There are three reasons why you need a business plan…
To obtain funding.
Every good potential lender or investor, be they bank, angel investor, venture capitalist or business partner, will require a business plan. They want to be comfortable that you have thought long and hard about your business rather than jumping straight into a business. More importantly they want to ensure that they have a good chance of not only having their investment returned, but also making a profit out of the arrangement.
Your business plan is your sales tool – it explains your business and your strategies to make this business a success. It shows how detailed and organized you are and how you intend to make a success of your business.
To introduce your business to potential investors.
The Executive Summary in undoubtedly the most important part of your business plan. Investors receive hundreds of business plans. They decide on their initial sort of who they want to investigate more thoroughly, by viewing the Executive Summary. Yours should be short, concise and eye catching. Investors like entrepreneurs who can concisely and accurately describe their business, products and potential. If you think of it, this is what an effective sales person does every day. If your business model is not planned well enough to be able to describe in a few well written pages then it is unlikely to be successful and very unlikely to be funded.
Once a potential investor has viewed your Executive Summary and become interested in your potential business, then they will read the rest of your business plan in order to gain a greater understanding of your business and investment requirements.
Your Executive Summary should be written after the main part of the business plan and should be no more than 3 pages long. It should summarize your business plan and include an overview of your business, your business models, what you are selling and in which market. You should also summarize your financial requirements and projections as well as provide your investor’s exit strategy.
To ensure that you have a carefully planned business
A well planned business is a business likely to succeed. Do you know who your potential customers are? Do you really know who they are, where they are and what they are looking to buy that you might be able to sell to them?
Do you know how to define your company within a sales environment? Where do you want your company to be in three years?
Do you know how many staff you will need? How you will pay for these staff?
Do you have a vigorous business model? Even know what a business model is?
Have you really thought through how you will run your business?
The answers to all of the above, plus many more will be discovered, decided and defined during the business planning process. If you use a professional business planning company, you have the advantageous of not only having a well written business plan, but you also benefit from the business knowledge of the planning company.
A well written and thought out business plan will help you to clarify your own thoughts about your business, how you want to present your company to your peers, customers and investors. It will help you find out who your best customers are, where they are, what they want to buy and at what price. It will identify any weaknesses you may have in your thinking. Lastly it will provide you with a business and marketing strategy combined with a robust financial model and business model that will give you confidence to make the leap into entrepreneurship.
…..and one why you need to have it professionally written.
Why use a professional business planning company?
A professional company will have experience of writing many different kinds of business plan for many different types of companies. A plan written for a Venture Capitalist is totally different to that which an Angel Investor or a bank requires. A professional company understands this and how to answer the particular concerns of each type of investor or lender. They will pitch you plan to your potential audience.
Investors are risking their hard earned capital by investing in your business and they are entitled to be comfortable that you have a clear business strategy a robust business model and have researched your potential market in great details. They also want to be comfortable that you understand all the risks that your new business faces.
Many business owners, who write their own business plans, often do not include all the information required or include information that is not required. Many amateur plans are unfocussed and discuss information that is not required in detail. An unfocussed and unstructured business plan gives off the wrong impression that you are also unfocussed and unstructured.
To a new entrepreneur you will be very short on time – in order to produce a business plan you will not only need a great deal of time to produce the plan but will also need to take time on a steep learning curve. A professional business plan company has climbed this curve and has enough experience to guide you through the whole process, set your mind working in the right direction and prompt your thought processes.
Hiring a professional allows you to concentrate on finding and servicing your customers, although a good professional will involve you at every stage and your input is definitely required to ensure that the plan reflects YOUR business.
Your business plan consultant will be objective in reviewing your business and have the experience to offer suggestions and advice during the writing process.