Business Plan Final Modifications

Cite this article as:"Business Plan Final Modifications," in The Business Professor, updated July 8, 2014, last accessed November 26, 2020,


What should I do to finalize my plans?

You will scope versions of your plan for specific purposes.

Continue to focus on the purpose of your business plan and use it as a planning device. You should continually update the plan as your business progresses.  Also, you will make modifications to the plan to meet the immediate purpose.  Below are discussions of the specific purposes of the business plan.

Obtain a Loan 

Any lender will want to understand the risk of their loan.  Besides making the borrower sign a personal guarantee for the loan, the lender will review the business plan in detail.  The lender will focus on the estimates for revenue and expenses in order to determine the potential of your idea to become a stable and operating business. Further, the lender will focus on the hard assets of the business to serve as collateral for the loan. Below are some aspects of the business plan to show additional attention for this purpose:

  • Loan Amount: How is the amount borrowed explained in the business plan? You will need to be specific and provide a line-item summary of the intended purposes of the funds. The loan officer will look closely at the financials to determine whether the projected capital needs are consistent with the loan amount.
  • Priority of Funds: ¬†What is the spending priority for the funds? How will each intended expenditure relate to the key purposes of the business? ¬†The loan officer will want to see how will these funds strengthen the business.
  • Re-Payment Terms: You will need to have an understanding of how a similar business loan is structured. ¬†What interest rate do you expect and what is your proposed plan for repaying the loan? ¬†Of course, the lender will structure any approved loan, but you should understand the key provisions of the type of loan you are requesting. This will help your ability to negotiate the payment schedule or length of repayment.
  • Security Interest: ¬†The lender will look to understand the level of security in the loan. ¬†Aside from the success of the business, the primary consideration of the lender will be the available collateral to secure the loan. ¬†You will have to provide assurance that the lender will have a security interest with priority in the collateral or after-acquired property.

Attracting Investors

An investor is looking for the opportunity in the project. Investors seek to invest in acquiring an interest in a high-growth company that will provide a high return-on-investment at the exit event.  The investor will seek a rate of return commensurate with the level of perceived risk that the business will fail or not meet its intended growth. Below are some aspects of the business plan to show additional attention for this purpose:

  • Use of Funds: ¬†The investor will do a close inspection of the financials to determine the intended use of funds. ¬†He/she will focus closely on: the amount needed up front; the rate of expected spending; and the ability of the funds to meet the immediate business needs.
  • Sufficiency of Funds: ¬†Will the funds by sufficient to meet the expected growth of the business? Is the investor intending to provide multiple rounds of funding? If no, will the investor’s equity be diluted with future equity rounds? ¬†If the investor will not make future investments, do you have a plan for future equity rounds?
  • Financial Calculation: ¬†You will want to make certain that your financial projections meet the intended interest of the investor. Explain the percentage of equity offered and the offered price. The intended equity price to meet the investor’s desired rate of return. ¬†Further, you will want to explain the intended rights and provisions. ¬†For example, account for the anti-dilution rights of the investor or the right to participate in future equity offerings. There are numerous conditions that you will have to consider in the financing arrangement. Do your research and address these issues in the proposed equity offering.
  • Exit Strategy: ¬†What is the intended exit strategy? (Ex. Sale to a strategic purchaser; sale to private equity firm; owner buyback, Initial Public Offering). How long until you reach the exit strategy? ¬†Is there a backup strategy? This should be constructed as a worst-case scenario to quantify risk.
  • Investor Involvement: What level of involvement or control will the investor exert? ¬†Will the investor seek a role in management, on the board, serve as a strategic advisor, or be completely hands-off? You will want to account for the investor’s expectations and your willingness to allow investor involvement.

Was this article helpful?