Business planning is more than just creating a roadmap or preparing for financing. It relates to attracting top talent, looking for prospective investors, competing for large contracts and presenting a credible face to prospective suppliers, strategic alliance partners and more?
A well-constructed business plan is useful for other things besides raising money. It’s a way to inspire confidence in your venture—you can use it as a selling mechanism for any number of things. You’re selling the company when you hire top executives and others, if you’re trying to get involved with a major corporation in any ongoing relationship, etc. In those cases, the plan offers a form of credibility enhancement.”
Putting the plan to work
Robert Ancill, CEO of Start Up Consultancy, The Next Idea, (www.thenextidea.net) There are a variety of situations in which your business plan can play a role. Examples include:
1 Obtaining bank financing—For most banks, it’s usually enough that an applicant provide past and current financial statements to book a formal meeting for a loan. But in today’s world a meeting is no longer isn’t enough. Given that more companies are now seeking bank financing than banks have money available, only those businesses that present the best case will receive funds. A business plan helps set you apart from the crowd. A written business plan presents an important message even before its read: essentially it demonstrates that the company’s executives are serious enough to do formal planning. That message is paramount as bankers, who are notoriously risk adverse believe that those individuals who plan are lower financial risks than those who don’t, and therefore are more deserving of bank support.
2 Seeking investment funds—Venture capitalists and other investors also require a formal business plan from any company that is seeking to be taken seriously for investment. It’s the first thing most ask for, much as a personnel manager asks job applicants for a resume. Investors use business plans as a screening device, looking for a business opportunity with significant growth potential. When something catches their eye, they read more carefully and, if they’re still intrigued, they’ll come back to the executives for further discussion.
3 Arranging strategic alliances—For small companies, arranging a strategic alliance with a large company can mean gaining access to important financial, distribution, technology. exposure and other resources. But in advance of a large company even considering a strategic alliance, its executives will expect to examine a smaller company’s business plan or business proposal.
4 Winning large contracts— Equally smaller businesses looking to attract a a business relationship with a major corporation can encounter a common obstacle. It comes when the corporate representative says something like: “Everyone knows who we are, but very few people know who you are. More important, we don’t know whether you’ll be around long enough to fill all the obligations we expect for the big bucks we’ll be paying you.” At this point, producing a business plan can alleviate fears and reassure your potential client or customer that you are a serious operator and the longevity of the agreement will be of benefit to both parties.
5 Attracting key employees—For a smaller company going after a top-notch employee, there’s often a two-way due diligence process going on. The company wants to be sure the person is as good as presented and the prospect wants to be sure the company is right for his or her talents. A business plan can save a lot of conversation, besides instilling the necessary confidence to snare that hotshot.
6 Completing mergers and acquisitions—Whether selling your company or acquiring another one, a business plan is the primary tool that will be scrutinized to establish credibility. And in today’s world of mergers and acquisitions, that can be very important. When you go to sell your company, you’ll be scrutinized by potential buyers who are looking at many companies.
When you do issue your business plan – be careful. A plan can consist of a variety of trade secrets and or proprietary information – ensure it is correctly protected. Choose carefully who you want to read the plan and how much information they may need. The point is to be able to give people a sense of your strategic direction and the process you follow in optimizing your product or service. It’s typically a good idea to gauge what you’ll show anyone to a specific circumstance. For example, you may not want to show someone with whom you’re developing a strategic alliance what your sales plan might be, especially if they’re in any way considered competitors. Or you may not want to divulge your financials to a prospective new hire.
For example; if you have a new restaurant concept or restaurant start up, remember that your idea can be copied. For this type of plan you may be well advised to hire professional, restaurant business plan writer, who can guide you through the restaurant funding maize, and protect your idea or new concept. Restaurant consultants are not necessarily cheap, but they are worth their weight in gold if you win the funding you are looking for.
Above all remember, this a selling and confidence-building tool. You need to let people know you’ve considered not just the good things that will happen, but the challenges you face, such as the strengths and weaknesses of the competition, or acknowledging that you’re having trouble finding the top salesperson you want. I would want to know that, if I’m going to get involved with you, that you have a handle on every aspect of the business and that nothing has been glossed over.”
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