Question

What is the purpose of the business plan if the audience is a. The Entrepreneur b. The investor c. Key supplier

Answer 1

A) The entrepreneur. To the entrepreneur the purpose of the plan is two-fold 1) to prepare one’s self for all the planning and details associated with starting up a business to ensure its success and 2) to convince outside sources such as investors, banker, suppliers, employees, and more that the business will be successful and that the details of the operation have been well thought out to secure much needed resources such as labor, materials, and capital.

B) An investor. Investors provide large sums of money to the entrepreneur and want to see a large rate of return within five to seven years. They are concerned with the entrepreneur’s character and willingness to be managed by them. Investors like to see specific information in the business plan even if the information is based on assumptions. The point to the investor is if the entrepreneur is realistic in his assumptions since he must consider such things as cash flow and cash requirements. Most people get too excited to realize that something new requires much hard work and planning. The business plan allows the entrepreneur time to step back and see that there are obstacles to overcome. If those obstacles are seen as insurmountable, then the project is abandoned.

C) A key supplier. A key supplier will be the one producing components, finished products, or providing materials. The supplier needs to know that the product or service provided will sell so that the supplier will get paid. The supplier needs to know that the entrepreneur is 1) marketing to the right segment, 2) has a plan to control costs, 3) has enough financial backing, and 4) seeks to continue a long-term relationship.

Does the plan need to be adapted for each audience or is it better to have one plan to serve all? Many different audiences need to evaluate the business plan for different reasons. The entrepreneur must be prepared to address all these different concerns. When preparing the plan the entrepreneur need carefully consider all the needs of external sources. It takes a lot of time and effort to prepare such a document. I think it would be better to have one plan to serve all. There are many different sections of a business plan and each section can address the needs and concerns of one or many outside sources. Good ideas about products, services, finances, marketing, operations, and assessment of risk to one are good ideas to all. When presenting the business plan to the various audiences concerns will arise if not pre-planned for. The entire document is designed to get the entrepreneur to think in detail about as many aspects of the venture as possible and to provide the outside sources with enough information to make suggestions and decisions.