Business Plans written with the primary purpose of presenting the company to outsiders differ in format and presentation from a plan developed as a management tool. While it would benefit the company and management to go through the efforts necessary to establish goals, objectives, strategies and action plans, outsiders unfamiliar with not only the company, but also possibly the industry and products require a different presentation. The emphasis for any plan for outsiders should be on selling the reader on the attributes of the company. A plan for strictly internal use is geared more toward defining specific, measurable performance targets and assigns responsibility for reaching those targets.
A business plan used as a management tool is not a static document. It should be reviewed every quarter and updated to reflect changes in the business environment and the progress of the company.
The business planning document is often the first exposure an investor has to a company seeking financing, often even before talking to the entrepreneur on the phone or having a meeting. Because it makes the critical "first impression" for the company, a poorly prepared plan can be a reason for an investor to decline on the investment, and not take the time to ask for more information. While we all hear of stories about deals that were scratched out on the back of an envelope, after a brief meeting between a savvy entrepreneur and a multi-millionaire, the truth is: no business plan equals no capital.
The business plan is often used as the basis for the offering memorandum that is prepared for investors.
The business planning template below can be used for an established company or for a start-up. Obviously a start-up company may not have an historical background, or the previous years' financial information. There also may be some gaps in the management team as well.
Below is an outline of each segment of a plan developed for presentation to potential investors or lenders.
EXECUTIVE SUMMARY
HISTORICAL PERSPECTIVE
ECONOMIC AND INDUSTRY ENVIRONMENT
PROFILE OF THE BUSINESS
Business Model
The Product
The Market
Competitive Environment
Marketing
Management, Operations, Production, and Facilities
Current Ownership
Strengths, Weaknesses, Risks, and Opportunities
STRUCTURE OF THE TRANSACTION
FINANCIAL SECTION
APPENDIX
The length of each segment can vary but overall the business plan should not exceed 30 to 40 pages, not including the financial statements. Entrepreneurs have a tendency to jam pack as much information in their business plan as possible hoping the quantity will substitute for quality.
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