Best Business Plan Practices

Business Plan Articles

When creating a business plan, there are several factors to consider that will not only increase the prospective success of your company, but also increase the receptivity and understanding by readers. Following the business plan best practices will help you to improve the profitability of your company, the fundability of your investment, and the overall persuasive power that you plan has. The following article created by Pro Business Plans is dedicated to providing insights into the best practices for business plan writing and how your company can translate these into profitability. We have worked with thousands of entrepreneurs and investors and are sharing over 30 years of insights.

business plan best practices

Best Practices

In general there are four main factors that must be followed in order to adopt the best practices for your business plan. These cover the business model, management team, marketing plan, and financial model. It is important to paint a complete picture of your company rather than focusing too much on any one area. We have often found that if the business plan is completed internally, that the writer excessively focuses on what he/she is most familiar with. For instance, the engineer places too much emphasis on non-important technical details. The finance professional goes into far much depth regarding the financials, or a legal professional covers unnecessary clauses that leave the reader fundamentally misinformed. The following practices are briefly explained as it related to each section and the business plan in its entirety.

Business Model

  • Be Concise, but Informative
  • We find that many companies struggle to strike a proper balance between a plans that contains enough information to make a decision, without going into extreme detail. In general, we believe in providing more information and using a ‘highlighter rule’. This rule only retains information after the first draft that would be highlighted by the reader. Many plans contain non-important information surrounding critical details that would be highlighted or underlined. When a person must underline some important points, their attention is lost as they research for these conclusions or premises. By following this rule, your company can develop a plan that is both concise and informative.

    1. Be Conservative yet Optimistic

    We have often found that business plans are extreme and either overly ambitious, to the point of being infeasible, or they are overly conservative and reflect a management team satisfied with ‘mild’ success. The best practice is to create conservative, yet optimistic projections that may be achieved with the resources that the company has. Expecting to monopolize the market in the banking industry is obviously infeasible, but we have seen business plans that propose to do what would be blatantly illegal. On the other side of the, we have seen many entrepreneurs only thinking about their own profitability and securing a reasonable salary to quit their day job. This will not interest investors or prospective partners. Moreover, most companies fall short of their goals so it is important to set them high so that the team is much more ambitious to achieve the highest performance possible.

    1. Use Reliable Research and Cite Sources

    Many business plans that we have seen use market research that is in the favor of the investment case. Rather than using an unbiased research firm such as IBIS World Industry Research, they deliberately find information to prove their opportunity. This generally invalid because investors know that there is someone that can manipulate statistics and independent studies to provide ‘evidence’ for almost anything. If the research firm is not used by an investment bank or comes from raw data such as US Census information, it is likely to be rejected outright.

    1. Focus on What You Have Done

    What you will do is important for the future, but anyone can talk about what they will do. A company can use any market research and third parties to support its financial projections, but the most important thing is the historical ability to deliver returns on investment. If your company has previous sales, the management team has a tangible track record for performance, or the company is already profitable, your chances of persuading the reader are much greater. Therefore, the best practices for a business plan always includes leveraging what you have done as a justifiable case for what you will do in the future.

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