Write Business Plans For Your Audience
Investors will provide cash and, in return, own shares of your company. Unless they are of a small subset of investors (such as family and friends) with non-financial goals for their investment in your company, investors are primarily interested in the return they will receive on their investment over time. Merely showing the company giving off huge dividends to investors in the coming years is not enough, or perhaps even the right tack to take. Dividends paid out mean the company has reduced means to invest in its own growth, and most investors will be interested in the increasing value of the firm leading up to a strategic sale or additional round of investment. Know which type of investor your firm will seek based your plans for growth and whether the return you show will be through dividends or appreciation.
Lenders will also be interested in the financial plan, but primarily to see the balance sheet and the cash flow statement. The balance sheet will show them the assets within the company in coming years which the lender may hold as collateral and sell off in the worst-case scenario of a loan default. The cash flow statement will show them that you will start to have positive overall cash flow relatively soon after launch so you can begin to repay the principal and interest on your loan. To back up the claims of cash flow you make here, the entire plan must show a convincing argument of a good market opportunity, the right marketing and operations, and a management team that can deliver.
Both individuals and other companies are potential partners for your business. If you seek real commitments from them as to their involvement in your firm going forward, you may need to show them your business plan as some proof of your intentions and expertise during the pre-launch phase. They will be interested in learning about the operational and marketing methods you will use, as well as your products and services, to determine if your activities and products are compatible with what they do and there are not conflicts of interest between what they do and what you intend to do as a business.
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