A business plan is written for a reader, and the most common mistake in writing one is forgetting who that reader is. A plan written for a bank reads differently from one written for an investor, and one written for a visa endorsing body is different again. The core of the business does not change, but what you lead with, what you explain in detail and what you leave out all depend on who is going to read it.
Here is who reads business plans, and what each of them is actually looking for.
You
The first and most important reader is the owner. Writing a plan forces decisions that are easy to put off: what exactly you will charge, how many customers you need, what happens if they arrive more slowly than you hope. Many people find that the plan changes the business before anybody else has read it. Some find it tells them not to start at all, which is the cheapest possible way to learn that lesson.
The plan you write for yourself should be the most honest version. The others are that version, presented for a particular reader.
A bank or Start Up Loan assessor
A lender is asking one question: will this business be able to repay the loan, on time, even if things go less well than planned?
They look first at the cash flow forecast, especially its lowest point, and at whether the repayments are affordable from the business’s income. They look at your personal contribution and at any security. They test the assumptions behind the sales figure, because everything else depends on it. They are much less interested in your long-term vision than in the next two or three years.
Our guide to writing a business plan for a bank loan covers this in detail, and what a lender checks in your cash flow forecast walks through the forecast itself.
An equity investor
An investor is not being repaid; they are buying a share of the business, and they make money only if it becomes worth a great deal more. So they read for the size of the opportunity, the strength of the team, and what their money will achieve.
They want to know how big the business could get, what makes it hard to copy, how long the money lasts before you need more, and how they might eventually get a return. Small, steady, profitable businesses are often excellent businesses and poor equity investments, and a plan that does not show a route to significant growth will struggle here. See writing a business plan for investors.
A visa endorsing body
For the Innovator Founder visa, an endorsing body assesses whether the business is innovative, viable and scalable. Those three words should shape the plan. The assessor wants a clear statement of what is new, evidence that the business can work and support you, and a credible route to growth and job creation. They will also interview you on it. Innovator Founder visa requirements explains the route, and how to get endorsement covers the assessment.
A landlord
Commercial landlords, particularly for retail and hospitality units, often ask for a business plan from a new tenant with no trading history. They want to know one thing: can you pay the rent, reliably, for the length of the lease? They look at rent as a share of your forecast turnover, at your experience in the trade, and at how much cash you have behind you. They may ask for a rent deposit or a personal guarantee if the plan does not reassure them.
A grant funder or charitable trust
Grant funders are buying an outcome, not a return. They want to see what their money will achieve, for whom, how you will measure it, and how the activity continues after the grant ends. The financial section matters, but so does the evidence of need and the organisation’s ability to deliver. See writing a business plan for a charity or CIC.
Suppliers, partners and key hires
Less formally, a business plan is often shared with people you need on your side: a major supplier deciding on credit terms, a franchisor, a business partner, or a senior person you want to hire. They read it to judge whether the business is serious and whether it will be around long enough to be worth their commitment.
Writing for more than one reader
Most businesses will send their plan to more than one of these readers. You do not need to write a separate plan for each, but you should adjust three things:
- The executive summary, which should lead with what that reader cares about most. There is more on this in how to write an executive summary.
- The level of detail in each section, expanding what they will scrutinise.
- The ask, stated in their terms: a loan and how it is repaid, investment and what it buys, a grant and what it achieves.
SquarePlan’s software builds the plan and the financial projections that every one of these readers relies on. If you would rather have it written, our business plan writing service tailors the plan to the reader you are sending it to.