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Chapter 1. Business Plan Basics > Getting the Most Benefit from Your Business P...

Getting the Most Benefit from Your Business Plan

Many people think business plans are used only to start a new business. That's not true. Yes, business plans are used to raise capital from investors or borrow money from a bank. But business plans have other uses, too. For example, they can be used to improve the operations of existing businesses, propose a new direction for a department or business unit, or reset a company's priorities.

Different business plans can also be written for different audiences. Writing a plan to borrow money from a bank is different from writing a plan to attract investment from venture capitalists. Although, like the investor, the bank manager is interested in management, he primarily is looking to see if your financial assumptions are realistic. For example: Will your cash flow be sufficient enough to make the payments on your loan? Venture capitalists are looking for different things in your plan. Though they too are interested in financial assumptions, they're also concerned with your management team. In real estate, the three biggest criteria are “location, location, and location.” For venture capitalists, it's “people, people, and people.” The venture capitalist wants to know how experienced the management team is in running a business. Does your team have knowledge of the industry you plan to do business in? Have they started or run successful businesses in the past?


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