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Lesson 80: The right business plan for the job

When entrepreneurs seek funding for a new venture, potential investors often want to see a business plan. The question is: What kind?

If you are searching for funding—whether from venture capitalists, angel investors, bankers, or even friends and family—one of the first requests you'll receive is this: "Send along your business plan." Before you hang up the phone or acknowledge the e-mail, you may want to ask one question: What kind of business plan do you want me to send?

Business plans come in several forms, and before you start writing a 35-page document, you may want to determine whether a one- or two-page summary might do the trick, or vice-versa. Just keep in mind that whatever type of document you send, it must do more than simply describe your business—it must also sell you and your business and convince the backer you have what it takes to make the business succeed over the long term.

Here are the five most common types of documents that can fill a request for a written business plan, from most basic to most involved.

AN EXECUTIVE SUMMARY. An executive summary is essentially a business plan in miniature and shouldn't be longer than two pages. That means it should cover the main components—the strategy, the management team, the market, the product or service, the sales plan, and the finances. But it must go beyond simply addressing these issues in factual format like an abstract or an outline, as if hitting items on a list. It should integrate them in a cohesiveconvincing way that interests and stimulates the investor candidate. and

A SYNOPSIS. A synopsis might best be described as an executive summary on steroids. From a writing and presentation perspective, a business synopsis is a cross between an executive summary in traditional business plans and a business proposal. The emphasis here is less on the particulars of the idea and more on why the idea is especially relevant to the investor. Does your business somehow complement the venture capital firm's other investments from an industry perspective? Does it open up a new opportunity area the investor is likely to be interested in, based on his past experience? In other words, the focus is on convincing and selling the recipient.

A SUMMARY BUSINESS PLAN. This is a document typically 10 pages or fewer. It includes an executive summary, and then a page or so of explanation of each of the key components of a business plan. So it expands on what an executive summary or synopsis provides. Its financial section may look ahead a year or two instead of the traditional three to five years. A summary business plan has become the most common answer to the request from prospective investors, in my experience.

A FULL BUSINESS PLAN. This is the traditional business plan of 25 to 35 pages that gets written about in books on planning. Each section of the plan is explained in full—lots of industry marketing data to back up the marketing section, much detail about features and warranties in the product description, and full financial projections including cash flow, looking ahead three to five years.

AN OPERATIONAL BUSINESS PLAN. This is the most detailed plan, since it is for companies that are already operating and thus have a history and an existing strategy. Moreover, such companies tend to develop a business plan literally to plan the business, rather than simply to raise money. A complete operational plan may be 50 or more pages, going into detail about sales, production, and distribution, so as to offer guidance to key managers, and in some cases to all employees. A well done operational plan can also be used to raise expansion capital, or even to attract prospective acquirers.

How do you know which kind of plan you should be preparing? Sometimes it's best to ask prospective backers what kind they would like to see. And if you haven't prepared anything, you can try to steer them toward the simplest plan, as in: "How about if we send you our executive summary?" Then you can get busy writing, in hopes of completing something reasonable in a few days.

But be prepared. If the prospective backers are truly interested, they may come back with the question: "Do you guys have any more detail to back up what you sent us?" Then the next step could be a summary business plan, or maybe even a full plan.

Adapted from:



on steroids - in a much more powerful or extreme form

entrepreneur - someone who starts their own business, especially when this involves seeing a new opportunity

venture - a new activity, usually in business, which involves risk or uncertainty

venture capital - money that is invested or is available for investment in a new company, especially a risky one

angel investor - An angel investor is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.

acknowledge - to accept, admit or recognize something, or the truth or existence of something

determine - to control or influence something directly, or to decide what will happen

summary - a short clear description that gives the main facts or ideas about something

do the trick - to do exactly what is needed

convince - to persuade someone or make them certain

backer - someone who gives financial support to something

have what it takes - to have the skills, power, intelligence, etc., to do something.

address the issue - to give attention to or deal with a matter or problem

hitting items on a list – deal with some issues successfully

cohesive - united and working together effectively

convincing - able to make you believe that something is true or right

a cross between - a mixture of two different things which have been combined to produce something new

emphasis - the particular importance or attention that you give to something

particulars - details or information about a person or an event, especially when officially recorded

complement - to make something else seem better or more attractive when combining with it

relevant - connected with what is happening or being discussed

sth is likely to be - describes something that will probably happen or is expected

recipient - a person who receives something

look ahead - to think about the future

prospective - people who are expected to buy something/employ someone/become a parent, etc

feature - a typical quality or an important part of something

warranty - a written promise from a company to repair or replace a product that develops a fault within a fixed period of time, or to do a piece of work again if it is not satisfactory; a guarantee

cash flow - the amount of money moving into and out of a business

guidance - help and advice about how to do something or about how to deal with problems connected with your work, education, or personal relationships

steer towards - to guide something in the direction of someone or something


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poniedziałek, 08 lutego 2010, kurs_praca

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