The Recipe for Writing a Business Plan That Could Win Funding
Updated: May 17, 2021
Writing a business plan is one of the most daunting assignments that you as an entrepreneur or as a business executive could face. This is not only because it is challenging to create an all-encompassing roadmap (which it certainly is) and deciding on what to include and what not to. The biggest challenge to overcome is our mental conditioning which always makes us resist planning of any sorts. Afterall, freewheeling opportunism and day to day fire-fighting is way more exciting than trying to find our way to success through a carefully developed roadmap.
A comprehensive, carefully thought-out business plan is essential to the success of entrepreneurs and corporate managers. Whether you are starting up a new business, seeking additional capital for existing product lines, or proposing a new activity in a corporate division, you will never face a more challenging writing assignment than the preparation of a business plan.
At the early stages of my career, as a young finance executive, like many others, I did not have much respect for the value which such work adds to a business. I considered formally written business plans to be fancy documents full of fluff and nice honest things (which often no one had any intention to follow) that served only PR purposes. I thought that all providers of finance make their investment or lending decisions independently of what you tell them. i.e. based on their own judgement of the risk which the venture exposes them to and the return which they desire to earn at that risk level. That view was further supported by banker’s attitude who always looked at your balance sheet to find collaterals, no matter how brilliant was the project or new venture idea you were trying to present them to for funding.
Developments in the business management approaches
Whilst the broad connection between a funding decision and risk-return profile is fundamentally correct, the belief in the futility of an effective presentation and its effects on a funding decision is not true. In fact, it is far from being true. To understand it further, we have to take a quick look at the developments in business management approaches in the past two decades.
Rewind 23 years, back to 1996/97. The years when I was still training with the audit firm. Times were turbulent and we were witnessing one mega financial fraud (or mismanagement) case after another, sending shockwaves through the international financial systems. Accounting & auditing processions as a whole were forced to take a fresh look at the objectives & approaches that were till then adopted and taken. We started hearing about the need for accountants to add value to the business rather than being ‘bean-counters’. Till then, there was very little in our training which could equip us to look at a business strategically and scan through for non-financial signs of a corporate failure. Similarly, we rarely heard of the need for an alignment between all business functions and its correlation with success. The focus was always on control, which we as young auditors construed to be the systems of financial controls.
In the past two decades, we have certainly come a million miles in the development of new management philosophies w