Module 1: Plan Foundations

Who Business Plans Are Really For

Most people start a business plan by opening a blank document and typing "Executive Summary". That is the wrong first step. Before you write a single section, you need to know who will read the plan and what decision they are trying to make. A plan written for a bank loan officer, a business partner, a grant committee and yourself will contain much of the same information, but the emphasis, length and tone will be different.

The four main readers of a business plan

Almost every business plan is written for one or more of these readers:

• You and your team. A plan is first a thinking tool. Writing it forces you to test your idea, spot gaps and agree on priorities. Even if nobody else ever reads it, the plan should guide your own decisions about what to sell, to whom, and at what price.
• Lenders. Banks, SACCOs, microfinance institutions and asset financiers want to know one thing above all: will this business repay the loan on time? They focus on cash flow, existing income, collateral, your track record and the risks that could stop repayment.
• Investors. Angel investors, venture funds and equity partners buy a share of the business. They care about growth potential, the size of the opportunity, the strength of the team and how they will eventually make a return on their money.
• Partners and other stakeholders. Landlords, large suppliers, distributors, franchisors, grant programmes and sometimes government agencies may ask for a plan to judge whether you are a reliable partner.

What each reader is really asking

Every reader comes to your plan with a question in their head. Your job is to answer that question clearly and early.

Notice that the same fact can be presented differently. A lender reading "we plan to triple revenue in two years" may see risk. An investor may see opportunity. A lender is more comforted by "our current sales already cover 1.6 times the proposed monthly repayment".

Worked example: one business, two plans

Imagine Wanjiru runs a small bakery in Kahawa West, Nairobi. She sells bread and cakes to walk-in customers and two nearby schools. She wants to buy a larger oven and a delivery motorbike, costing a hypothetical KES 850,000.

Version for her bank. Wanjiru opens with her two years of trading history, average monthly sales from her M-Pesa till and bank statements, and her existing school contracts. She shows a monthly cash flow forecast proving that, even if sales grow slower than expected, she can meet the loan repayments. She lists the oven as security and explains what she would do if one school contract ended.

Version for a potential investor. A relative is considering buying 20 percent of the business. Here Wanjiru leads with the opportunity: dozens of schools and offices in the surrounding area that buy baked goods, the plan to supply them with daily deliveries, and how the bigger oven lets her serve them without hiring a second shift. She shows how the business could grow over three years and what the investor's share might be worth.

The facts are identical. The order, emphasis and level of detail change because the readers want different things.

How to identify your reader before you write

1. Name the reader. Write down exactly who will read this plan: "the SME credit team at my bank", "my co-founder and me", "the selection panel of a youth enterprise programme".
2. Name the decision. What will they decide after reading? Approve a loan of a certain size, invest a sum, sign a supply contract, or simply agree a direction.
3. Find out their requirements. Many banks and grant programmes publish a checklist or template. Ask for it. If they require a particular format or specific attachments, follow it exactly.
4. List their likely concerns. Write down the three objections they are most likely to raise, and plan to answer each one in your document.

Common mistakes to avoid

• Writing for everyone at once. A plan that tries to please every reader ends up long and unfocused. Write a strong core plan, then adapt the summary and emphasis for each audience.
• Treating the plan as paperwork. If you only write a plan because a bank asked for it, you lose its main value as a thinking tool. Use it to make real decisions.
• Ignoring the reader's template. If a lender asks for specific sections, do not substitute your own structure. Reviewers often score against their checklist.
• Hiding the weaknesses. Experienced readers will find them anyway. Naming a risk and showing how you will manage it builds more trust than pretending it does not exist.

In the rest of this course you will build one core plan for your own business idea. Keep your primary reader in mind at every step, and you will make better choices about what to include and what to leave out.