About Investment Business Plans
Every business, regardless of size, should have a business plan. Business plans are a great tool to clarify the company's vision, what it actually does, who sees that it is done, how it does that, what competitors exist, the outlook for the industry it operates in, its marketing strategy and its financial future. While several types of business plans exist, the investment business plan is the type most commonly referred to. Investment plans are used when a company is applying for a loan or working with an investor.
Other People Are Reading
-
Features
-
The investment business plan should cover the following sections: customers, products/services, plan of operations, marketing strategy, management team, competitors, industry and sales, both current and forecast. The size of these sections varies by the type of business plan, the audience the plan is geared toward, and how long the company has been in business. A good investment business plan ranges between 10 and 20 pages long, not including appendices.
Sections
-
Firstly, the business plan explains the vision of the company; this includes the executive summary, mission statement, why the company exists, its purpose, its management, etc. Secondly, all businesses plans contain a description, however brief, as to how the business addresses the needs of its customers. This part includes a description of what the business actually does, how it obtains sales (i.e. a brief description of how it is marketed), industry outlook, an overview of its competitors and what competitive advantage the company holds. Lastly, an overview of the marketing plan and an overview of current and forecast financials are included.
-
Functions
-
Investment business plans are meant as a tools to "sell." Whether the "sale" is that a bank approves a loan or an investor purchases shares, the investment business plan should explain the business in a way that someone uninvolved with the company can understand and agree with. As a result, assumptions and trains of thought must be thoroughly explained, as well as any competitive advantage held by the company. The investment business plan is not a workbook for the entrepreneur.
Scenarios
-
Investment business plans are generally developed early on in the company's history, but after it has been established, either through product prototyping or, in the case of a service-oriented business, after a year or two in the market when looking to expand or fund an opportunity. In fact, many small businesses do not develop a fully-formed and formalized business plan until reaching this point. That said, developing an investment business plan even earlier is still not a bad idea. It can help consolidate company goals, clarify strategies, critique the market/industry/competitors and force greater thought into forecasting and assumptions.
Considerations
-
Every care should be taken to ensure that the investment business plan is grammatically correct and formatted well. There should be several charts and graphs. Forecasts should project at least three years into the future, if not five. Assumptions and forecasts should make sense and be appropriately justified. Also, the investment business plan should actually exhibit a real plan for action, in the market/industry, against competitors, etc. Investors look for an explanation as to how the company will be profitable. If the investment business plan claims there to be no risk or no competitors, the company is simply not ready. Risk and competitors always exist; to not acknowledge that is not only short-sighted but exhibits a management philosophy that will likely spell disaster.
-
References
- Photo Credit Jupiterimages/Comstock/Getty Images
