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The best use of business plans starts with founders using plans to establish strategy, tactics, milestones, and (especially important) essential projections of sales, spending, headcount, startup costs, capital needs; it`s for the founders to know, first, what they plan to do.

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By having a written business plan that you`re regularly reviewing, you can make confident decisions. You`ll have all the information necessary to know when you can hire new employees, launch a new product line or make a major purchase. At the same time, you can also plan ahead in case a decision doesn`t work out as expected, minimizing your potential risk.

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It`s trendy to say investors don`t read business plans, but what actually happens is they only read business plans of the businesses they are interested in. They reject businesses from intro and pitch, without reading the business plan.

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Later, as the investment process proceeds (if it does), the latest regularly-revised plan will serve as a companion piece to the pitch and a key document for due diligence.

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Without a business plan as a baseline, it will be far more difficult to track your progress, make adjustments, and have historical information readily available to reference when making difficult decisions. Creating a business plan ensures that you have a roadmap that doesn`t just outline where you plan to go, but where you`ve already been.

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The investment decision is about the content – the team, the market, the differentiators, the scalability, traction so far, validators, growth potential – not the presentation or formatting of the plan.

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