Business plans serve many purposes. Before starting a business, a simple business plan enables would-be entrepreneurs to flesh out their ideas and lay out their vision. When it comes to seeking funding or planning for expansion, a comprehensive business plan is almost always a must. And when it comes to problems down the road, business plans help business owners foresee issues, make adjustments and plan their attack.
"A business that operates without a business plan is a business that is on the road to financial failure," said Joe Geiger, president and CEO of First Nonprofit Foundation and an adjunct professor at Duquesne University's Graduate Program for Leadership and Ethics. [Free Business Plan Templates for Startups]
Of the several million startups that launch each year, the vast majority fail within the first few years, he said. "The primary reason for all of these failures is that they run out of money," Geiger said. "The fundamental reason for their financial problems is lack of planning."
Some of these failures could have been prevented by having a business plan. Yearly business plans with cash-flow forecasts enable businesses to discover their impending cash shortages months, if not years, before they run short of money, Geiger said.
To create a well-crafted business plan, your chosen business-plan software should cover the two critical parts of a business plan. The first part outlines the business's goals in the coming years and how they will be accomplished, Geiger said. "Who is going to accomplish the goals? What are the milestones on the path to accomplishing the goals? And what people, tools and funds will be needed?" he said.
The second part is a cash-flow forecast, which typically covers a three-year span — the first year includes monthly forecasts, and the second and third years have quarterly forecasts, Geiger explained.
However, most entrepreneurs don't have an accounting background to help them make proper forecasts, he said. Business planning tools should fill that gap. Geiger's own cash-flow forecast template forces entrepreneurs to carefully forecast all revenue and cost items; tells them how much money is needed and when it is needed; and warns them of financial problems before they occur. Similarly, the business-plan software you choose should delve deep into financial details, he said.
"The more specific a cash-flow forecast is, the better it is," Geiger said. For instance, "listing a general overhead expense item is meaningless, while using rent, electric, etc. results in a meaningful forecast," he added.
To help you choose the best solution for your business, our sister site Top Ten Reviews does extensive in-depth reviews of business-plan software. Here are the top three recommendations:
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#1 Business Plan Pro
Business Plan Pro leads Top Ten Reviews' rankings for business plan software, as it provides everything beginners need to develop a professional business plan, and also has several options for advanced users. The Standard Edition of the software has many features, including more than 500 sample business plans, industry profiles and planning e-books. The Premier Edition adds the ability to import data from QuickBooks or Excel, visual cash-planning capability, valuation-analysis tools and additional financial tools.
Research and Forecasting Tools: Business Plan Pro provides more than 500 sample business plans covering several diverse business concepts. Additional resources are available to determine the best way to forecast numbers for marketing, cost per unit and other industry expenses. The "drag and drop" graphic forecaster lets users quickly and easily create graphs and charts.
Help & Support: Business Plan Pro provides beginners and professionals with a business-plan wizard, step-by-step guidance and informational videos.
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#2 Biz Plan Builder
Biz Plan Builder ranks highly for its multiuser capabilities, including the ability to share securely stored files over the Internet. The software includes everything needed for a customizable, professional business plan. It also helps users create an understanding of their business to help sell themselves to investors and bankers. It includes future strategy development to review the prospects of an acquisition through valuation analysis, adding value for a potential merger and cultivating ideas and advice on restructuring or reorganization.
Research and Forecasting Tools: Forecasting tools include a comprehensive budget/feasibility analysis using a "best/worst" case analysis. Models and financial analysis are also available to help users make the best assumptions, projections and financial determinations.
Help & Support: Supporting documents include business forms such as articles of incorporation, résumé templates, team responsibilities and general partnership agreements, as well as personal financial statements, press releases, private offering disclaimers and stock-option tracking worksheets. Business-plan updates, business-plan FAQs, an online business-plan workshop and an expert referral network are also part of the program. Built-in advice and support include interactive guides, built-in sample plans and expert explanations.
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#3 BizPlan.com
BizPlan.com earned Top Ten Reviews' Bronze Award for offering a contemporary online interface that is simple to use, while also providing enough flexibility for the advanced user. The software allows other collaborators to access, edit and share information easily. BizPlan.com has recognized the significant advantage of providing applications that allow for online collaboration and integration with other services and products.
Research and Forecasting Tools: BizPlan.com provides spreadsheet forecasting templates that can be customized and then imported with the final business plan. A full marketplace will soon be launched, which will include access to business resources, as well as the abilities to add features to the business plan and send a completed plan to professionals for printing and binding. Sample plans are also included in the professional package.