Who is Your Business Plan Written For?

Today’s guest blogger is Corey Blahuta, the managing director for the Austin office of vcfo. The firm specializes in operational finance and accounting, HR Solutions and recruiting services for companies of all sizes. He can be reached at 512-345-9441.

I had an unusual experience the other day that I thought other entrepreneurs would find interesting and possibly instructive. I received an e-mail from a successful business owner and entrepreneur looking for some advice on software to help develop a business plan. I responded that Word, Excel and PowerPoint are what most vcfo clients commonly use when developing business plans for their ventures. But now I was curious so I also asked some questions about the new venture and suggested that factors such as the overall business model and the type of funding sources they were targeting might influence the complexity of the business plan. This is where the interesting part comes in. This individual responded that they were not actually looking to raise any money. They were simply developing a plan for a new self funded venture but wanted to go through the process and discipline of developing a business plan.

At first I was a little surprised, then a little embarrassed, and finally happy to have been part of this exchange. The surprised part comes from having met very few individuals over the years that were actively developing business plans who were not 100% solely focused on raising some type of debt or equity financing.

The embarrassment comes from having fallen into the trap of assuming every entrepreneur developing a plan is looking to raise money. I have been working with some entrepreneur education groups here in Austin and there are a couple of things I consistently tell them when the discussion turns to business plans in general and financial projections specifically, they need to be as realistic as possible but show the entrepreneur knows how he is going to execute the business to make money, and they need to be developed as a living document for the operation of the company. This second point seems to be the hardest for many entrepreneurs to grasp as they are many times so focused on checking the box for some due diligence process, or making the numbers say what they think potential investors needs them to say. The business plan and projections need to be developed by the entrepreneur for the entrepreneur, period. The fact you have a comprehensive plan and it is in a form that works for potential investors simply shows you are serious about your idea and can articulate in words and numbers how you plan to make money from your new venture.

So, I was happy that in some small way my exchange with this entrepreneur helped validate my message. Here was an experienced business person and entrepreneur developing a business plan for a business but the process had nothing to do with raising money. That should be a good lesson to prospective or serial entrepreneurs who are starting new ventures in the current business environment where quick exits are virtually nonexistent.

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