corporate finance

Corporate financing

Why write a business plan?

Many entrepreneurs feel a little overwhelmed when explaining their business plans to investors. There are two reasons: first, they don't want to make the development logic of the project itself transparent and are very confused. Of course it's hard to explain; Second, it is impossible to effectively express a clear strategy through concise written materials. In fact, it is not difficult to solve these two problems. Just write a business plan for investors.

But at present, there are often some entrepreneurs who are unwilling to provide business plans to investors. On the contrary, they prefer investors to meet and talk with them. As we all know, investors are a very busy group, reviewing dozens of business plans every day. Even interviewing multiple interested financiers, if the financiers all ask for interviews with investors, their work efficiency will be greatly reduced. Therefore, investors usually read the business plan before meeting entrepreneurs.

In addition, for all entrepreneurial projects, especially those in the initial stage, the entrepreneurial team is the largest investor in the project. From this perspective, entrepreneurs should adhere to the same investment principles as external investors. The difference is that entrepreneurs cannot choose to invest in their own companies, while investors can choose freely.

Therefore, the business plan is not only written for investors, but also helps entrepreneurs to make an in-depth analysis of customer needs, products, technologies, business models, teams, marketing, operations and competitive advantages, and show their advantages strategically. Therefore, the business plan is actually written for entrepreneurs themselves, which is also a necessary prerequisite for writing a business plan.

Function of business plan

(1) For investors, sorting out all business models and operational management issues can make the later operation of the enterprise orderly.

(2) For the government. Business plans must be provided for government-funded entrepreneurial projects, which ensures the rigor and standardization of government investment.

(3) For financial institutions, the business plan is a very important document if they want to apply for commercial loans from financial institutions.

(4) When cooperating with foreign countries to recruit shareholders or limited partners, the business plan is also the most convincing and authoritative.