Business plans can be a great tool to keep you on track in your business and to help you answer lots of questions that may be you haven’t thought about. Though a lot of business owners don’t realise that there are different types of business plan for different purposes.
The most common reasons to write a business plan are; for yourself, for a loan or grant or to gain investment.
Your own plan
If you’re writing a business plan for yourself, it might be because someone has said it’s what you should do. That’s good advice, however a business plan can be a lengthy process if done properly and it may not be what you need.
A business plan for yourself should be very much focussed on calculating possible risks, assessing where you are and what the competition are doing and looking at financials. You may also use a business plan in order to set a direction in a new business or to look at possible weaknesses in the idea.
Be wary of using a business plan to help you set goals.
Writing your goals should be a positive and inspiring process, writing a business plan not only involves lots of time, but it’s generally not very motivational.
Also, don’t confuse a business plan with a marketing plan. Though there are marketing statistics used in a business plan, a good marketing plan will focus on different aspects.
Bank Business Plan
Your bank will use a business plan to check whether you’ve done your homework and are therefore a safe bet, what level of business acumen you have and how you plan to pay back the money.
Generally a business plan written with a bank loan in mind will focus on statistics, marketing strategies and financials – especially how soon you’ll be in profit.
Most plans for a start up in this situation will paint a very rosy picture and avoid including risks or weaknesses (unlike your own personal plan).
It’s important with this kind of plan to show market research, have a good understanding of your industry and to be able to show experience and credibility. Remember that the business bank manager has to answer to someone and to be able to show facts and figures to justify your loan / overdraft.
(Remember to also ask your bank about government sponsored loans!)
Investment Business Plan
We’ve all seen Dragon’s Den and the barrage of questions that a potential investee goes through – so you should have a general idea of what facts and figures you’re going to need to be able to produce.
At this point any investor probably knows very little about you so you need to again show credibility and that you’ve done your homework. However, unlike a bank, an investor is generally quite emotional about what they will get involved in.
A true investor will use logic and gut instinct in their decision making process. You can have all the facts and figures but if they don’t trust you or have a good ‘feeling’ about the business, then you’re on a loser.
On the other hand, you can be the nicest, most charming person with the best idea to hit the 21st century – but if you haven’t done the proper market research, got your facts and figures and can show not only how they will get their money back but actually double it, then you’re similarly going to get stuck.
Our advice? Get some help with your plan either way. At the minimum get a friend in a similar industry to go through the plan with you. This is the time to put the extra effort in so you can get started on the right track.