WHY TAILORING BUSINESS PLAN TO SPECIFIC AUDIENCES IS IMPORTANT
Business plans are organized to address major concerns and interests of their intended audience. They are commonly tailored to a specific audience by emphasizing aspects that directly relate to the interest of the reader. For example, a business plan written to obtain a loan for ongoing operations would address the major concerns of potential lenders.
Banks, Investors, and other Sources of Funding
Business plans are frequently written to obtain additional funding. Start-up capital may be needed for a new venture, or the company may require additional working capital for ongoing operations. New capital may be needed to acquire assets for expansion, or equity financing may be needed to support the company’s long-range growth.
Potential lenders of debt or equity financing are usually concerned with minimizing their risks and maximizing the return on their investment. It is important, then, when composing a business plan to this audience, to make a strong financial presentation and provide adequate documentation of projected revenue and costs. Areas to be stressed in the business plan include the predictability of the company’s cash flow, how well cash flow will cover debt servicing, the reasons additional funding is needed, strengths of the company’s financial management, assets used to collateralize the debt, and the capital and ownership structure of the company. In addition, business plans written to obtain funding for expansion provide details on the overall scope of the market and profit potential. Such plans typically enumerate the return on investment for equity investors.
Potential Buyers
Potential buyers are generally interested in such factors as the basic business concept underlying the company, its long-term viability, and its strategic position within the industry. They also look for strengths and weaknesses in the company’s basic functional components and its management team. Business plans written for the audience stress the company’s strengths and include contingency plans designed to overcome weaknesses, challenges, and other possible developments.
Other factors that might be emphasized in a business plan written for potential buyers are the company’s ability to improve profitability and market share, the company’s competitive edge, the company’s potential to take advantage of opportunities in related industries, managerial and technical skills within the company, and the company’s financial capacity.
Parties Interested in Reorganization or Restructuring
Business plans written for a company reorganization may be tailored for a variety of readers, including internal management, outside creditors, or new owners. Such a plan sets forth the necessary actions designed to reorganize or restructure the company to achieve greater profitability or production capacity. The business plan identifies operational changes that need to be made in different functional areas of the company. It also establishes performance and operational measures against which the functional areas of the company are evaluated.
The audience for this type of business plan is interested in such factors as the timing and sequence of specific changes, and the operations and financial impact of restructuring efforts. The business plan provides details on the new functional organization, as well as key personnel and their responsibilities. Transitional plans are typically furnished, and operating and financial goals are defined.
Internal Users
Business plans written primarily for use within the company generally stress the benefits that will result from implementation of the plan. They may include improved and more consistent performance, improved coordination and consistency among various segments of the company, greater ability to measure performance, empowerment of the workforce, and a better motivated and educated workforce. The plan provides a comprehensive framework and direction for ongoing operations.
Business plans written for internal use typically identify the company’s strengths and weaknesses, potential problems, and emerging issues. They set forth performance standards on which expectations will be based, and clearly delineate goals and objectives to allow for coordination and better communication between all company areas.
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