A cottage industry has grown around business plan writing, as banks and investors want to see a business plan before parting with their money. Why? A business plan helps you define where to play and how to win in whatever market you’re in.
“It helps you organize all your resources and align them to the objective of the company,” said Andrew Penny, president of Ottawa-based of business advisory firm Kingsford Consulting. “It documents where you want to go and how you will get there and because you’ve documented it, you can see where the gaps are.”
Brad Cherniak, partner at Sapient Capital Partners, a business advisory firm in Toronto, has provided his share of input on business plans as an advisor, investor and entrepreneur. He defines a business plan as a thought process. “It often gets confused with an information memorandum or bank/board presentations when raising money, but a true business plan is a different animal,” he said.
It’s also brief. According to Mr. Cherniak, it’s a negative to have an encyclopedic business plan because if it’s too big, it becomes a coffee table book and no one will want to update it. Its inversely proportionate to its usefulness. “A business plan has to be fluid. It should be regularly rewritten quarterly to semi annually, depending on the the stage of the company, without taking up too many resources.”
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