A business plan, like any written work, should be tailored to a specific purpose. In this article, I review the main differences that should be observed when preparing a business plan for the following three purposes - attracting an equity ( risk capital ) investor, attracting credit , restructuring.
When preparing a business plan for attracting venture capital , it is important to remember that investors invest money in a company to receive a return from the sale of company shares in the future or from dividends. Thus, this business plan should emphasize long-term (five or even more) growth and profit prospects. The financial calculations can be supplemented with an investment return calculation for an investor who would invest in this company/project - in the form of IRR or annual return.
For potential creditors, the most important aspect is not so much the company's potential income and rapid growth potential, but the security of the issued loan and the company's ability to cover interest and loan amortization payments. As a result, the business plan should emphasize the amount and value of the collateral against which the loan would be issued, as well as cash flow data in an average time frame (2-5 forecast years), which would indicate when and with what "reserve" the loan repayment can be made. Financial calculations can be supplemented with DSCR (debt service coverage ratio) and Credit to EBITDA (earnings before interest, tax, depreciation and amortization) indicators.
The restructuring business plan , compared to the other types of business plan, requires the "shortest" time perspective and typically focuses on a 1-2 year forecast of the company's operation. As the name suggests, the restructuring business plan focuses less on the description of a beautiful and distant future, but on short- and medium-term actions that will lead to quick and improving effects in the company's operations. In the financial section, the unequivocal focus should be on detailed cash flow forecasting and analysis. Detailed monthly forecasts are important for this type of business plan, and analyzes of various development scenarios can be very useful.
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