Your Plan's External Audience

A written business plan is virtually a requirement if you intend to obtain a line of credit or loan. While it appears that some banks are becoming more willing to deal with small startups, it's highly unlikely that you'll get a loan without a written plan. Lenders need to be convinced that your business operations will generate the funds necessary to repay the loan. Therefore, a plan destined to be shown to lenders will have to emphasize the financial side of your business, including detailed historical and projected cash-flow budgets.

Others outside your business may also require the information and reassurance that a written plan provides. Venture capitalists and outside investors, for example, will want all the financial information that a banker would need, plus all the marketing, operational, and personnel information they can get their hands on. These types of investors view themselves as owners, so they want a lot of detail. They also need to get a strong sense of your vision, experience, and commitment to the company.

In addition to banks, venture capitalists, and other potential sources of funds, you may want to share part or all of your plan with vendors, credit rating firms, and others with whom your business will interact. A written plan can be particularly helpful when negotiating with vendors regarding payment terms. Portions of the plan may also be shared with prospective employees in order to sell them on the future of your business. The process of drafting the plan will help you organize the information needed to prepare realistic job descriptions for use in recruiting employees.