The most important goal of a business plan is to affirmatively answer the question, Will this company make money?
That, overwhelmingly, was the conclusion of a recent survey of Wall Street investment professionals who have been involved in evaluating the prospects of new businesses.
The study, conducted by Business Plans International, concluded that investment professionals want to see, more than anything else, sections within a plan that tell them whether the company can generate a significant return on investment.
Most respondents said they peruse the summary to get an overall idea of the business, then skip to the resumes of key management personnel and financial projections. If the management is not right for the business, or if the projected return on investment appears to be too low, they go no further.
For entrepreneurs, the business plan is a do-or-die effort, says Judith Schneider, president of BPI. Your business plan has got to sell investors on your idea and on your ability to market the idea and ultimately make a profit. If your business plan does not sell, investors will not pursue the opportunity, and youre out of luck.
Respondents also said that learning about technology and products was less important than learning about the management and strategic and financial plans. None said they read each plan in its entirety.
The majority (90 percent) of respondents also said they have no objection to entrepreneurs using outside professional firms to help them write their business plans. They look for well-written, well-organized plans, and are not influenced by pictures, color or other aesthetic touches. Most of the professionals polled receive from 26 to 50 plans a month.