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is a concise document, usually written by a firm's management, which describes the company, its products, business methods, financial condition, and needs for funding. Business plans are written to clarify company purposes, to plan new directions, and to raise capital from private investors. Often, business plans are written exclusively to raise money. A good business plan should be concise, complete, and easy to understand. It should introduce a company and its objectives in a positive way that makes investors want to learn more about it. The content of the plan should show that management knows what it is doing. It should show that the company's management has the experience and talent necessary to make the company succeed. Most venture capitalists insist on seeing a company's business plan before they will even consider an investment. The document's content gives them a basis upon which to evaluate their interest in a company. If the plan interests them, they will investigate further. If it does not, they will reject the company as a potential investment. Most venture capitalists see too many deals to spend time with companies whose business plans fail to excite them. It is important, therefore, to prepare a business plan carefully and to make it easy to understand. Enough time should be allocated to writing and rewriting the plan so that it articulates clearly the excitement the company presents. At the same time, it must be well organized and carefully researched. Its discussion of the company and its industry should be based on thorough analysis. It should be thoughtful and realistic. After reviewing it, an investor should be excited about the company's prospects and impressed with management's preparation and candor. There are many sources of help available to entrepreneurs who are preparing their first business plan. For example, accounting firms will often help prepare financial statements and projections. Some have professionals who will review a business plan and provide constructive criticism. Consultants can be used to conduct market research, assist at arriving at reasonable assumptions for projections, or help prepare parts of the plan. Other businessmen and lawyers will sometimes critique a business plan if asked. For more information about business plans, entrepreneurs can check with accountants, lawyers, and other entrepreneurs. Many accounting firms have detailed brochures on how to prepare business plans that are available for the asking. Local bookstores and libraries also have valuable materials on business plans. See: Brokers, Business Plan Format, Deal Flow, Downside, Due Diligence, Finders, Summary, Three Questions. |
