Business Plan Evaluation
How does an investor or banker accomplish a business plan evaluation? When a business plan has been drawn up, evaluation is critical. The business plan evaluation phase it's best to be concentrated on the value of the plan and whether it has the results forecasted. The business plan will be the subject of intensive scrutiny by the banker or the investor. Before this happens, thorough proofreading is essential. First evaluate the plan yourself, to eliminate any possible weak points or flaws. In this process, look at the plan from a different perspective, as an outsider, as one of the readers targeted. The business plan evaluation is strictly linked to the the type of reader. In his or her eyes, which aspect of the plan plays the crucial role? To put it plainly:
- If it is the investor, he will be interested in long-term profit he can make from investing. In other words, he will look closely at the viability and growth possibilities of your project. Equally, he will want to identify potential exit routes at the time of investment. He will therefore focus on management information, marketing and sales perspectives, and naturally, on the finance.
- Buyers will look for a business with potential and perspective. They will have your products and services as their main focus. Facts and figures related to marketing and finance play almost as important a role.
- Bankers and business partners offering credit will be primarily interested in your solvency. For this reason stress the healthy state of your finances. If called upon, you may also wish to reveal your fixed assets as collateral.
- Most good job applicants will be concerned about their paychecks. Can the employer ensure regular salary payments for the personnel? As well as this, future employees will take an interest in your company's financial history and your forecasts.
- The written business plan itself — dates and deadlines must be analyzed exhaustively. All fundamental questions must be answered.
- The manner of presentation — form, clarity, conciseness, logical presentation, a realistic approach.
- The viability of the business — from the point of view of market competitiveness, management capability and financial competence. Does the business plan present a business strategy with a strong and sustainable competitive advantage?