Outlining Your Business Plan: Internal vs. External Planning

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Author: Eric Powers

Author: Eric Powers

Whether you create a business plan for external sources (generally potential investors, lenders, or partners) or for internal guidance for your management and staff, the outline of required sections is generally the same. However, there are some key differences between these two types of plans.

Focus on Control Mechanisms

While important that the operations plan mention to some extent how quality and financial controls will be in place for a funder plan, it is extremely important for an internal plan. A business plan is only as good as the companys means to insure that it is put into practice. The systems of controls, including both technological and human elements should be covered in detail.

Management Qualifications

For an externally-focused business plan, it is important to sell the qualifications of the management team to potential funders to prove that they can execute the outlined plans. For an internal plan, the management is already generally a given. Rather than detail who these managers are and why they are qualified to be in charge, it is more important to review the responsibilities of each manager and the organizational chart showing the hierarchy of reporting relationships. This should be a time to clarify unclear relationships and overlaps in responsibilities which may have caused tensions in the past.

Financial Plan Differences

Investors are focused on the returns that they will see from the business through appreciation of their ownership shares and/or dividends. An internal plan looks at maximizing profits and does not generally concern itself with the cash flows to owners. Therefore, the financial section does not need the same kind of summary of investor returns. Also, as the plan is not being used to raise outside capital, it should describe how internal funds are allocated between projects and departments (i.e. new products, marketing, sales, information technology, and human resources). This is part of the pro forma income statement or budget, rather than a separate chart showing the sources and uses of funds.About the Author:

Eric Powers is associated with Growthink, a business plan consulting firm. Since 1999, Growthink has developed business plans for more than 2,000 clients. Call 800-506-5728 today for a free consultation with a Growthink business plan writer. Or, if you're writing your plan yourself, Growthink also offers a business plan template.

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