My column this week for the Tennessean addresses the importance of following the correct process in developing a business plan:
Many aspiring entrepreneurs turn to the latest business planning software when getting ready to start their businesses, but such tools create too many shortcuts that undermine the crucial process of business planning.
To construct an effective and more accurate business plan, it helps to understand how the experts — such as investors and bankers — evaluate business plans.
The business plan information presented in your article is extremely helpful in that I was planning to run out and purchase business planning software after becoming somewhat confused with all of the offerings online. The focus on tying the revenue forecast to the marketing plan gives me a stronger angle to formulate my first plan. Looking at what I’ve constructed so far, there is opportunity for improvement. Thanks for taking the time to share this.
Jeff, I doubt whether you really meant to indiscriminately trash business plan software as if it were all bad. Tools are good, right? Word processing is good for writers and spreadsheets are good for business analysts? And did you really mean to imply that planning cash flow is as simple as multiplying price times units? I really doubt it.
I’m Tim Berry (www.timberry.com), principal author of Business Plan Pro. I really believe you need to distinguish between good business plan software, which includes completely modifiable outline and mathematically and financial correct projections, and bad business plan software, which doesn’t. I agree with you that “black box” software is bad, but I don’t agree at all that everyone should start at zero with an empty page and an empty spreadsheet.
Cash flow is not intuitive and it is critical to business success. That alone is enough argument to justify taking another look at this topic for the sake of your readers.
Even though preparing a business plan is a long (and sometimes tedious!) process, I am glad that we have learned how to do so without software in our class this semester. Once you learn how to write a plan yourself, using the software might be ok, but at least you won’t be entrusting computer software the fate of your business. The way I see it, the advantage to knowing how to do BP’s the “old-fashioned” way is that when using other tools you will be able to catch on if something doesn’t look right.
having reviewed a lot of businessplans, I agree that it helps to understand what the “investors” whant. A crucial step in this process, is to get the right structure in the plan – I have found it helpful to use a mindmap in this process. It helps by getting a structured overview of the initial thoughts, the different steps etc.
A good online version of a mindmap can be found at http://www.comapping.com – check the video out