Definitive Business Plan, Second Edition, The

The planning horizon

The planning horizon is the most distant point in the future that you will visit in the plan. By the time you start work on the financials, the planning horizon will already have been staked out – probably three or five years hence. If you happen to be working on a plan covering longer than this, you probably will not want to attach much credibility to forecasts more that five years out.

Good business plans usually contain monthly figures for the first year, and quarterly or maybe only annual numbers for the remaining years. Budgets, used for planning and measuring performance, are no more than profit and loss and cash flow forecasts by another name (usually monthly). If you have mixed periods, include a summary for the early ...