First, here is what a standard business plan should cover:
- The company (its legal formation, history, ownership).
- What it sells (the product or service).
- The market (including size of market, growth, and trends).
- The plan (sales forecast, sales and marketing strategy, milestones, assumptions, and tasks). – The management team (organization structure, managers´ backgrounds).
- Financial analysis (cash flow, profitability, balance, returns).
The most important part of the plan is where it says specifically what´s going to happen. The core of a business plan is the collection of detailed dates and deadlines and responsibilities and commitments. I call it the milestones. I´ve seen it called MAT, for milestones, assumptions, and tasks. Ironically, this kind of detail is frequently left out of business plans that are full of big ideas and strategy. What you want from a plan is results, and the way to get results is to build specifics you can track.
The cash flow comes in as the second most important item. It should plan cash flow by month for the first 12 months of the plan. Cash in this context means money in the bank, not coins and bills. It is critical to business and much more important than anything else. There are two good reasons for stressing cash flow. First, businesses live or die with cash, not profits. Second, cash is not intuitive and makes much more sense in a plan, laid out month by month, than in your head. Complete financials means at the very least projections for profit, cash, and balance sheet, which should be in monthly detail for the first 12 months in a plan and then annually for the following 2-4 years.
A three-year plan is enough for most businesses, although some want 5 years and of course you talk about vision beyond the detail of the financials, into 10 or more years, as part of the text, if you want. a plan needs to present the three main accounting statements, is sales, profit or loss Since it´s very hard to plan for cash without also forecasting sales, expenses, profits, and balances, that means that having the cash flow straight usually means you´ve got the rest of the financials.