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A business plan is a critical business management tool when looking to establish, finance and expand any business.
Entrepreneurs and founders should consider starting early, perhaps with a concise statement of a businesses objectives and how founders intend to meet those objectives - describing, at a minimum, the product or service offered; anticipated customers and potential competition; management and financial arrangements; as well as proposed production and marketing plans. A Business Plan is almost always a work-in-progress and subject to update, expansion and revision as business factors change and a business (hopefully) grows in size and sophistication.
A Business Plan is not a legal document, nor should it be, but we often suggest it is prepared if possible with some degree of input from your business legal counsel and/or accountants - particularly if it is to be used in connection with potential financing. Issues often flagged by legal counsel include statements that may suggest legal arrangements that are not, perhaps, formally intended or disclosure of business arrangements that are subject to non-disclosure covenants. Furthermore, in almost all circumstances, it is not particularly beneficial to distribute a Business Plan without some attached confidentiality obligation. You may be speaking to a current or potential competitor - or a person or entity that may finance a current or potential competitor.
Regardless of the initial intended use, a Business Plan is at the very least a good planning exercise for any new business. Other more formal uses that benefit from the preparation and maintenance of a proper, up-to-date Business Plan include:
Angel and venture capital fund raising. Sophisticated early-stage investors almost always will assess any potential investment opportunity in part by the quality of an existing Business Plan.
Bank Loan Financing. While not necessarily a go-to for every small business or startup, bank lending decisions are often determined in part by the quality of the existing Business Plan.
Exits and Business Combinations. Perhaps a third party buyer has indicated an interest in purchasing a business or perhaps an existing competitor has reached out to suggest a potential acquisition or even merger. Many negotiations start with a review of documents like an updated Business Plan (and financial statements). Take care here to consider confidentiality and limitations on use with your legal counsel!
Regulatory Disclosure Documents. For later stage businesses an offering document like an Offering Memorandum or even a Prospectus may in in the cards. I such circumstances the prescribed disclosure required for these documents is greatly facilitated (and therefore the associated costs for preparation consequently mitigated) by the existence of a well drafted and current Business Plan.
The internet is full of self-help and guidance regarding descriptions of, and templates for, a Business Plan. Three good resources include:
Endeavor Law is pleased to help any entrepreneur, business owner or founder with the preparation and review of a Business Plan and offers legal advice and services on terms and at rates structured for new and growing British Columbia businesses (see here).
Does not constitute legal or other advice and must not be used as a substitute for legal advice from a qualified legal professional in your jurisdiction who has been fully informed of your specific circumstances. Information may not be up-dated subsequent to its initial publication and may therefore be out of date at the time it is read or viewed. Always consult a qualified legal professional in your jurisdiction.