other relevant information, a business will have a variety of uses for a "resume" of its own. The
business plan is that resume. To the extent that it reflects the reasonable plans of a carefully
managed business, it gives its audience a positive image of what your business is and what it can
be expected to do.
For vendors and suppliers. When you negotiate with a key vendor or supplier, you will want to
obtain the best prices possible and terms that permit you to defer payment for some period
and/or obtain a discount by prompt payment. The terms you will be able to negotiate will depend
in large part on the vendor's practices and on the vendor's perception of your desirability as a
customer. Factor number one in that perception is your ability to pay for what you buy. A
business plan that demonstrates that your business will have the cash flow to honor its
obligations can do a lot for you.
A secondary factor is your staying power as a customer. If a supplier thinks it will get a lot of
business from you in the future, it is more likely to give you a good price and extend favorable
terms.
For lenders. Starting a new business, or expanding an existing one, may require more money
than you can get together on your own. This usually requires an outside source for financing.
While you might consider taking on a partner or finding an investor, you will most likely go to a
bank for a loan. The very first thing that you'll be asked for is a copy of your business plan.
If you have been in business for a while and you need financing to expand into a new market or
introduce a new product or service, your business plan will illustrate the successful operations
that got you where you are today. That track record provides strong support for the projections
you provide regarding your business's new venture.
If you are just starting out, you won't have the benefit of a history of successful operations. In the
past, this made banks very hesitant to lend money to unproven businesses. However, bankers
are becoming more open to financing startup operations because much of their new business is
coming from this business sector. As with an existing business, a business plan is essential to
getting this type of financing. It is one of the first things that a potential lender will want to see
(along with a list of your personal assets). A good idea, presented in a carefully drafted business
plan, can be a very persuasive tool.
Venture capitalists, prospective partners or shareholders, and even relatives who might loan
money or invest in your business will likely want some assurances that they have used their
money wisely. A business plan demonstrates how their money will be used, and what they, and
the business, can expect in return. If you expect an ongoing need for funding, showing that the
business is meeting or exceeding planned goals can help you build the proven track record that
might let you borrow under more desirable rates and conditions.
For prospective employees. Portions of a business plan can also serve to introduce
prospective employees to your business. Particularly if you intend to hire long-time or high-level
employees, you will want to present a fair picture of what your business is and what types of work
need to be performed. You can also establish expectations regarding income and growth
opportunities based on the plan's projections.
