Business Plans – External and Internal Plans Get You Different Benefits

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Broadly, there are two types of  business   plans . These are external  business   plans  and internal  business   plans . An external  business   plan  is focused on parties that are outside your  business . An internal  business   plan  is, broadly, only for the eyes of those people who work within the  business . Here is a brief summary of the differences.

External  business   plans 

When a  business   plan  is prepared for an external party, it should be focused on what the external party requires. Very often external  business   plans  are prepared for people who are providing capital or finance to the  business . However, this may not be the only reason. You may need to prepare a  business   plan  for a community organisation or a council so that it outlines the impact of your  business  on the community. This will have a different focus to a plan that is prepared for a financier.

More specifically, external  business   plans  are often prepared for parties that you would like to invest in your company. If you are preparing a plan for an investor of this category, you need to think clearly about what that investor wants to see in your plan. If it is at all possible, ask questions and understand exactly what the investor wants to see. Leaving this to chance is often a fatal mistake. Don’t try to guess the needs of your reader. Find out.

I would also warn you about putting too much detail in an external  business   plan . Keep it to the point and keep it focused. Don’t stray into reams of detail on the chance that your reader wants to know this. Further detail can be supplied at a later time. However, if your reader wants the detail, go ahead and write all the pages that you need.

In the opinion of some commentators, the executive summary carries about 95% of the importance to the reader. I think this is a bit overstated, but it is important that your executive summary outline very clearly the benefits to the reader. Your executive summary answers the question “Why should I read this plan?” So make sure you get the “What’s in it for me?” points into the executive summary.

Internal  business   plans 

On balance, I think internal  business   plans  are the most important. This is a document that dries your business forward. An internal  business   plan  summarises what you and your team are actually going to do to improve your  business  and achieve your goals. No one need see what is written in this plan except those people who are directly involved in carrying out the plan. You may choose to show it to a wider readership, but that is your choice.

While the internal  business   plan  will contain elements of what is in an external plan, the internal plan will be solely focused on trying to achieve the goals of the owners of the enterprise. What are the precise financial goals? How many locations will you operate from in five years time? When will the business be sold? How will production efficiency be improved by 15%? How many people will you employ at the end of next year? And so forth.

In my view, an internal  business   plan  is only of use if specific tasks are assigned to specific people to be achieved by a specific time. Also, there must be constant follow-up of these goals. No progress is made until people know exactly what they have to do and by what time and they need to be accountable to the plan.

Another aspect of an internal  business   plan  is that it will (and should) change. The world changes rapidly. Your industry changes rapidly. People come and people go. Opportunities arise and projects fail. Your internal  business   plan  should not be a document that is visited once per year. Internal  business   plans  that are reviewed that frequently usually sit in the bottom of someone’s drawer and don’t have any impact on the organisation. The internal  business   plan  should be examined at least once per month.

Wishing you easier business.

John Jeffreys


Source by John Jeffreys

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