Question

. What is the purpose of a business plan if the audience is (a) entrepreneur (b) an investor or (c) a supplier? Should plan be adapted for these different audiences. If yes then how? Explain with examples                                                         

Answer 1

(A) A business plan is a very important strategic tool for entrepreneurs. A good business plan not only helps entrepreneurs to focus on the specific steps necessary for their to make business ideas succeed, but it also helps them to achieve both their short-term and long-term objectives.

EIght typical audiences who'll be reading our business plan.

They are

* Active venture capitalists

VCs see hundreds of plans in the course of a year. Most plans probably receive no more than a glance from a given venture capitalist before being rejected; others get just a cursory inspection. Even if your plan excites initial interest, it may receive only a few minutes of attention to begin with. It’s essential, when courting these harried investors, that you make the right impression fast. Emphasize a cogent, succinct summary and explanation of the basic business concept, and don't stint on the details about the impressive backgrounds of your management team. That said, make it concise and to the point. Remember, time is of the essence to venture capitalists and other investors.

* Bankers

Bankers tend to be more formal than venture capitalists and more concerned with financial strength than with exciting concepts and impressive resumes. For these readers, you’ll want to give extra attention to balance sheets and cash-flow statements. Make sure they’re fully detailed and come with notes to explain any anomalies or possible points of confusion.

*Angel investors

Angel investors may not insist on seeing a plan at all, but your responsibilities as a businessperson require you to show them one anyway. For such an informal investor, prepare a less-formal plan. Rather than going for impressive bulk, seek brevity. An angel investor used to playing their hunches might be put off by an imposing plan rather than impressed with your thoroughness.

*Potential partners

If you were thinking about becoming a partner in a firm, you’d no doubt be very concerned with the responsibilities you'd have, the authority you'd carry and the ownership you'd receive in the enterprise. Naturally, anyone who's considering partnering with you is going to have similar concerns. So make sure that any plan presented to a potential partner deals comprehensively with the ownership structure and clearly spells out matters of control and accountability.

*Customers

Customers who are looking at your business plan are probably doing so because they're contemplating building a long-term relationship with you. They're certainly going to be more concerned about your relationships with your other customers and, possibly, suppliers than most of your readers. So deal with these sections of your plan in greater depth; you can be more concise in other areas. Customers rarely ever read a company’s business plan, so you should probably have your miniplan available for these occasions.

*Suppliers

Suppliers have a lot of the same concerns as customers, except they’re in the other direction on the supply chain. They’ll want, above all, to make sure you can pay your bills, so be sure to include adequate cash flow forecasts and other financial reports. Suppliers, who naturally would like their customers to order more and more, are likely to be quite interested in your growth prospects. In fact, if you can show you’re probably going to be growing a lot, you may be in a better position to negotiate terms with your suppliers. Like customers, most suppliers don't take the time to read lengthy business plans, so again, focus on the shorter version for such purposes.

*Strategic allies

Strategic allies usually come to you for something specific—technology, distribution, complementary customer sets, etc. So any plan you show to a potential ally will stress this aspect of your operation. Sometimes potential strategic partners may also be potential competitors, so you may want to present your plan in stages, saving sensitive information such as financials and marketing strategies for later in the process when trust has been established.

* Managers

Managers in your company are using the plan primarily to remind themselves of objectives, to keep strategies clear and to monitor company performance and market conditions. You’ll want to stress such things as corporate mission and vision statements and analyses of current industry and economic factors. The most important part of a plan intended for management consumption is probably in the financials. You’ll want to take special care to make it easy for managers to compare sales revenue, profitability and other key financial measures against planned performance.

There’s one caution to the plan-customization exercise. Limit your alterations from one plan to another to modifying the emphasis of the information you present. Don’t show one set of numbers to a banker you’re trying to borrow money from and another to a partner you’re trying to lure on board. It’s one thing to stress one aspect of your operation over another for presentation purposes and entirely another to distort the truth.

(B) The purpose of a business plan if the audience is investor. Our business plan is the blueprint for how you plan to build a successful enterprise. It’s a comprehensive document that covers a lot of territory and addresses all sorts of issues. To help focus your efforts, consider which groups of people will have the greatest impact on your success. Those groups will be the primary audiences for your business plan.

For example, if you need capital investment, investors will be your primary audience. If you need to build strategic alliances, you want to address potential business partners. You and your team are another key audience for the plan, of course, because it will serve as your guide. Be sure to keep that fact in mind as you fine-tune the messages you want to convey.

All the people who have an interest in your business venture — from investors and lenders to your employees, customers, and suppliers — represent different audiences for your business plan. Depending on the situation you face and what you want your company to achieve through its plan, certain audiences will be more important than others:

• If your company seeks investment capital, your all-important target audience is likely to be filled with potential investors.

• If your plan includes the introduction of stock options (possibly in lieu of high salaries), your current and prospective employees will be a primary target audience.

• If you’re launching a business that needs clients, not cash, to get up and running — the sooner the better — potential customers will comprise your plan’s primary audience.

• If you’re a self-employed freelancer, your plan may be for you and you alone to focus your efforts, chart your course, and anticipate problems before they arise.

• After you target the audiences for your plan, the next step is to focus on the key messages you want each group to receive. People with different stakes in your business will read your business plan with different interests and values. For example:

• A person who owns shares in a company wants to read about growth plans.

• A banker considering a loan request wants to see proof of strong revenue and profit prospects.

• Employee groups want to see how they’ll benefit from the company’s growth and profits.

• Regulators focus on operational and financial issues

(C) Here are the factors if the audience is the key supplier

1. Stability - the supplier may want reassurance that you have a stable business and good management of that so they know that you can pay for their goods or services
2. Reputation- the supplier may be providing goods that rely on brand or image (clothing, jewellery, etc) so they may want to make sure that you will be running a business with standards that are as high as theirs
3. Skills - if you’re reselling a product that requires special skills to install or use they will want to see that you have the right training and quality processes in place so that the end customer gets a good quality of service and they can provide guarantees against the product