,
youll never know the difference
between plan and reality. Work
your plan; dont just write it.
6. dont fudge the details in
the first 12 months.
By details, I mean your financials,
milestones, dates, responsibilities
and deadlines. Cash flow is the
most important, but you also need
18 s m a r t t ip s s e r ie s

Dont use
technical
jargon or
unknown
acronyms in
your plan

Greg Fisher

lots of details when it comes to

assigning tasks to people, setting
activity dates and specifying
whats supposed to happen and
whos supposed to make it happen.
These details really matter. A business plan is wasted without it.
7. dont sweat the details for
the later years.
This is about planning, not
accounting, and youre only
guessing the future in a system
full of uncertainties. As important
as monthly details are in the
beginning, they become a waste of
time later on. How can you project
monthly cash for three years from
now, when your sales forecast is
so uncertain? Sure, you can plan in
five, 10 or even 20-year horizons in
the major conceptual text, but you
cant plan in monthly detail past
the first year. Nobody expects it,
and nobody believes it.
8. dont create absurdly
optimistic hockey stick
projections of sales taking
off in the near future.
Yes, it happens about once a
generation, but nobody believes it
in a business plan because they
all say that. No investor is going

to tell you they believe that even

though your sales have been flat up
to this point, once you have their
money, your sales are going to go
through the roof. If youve really
created that once-in-a-generation
business whose sales will take off,
then youd better build so much
bottom-up detail into that forecast
that even the most jaded investor
will believe it.
9. dont write too much.
Keep your business plan short and
focused on your main priorities.
Its a business plan, not a doctoral
thesis. Stick to the main points, and
use bullet points to keep the main
points highlighted and simple.
10. dont sweat the
formatting details.
No business plan has ever failed
because the page headers werent
color-coded. Dont dress up your
plan with multiple fonts, too
many colors or complex page
layouts. Dont hide the important
information. Keep it simple, and
dont sweat the small stuff.
By Tim Berry, the president of Palo Alto
Software Inc,which produces the worlds
leading business planning software, Business
Plan Pro, as well as other popular planning
applications for businesses.

s m a r t t ip s s e r ie s 19