Writing A Business Plan:
Definition Of A Business Plan

Most people will tell you that the definition of a business plan is "a document written to raise financing."

Nuts.

A business plan never raised a dime for anyone. No, I take that back. During they heyday of the dot-com stocks, a business plan written on a napkin could raise millions.

But that just isn't so any more.

In the case of venture capital, there is one thing, and one thing only, that a business plan is intended to accomplish. It is to get you a conversation with the venture capitalist. That's all. A conversation. A telephone conversation most likely.

Don't underestimate the power of that conversation. Do you know how many thousands upon thousands of people DON'T get that conversation? Well, there are thousands upon thousands.

You still have a long way to go to get a check. There are the phone conversations, the in person presentations, the call backs, the negotiations. And the waiting. Interminable waiting. Gut wrenching waiting.

But it starts with the business plan.

So how about with an SBA lender? Well, a business plan actually gets you further along the path there. Your local bank will take the business plan and "send it down town". Everything is done "down town" these days. I don't know what banks do when they don't have a "down town". Maybe then it goes "upstairs".

At any rate, the definition of a business plan for SBA lenders includes presenting sufficient material the lender to analyzer your potential. That is, how likely is the lender to get his money back?

You're still not home free. The SBA lender will take what you say and tear it apart, piece by piece. They will run it through financial analysis. They will check your credit. They will compare your business to every other business in the industry.

But it starts with the business plan.

So perhaps the best definition of a business plan is "the document that begins the lending/investing process". If it's a not so good business plan, it can also end the process. But if it is a good plan, it will open the doors that need to be opened.

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