There is a view that there is a single “business plan document”. In reality, there will probably be several different documents representing the business plan, across a spectrum from an operational manual to a fund-seeking document. Like the slide pack you use to put together your presentation.
Each document needs to be tailored both to its audience and its purpose. The tailoring is much more important than the structure of a document.
The operational manual-type business plan document will be lengthy, detailed and effectively a turn-key manual for implementing the development of the business. It will show step-by-step how the management team plans to achieve its targets.
On the other hand, the fund-seeking document will be much shorter (perhaps no more than a dozen pages), will be focused on the reader’s needs and will explain what funding is required, how it will be used, what results are expected and how the reader will benefit from investing in the business.
A business plan will have different audiences, each with different information needs, each with their own perspective, including:
- The businessperson: To manage the business
- Management team and key staff: To understand their roles in implementing it
- Bankers: To assess any loan applications you make
- Investors: To judge the risk/return potential of your business
- Advisers to the business: To let them quickly “read in” to your business strategies
- Customers or suppliers: In certain special circumstances, you may circulate parts of the plan to important customers or suppliers, to gain their support.
As in any communication situation, the key to the style and emphasis of the document is determined by:
- Why does the person want to read the document?
- The level of detail they require to make a judgement
- The level of confidentiality needed and offered.
The Executive Summary is critical. It must:
- Persuade the reader that the idea is good, to encourage them to read on – many readers of business plans never go beyond the executive summary because it fails to excite them
- Summarise the company, its objectives, and why it will be successful in achieving its growth strategy
- Explain the growth strategy to be adopted and how it will be implemented
- Describe the products, the market, and critical financial information
- Outline what finance is required – how much, in what form and when
- Assume that its reader is not expert in your industry and knows nothing about your business
- Be short and easy to read.
The rest of the document must explain:
- How much funding the business requires
- How much the owner/management team have contributed
- How much is still to be raised and what form it is expected to take (equity, debt or subsidies).
In presenting a business plan, the businessperson must show:
- Willingness to work and prepare
- Ability to sell
- A positive attitude
Remember, the only objective evidence that a management team can show at this stage is the thoroughness with which they have completed the business planning process – and this will only be communicated through the business plan document.