The benefits of having a business plan include:
As a management tool, the business plan should be a living document used first and foremost by management. However, it may also serve a specific additional purpose – it is one of the key means by which the finance provider will make a decision about lending funds and in these circumstances it should aim to convince potential investors of the company’s ability to exploit its potential.
A provider of finance will not know the background of the company. The business plan will be the initial guide as to whether the proposals are viable and whether there will be sufficient rewards for the risk involved in providing finance.
Thus, in preparing a business plan, the following fundamental points should be addressed:
The business plan is a direct reflection of you and your business – do you understand your market place, do you have the vision and skills to take your business forward, have you evaluated the risks you face and taken steps to minimise them?
Who should produce a business plan?
A business plan should reflect the strengths of the business and the abilities of the management. It will therefore almost always be most effective as a working document if the management are closely involved in its production.
However, the business planning exercise will involve taking stock of where the business is now before deciding on where it is going. It is often in this area that management find that they are too closely involved in the everyday running of the business to be objective.
Grant Thornton has helped a diverse range of owner/managers to prepare credible business plans. We understand what is important to both the management and to finance providers – what they need to see and what they don’t; how to present the information to help them reach a decision quickly. Ultimately, any finance provider’s lending decision will be based on an assessment of the quality of the management and the strength of the proposal. A good business plan will ensure you communicate the basis of your proposal succinctly and effectively.