Are You Facing A Business Plan Event?
by Tim Berry, Guest Blogger
- Created: September 25, 2012, 11:17 pm
- Updated: September 26, 2012, 6:39 am
For years now I’ve thought of business planning in terms of the special case that I call a business plan event.
The business plan event is when you have to produce a business plan for some specific business hurdle or gateway. For example, a startup looking for either angel investors or venture capital needs a business plan to give to interested potential investors. And a business applying for commercial credit needs a business plan to present to the loan officer at the bank. Some other business plan events are the sale of a business, a divorce affecting ownership, and applying for a merchant account to be able to process credit cards.
The world of entrepreneurship and small business divides into two groups: those that need a business plan because they have the business plan event, and those that don’t need the plan for the event, but can still benefit from business planning as part of the normal management process.
Which are you?
If you have that business plan event coming up, I recommend you prepare the business plan to best address the specific needs. Here are some obvious cases:
- A business plan for investors should include information on the management team, the opportunity, scalability, defensibility, market potential, growth potential, and exit strategy.
- A business plan for commercial lenders should include information supporting the business’ ability to repay loans and cover interest. Evidence of stability is very important. Owners’ backgrounds and credit ratings usually matter a lot.
Furthermore, with business plan events, the form of the business plan depends on the nature of the event. When you’re developing the plan for some specific outsiders to process, the best thing to do is to ask them, specifically, what they are looking for.
- In some cases, your outsider will want a document printed on paper and organized for easy reading, with a table of contents, executive summary, and appendices.
- In other cases, your outsider will be perfectly happy with a business plan published on the web, password protected, but updated behind the scenes and available whenever the reader wants.
- In most of these cases, brevity is important. Make sure the formal plan is easy to read and organized well enough to make it easy to find the different kinds of information quickly.
And what if you don’t have that event? Theoretically, at least, in that case you don’t need a business plan. But you do still want a business plan to help manage your business. It may not be a document-it may not be polished and edited-but it should still summarize your strategy and what is supposed to happen. It’s for you, not for outsiders. It’s about optimizing management by setting goals, objectives and performance measurements and then tracking results, reviewing and revising. The plan becomes the first step in a business planning process, which includes staying flexible and reviewing and revising monthly.
And that plan, for you and your team only, can stay on the computer, not be polished, and help your business.
About the Author
Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, doing social media business planning at smbplans.com, and blogging at timberry.bplans.com. Stanford MBA. Married 42 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including The Plan As You Go Business Plan, published by Entrepreneur Press, 2008.
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