04 Mar Why Audience Matters When Writing Your Business Plan
When writing a business plan, your audience will determine several aspects. If you have a business plan, it is likely you will have different versions for different audiences. Your audience will dictate:
Formality & Format – how you layout your business plan and what type of language and writing style is used.
Length – determined by the depth to which each main element of your business plan needs to be covered.
Emphasis – which sections or main points are most significant and require the most attention.
It is important to note that the specifics and details of your plan shouldn’t change; only how you present the information and what you emphasize will differ. We can consider three main types of audiences: yourself, outside funders, and strategic alliances. Below we examine how you would tailor your business plan to each type of audience.
When you first come up with your business plan, it should really be for yourself. There’s no need to worry about formality or focus on length. It may be only a few pages, or it could be dozens. You’ll have no specific emphasis at this stage. Here, you’re going through all the key components of the planning process in an effort to see the big picture and prove to yourself that you have a viable idea. As such, this is sometimes referred to as the “idea” business plan.
Investors, such as angels or venture capitalists, actively seek to invest in early stage companies. Due to the nature of this, they see multiple business plans per day. In order to stand out, it is advised to have a semi-formal pitch deck. The pitch deck is typically 10-15 slides and is a succinct and visually appealing summary of your overall business plan.
Before crafting your pitch deck, however, you should have your full business plan written. The full business plan should be professional but doesn’t need to be overly formal. While it should be very substantive and thorough, you want it to have some “flash” and exude a little personality to keep them interested. Investor business plans should be between 30-60 pages. These plans, along with the corresponding pitch deck, should highlight the growth potential, as investors will be concerned with their potential return. If you have managers with impressive backgrounds, specifically growing other high growth businesses, you will want to highlight that as well.
- Bank Loans
In contrast to investors, banks are all about financial stability. They are less concerned with high growth as they are with realistic financial projections that show sustainable growth and profitability. Their main concern is whether you will be able to service the debt, meaning pay back the principal with the agreed upon interest under the specified terms. If your business plan is solid, they will be more concerned with your personal financial position than your management experience or resume. This is because many bank loans require the business owner(s) to personally guarantee the loan if the business fails.
Bank loan business plans should be very formal, follow a traditional business plan format, and have detailed and thorough financial projections. These plans are typically between 30-40 pages.
- Business Partners
Having a written business plan is an important tool in approaching a potential business partner. This can be formal or informal, depending on who the potential partner is and your relationship with them. Of course, they are going to want to see evidence that your business idea has been fully fleshed out. The most important aspect of this plan, however, will be financial projections so they know their potential return, how you will realize the financial projections, and the organizational structure with an outline of roles so they can clearly conceptualize their place in the business and what you are expecting of them.
Some companies may need or choose to have a business plan for employees. Some businesses do this for transparency, but it is also a very effective tool for management. It allows managers to fully conceive of the big picture which aids in them being more committed to the objectives of the business and keeping their teams on the right track. These types of business plans should be relatively short and written in a formality level consistent with the company’s culture.
A company may have a more detailed business plan that focuses heavily on the financials if they plan to attract employees by offering stock options. This is especially true if these are offered in lieu of high base salaries to senior level employees. A full business plan paired with an appealing stock option can go a long way in attracting top talent to your company.