Timeframes -- Is Three Years Enough

Chapter 2: Pick Your Plan - Page 2.6

Timeframes -- Is Three Years Enough

Regarding the span or length of focus of a business plan — its timeframe — opinions vary. I believe a business plan should normally project sales by month for the next 12 months and annual sales for the following two years. This doesn't mean businesses shouldn't plan for a longer term than just three years, not by any means. It does mean, however, that the detail of monthly forecasts doesn't pay off beyond a year, except in special cases. It also means that the detail in the yearly forecasts probably doesn't make sense beyond three years. Plan your business for five, 10, and even 15-year timeframes; just don't do it within the detailed context of business plan financials.

Investor Summaries and Loan Applications

When a plan is used to back up a loan application or to explain a business to potential investors, it may require a special summary document as well as a complete plan. Many investors like to see a brief summary, and a loan application doesn't always require a complete plan. If you develop your plan in the right way, you can use the summary paragraphs of the main sections — company, market, product, etc. — to create these summary documents.

Summary

Although different plans require different sections, almost all need to keep cash planning and implementation at the center. Make the contents of your plan match your business purpose.

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