Objective Of Business Plan
This situation is complicated by the fact that many venture capitalists will refuse to sign an NDA before looking at a business plan, lest it put them in the untenable position of looking at two independently developed look-alike business plans, both claiming originality.
In such situations, one may need to develop two versions of the business plan: a stripped-down plan that can be used to develop a relationship and a detailed plan that is only shown when investors have sufficient interest and trust to sign a Non-disclosure agreement.
A business plan is a formal written document containing business goals, the methods on how these goals can be attained, and the time frame within which these goals need to be achieved.
It also describes the nature of the business, background information on the organization, the organization's financial projections, and the strategies it intends to implement to achieve the stated targets.
An externally targeted business plan should list all legal concerns and financial liabilities that might negatively affect investors.
Depending on the amount of funds being raised and the audience to whom the plan is presented, failure to do this may have severe legal consequences.
Reference class forecasting has been developed to reduce the risks of cost overruns and revenue shortfalls and thus generate more accurate business plans.Externally-focused plans draft goals that are important to outside stakeholders, particularly financial stakeholders.These plans typically have detailed information about the organization or the team making effort to reach its goals.A pitch deck is a slide show and oral presentation that is meant to trigger discussion and interest potential investors in reading the written presentation.The content of the presentation is usually limited to the executive summary and a few key graphs showing financial trends and key decision making benchmarks.With for-profit entities, external stakeholders include investors and customers, for government agencies, external stakeholders are the tax-payers, higher-level government agencies, and international lending bodies such as the International Monetary Fund, the World Bank, various economic agencies of the United Nations, and development banks.Internally-focused business plans target intermediate goals required to reach the external goals.Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization's ability to repay the loan.Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation.An "elevator pitch" is a short summary of the plan's executive summary.This is often used as a teaser to awaken the interest of potential investors, customers, or strategic partners.