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Learn2 Write a Business Plan (continued)
Step 1: Understand your audience

All writers must begin by asking who's going to read their work. This is especially true for people writing business plans, because they have the added task of persuading readers to part with their money. Be sure your plan targets your readers' specific concerns. Your audience will include:

Yourself. Experts say you should write a separate business plan for your eyes only. It should probably be the most conservative in terms of projecting future profits, so you don't overestimate your business's potential and end up with angry creditors down the road.

Banks and other lending institutions. Bankers are generally the most conservative of investors. They're looking for a more or less foolproof plan, plus collateral (equipment, buildings, vehicles, etc.). In addition, you should be prepared to show them that you and your team are trustworthy. They're going to want to see a detailed credit history, plus as much evidence of past entrepreneurial success as possible. Be prepared to provide a good explanation if you've had credit trouble in the past.

Individual investors. While individuals may be willing to take more risks with their own money, they're also going to expect more in return. A profit of 10 percent per year probably won't tempt them, since they can easily make the same amount by investing in larger, more established companies. Without being unrealistic, you want to emphasize that your venture could be highly profitable. Just don't make promises you can't keep. It's best to consult a good business lawyer before reaching any agreements, since individual investors might try to sue if they aren't happy with the way things are going.

Venture capitalists. Competition for venture capital money is fierce, so you have to make a case that your company is not just going to be profitable, but will grow rapidly over a period of five to seven years. A personal introduction will help enormously, since venture capital firms get many more proposals than they can read.

Relatives. If you borrow from relatives, keep things as professional as possible. This way, you can still spend holidays under the same roof. Don't expect them to sign on out of a sense of duty. Show them your venture can be genuinely profitable, and make sure any agreement you reach is committed to writing.

Employee investors. You can make your employees partners by promising them a share in the ownership of the business. In return, they may be willing to work for a below-average salary and even kick in some of their own capital. But again, make sure you have written agreements and consult a good business attorney for potential problems. For example, you need to be able to take action if your partner suddenly stops showing up to work.

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Step 1: Understand your audience
Step 2: Prepare to research and write
Step 3: Outline the essentials
Step 4: Detail the investment opportunity
Step 5: Analyze the company and industry
Step 6: Address the market
Step 7: Explain how your business will run
Step 8: Introduce the management team
Step 9: Prepare a financial plan
Step 10: Provide source materials
Step 11: Avoid common pitfalls
Step 12: Proofread your work