The Purpose of the Business Plan

Guest post by: Ken Hollowell
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A Funding Consultant Could Show You An Easier Way to Raise Capital in the United States - By Ken Hollowell

When an investor asks you for a business plan and you do not have one or better yet, chose not to provide the investor with one, how do you respond? Understand that a business plan is for internal purposes only. The primary purpose of any business plan is to provide direction, focus, clarity, and guidance to management.

It is amazing how many people think the main purpose of a business plan is to raise money from investors. Many people truly think that the only reason to develop a business plan is to convince potential investors to provide financial backing. This view is a little short-sighted, however. A well-developed plan can serve as one of your most important management tools. A good plan will provide a blueprint and step-by-step instructions on how to translate your idea into a profitably marketed service or product.

The ONLY time a business plan should be used for acquiring funding is when you are approaching a bank. Institutional funding may require a business plan to give you consideration for a bank loan.

Why have a business plan in the first place? Here are a few reasons:

The business plan should provides a reality check as you exam the feasibility of your business idea, which forces you to consider relevant factors associated with your business.
The management resumes are vital in dealing with vendors and attracting employees.
It’s a timetable for operations, helping you to coordinate all the diverse activities that go into running your business.
It’s a modeling tool that helps you evaluate the variable factors that affect your business, so you can better prepare to deal with situations that may arise as conditions change.
It’s a vehicle for tracking the progress of your business.
It’s a blueprint against which you can adjust operations in order to achieve your goals.
Finally, your business plan is a starting point for future planning.

Why a business should not be used to raise money from investors?

The business plan’s primary purpose is for internal purposes as a tool and road map.
The business plan is NOT a structured document designed for funding.
The business plan will usually attract the wrong type of investor.
Using a business plan for funding usually leads to failure.

The business plan can give too much information about your business and create competition.

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A Funding Consultant Could Show You An Easier Way to Raise Capital in the United States - By Ken Hollowell

About the Author: Ken Hollowell

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– Ken M. Hollowell, founder of both Prfran Consultants, Inc. and Profran Capital Group, Inc. and is a leader in the field of franchise development and non traditional methods of raising capital since 1980. Ken Hollowell has lectured before many business organizations, Universities and Colleges on the subject of franchising and hosted a radio talk show of radio for years.

Ken Hollowell conducts numerous seminars annually on franchise development and investing in a franchise business throughout the United States.Ken Hollowell is regularly requested by the Small Business Administration in Washington, D.C., S.C.O.R.E., Learning Annex and the International Franchise Association to speak on franchising. Ken. Hollowell's well-rounded experience and practical knowledge in both development and marketing have led him to be one of the most sought after franchise consultants in America. Ken Hollowell has written many articles on both developing a franchise network and buying a franchise. Mr. Hollowell sits on no less than a dozen boards of directors. Ken Hollowell works with as many as 120 new clients each year on teaching techniques and methods of raising capital through the SEC's Reg D Series of Offerings

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