Note: This is the first article in a 3-part series about Writing the Best Business Plan. There are countless articles, courses, outlines, and data available, both free and priced. The information available is indeed overwhelming, it is hard to know how to begin and things to trust! These articles are built to give practical, useful, and valuable advice regarding how to get it done.
The 3 Major Parts About “Why” To Write The Best Business Plan
Some successful businesses operate without having a written formal business strategy; those business entities had great planning of some kind, as well as other advantages. All executives, bankers, investors, and business leaders agree that all businesses really should have a proper business strategy.
What many start-up business ventures fail to recognize – and lots of entrepreneurs don’t know – is that there are several types of written business plans, created for well-defined purposes. Understanding “why” to create this document (its purpose) will result in knowing “what” sort of document ought to be constructed!
There are 3 Major points (or questions) to find out to be able to determine the sort of plan necessary:
1. Audience. Who is the Business Plan being written for as well as what purpose?
a. Is it to get an investor?
b. Is it to get a financial loan, SBA-backed loan, or any other commercial loan?
c. Is it simply for the company owner and serves as a guide?
d. Is it for multiple purposes, or be used for some ends?
2. Scope. How much info is required for each form of a strategic business plan?
a. If the purpose is to get a venture capitalist or to compete for investment finance, then this business strategy plan should be relatively short and needs to be designed being a “sales piece”, that “sells” the investor on the feasibility of the company and demonstrates in real and un-inflated terms what exactly is inside for that investor.
b. If the purpose is for any bank loan, SBA-backed loan, or commercial loan, then this document should always be a sales piece, but must be longer, including a lot of financial data about the Principals, initial collateral, cash balance sheets, projections, profit and loss (if available), business structure, accounting system, plus more the bank will specifically seek.
c. If the strategic business plan is to supply for multiple purposes, then consider writing many business strategies to meet those various purposes. Perhaps a “parent” business strategy plan may be made of which targeted plans might be extracted.
3. Long Term Results.
Beyond having the audience the master plan is made for and what ought to be included, it is important to comprehend exactly what the long-term goal is to the plan?
a. If the blueprint is always to solicit a venture capitalist, the “sales piece” includes an “exit strategy” for that investor that’s attractive. This is a payback plan for that invested funds along with the time frame that this investor could have an interest in the organization.
b. If the blueprint is good for some kind of loan, what is the suggested “note”, meaning a schedule for trying to repay the money with interest? Are the desired terms from the loan spelled out clearly? Is it shown how the projected revenues will probably be enough to pay for expenses, payback with the loan, whilst still retaining profit?
c. Once again, if your desired business strategy is usually to serve multiple purposes, the most effective idea is usually to either write a “parent” plan or consider writing separate plans. An “exit strategy” is vital to building into the program irrespective of its purpose. When perform the Principals want out (sell or retire)?
In conclusion, on this page, we’ve taken a short have look at why to write an official business plan and exactly how that determines the form of plan to consider constructing. My suggestion would be to decide the audience and the desired result before writing the plan or hiring someone for that job. As with anything positive, it’s best to consider your desired result before taking action.