CREATing A GOOD BUSINESS PLAN

Create a good business plan... obvious right???

business plan is a marketing document created to generate interest in the project from a marketing and operational points of view. As a standalone document, it can pretty much say anything because it is the equivalent of a glorified brochure. HOWEVER, when it is added to a Private Placement Memorandum as an exhibit (and it must be added to the PPM to fulfill your responsibilities to the potential investors) it then becomes a document that carries with it legal responsibilities. Responsibilities that if the information and representations are misstated or wrong, even if accidental, can have legal repercussions to you.

The business plan should contain operational information, forward-looking statements,  potential markets, detailed information about partners, directors and also possibly financial projections of revenue and income.

A business plan is never an Offering Document and should never be used as one. If you include the business plan statements such as the amount to be raised, what the deal is, exit strategy, pricing, etc. you have crossed the line into making the business plan an Offering Memorandum. At that point, the document must include all the information that necessarily must be in an Offering Memorandum.

Expect to add your business plan to the Private Placement Memorandum (PPM) and for it to be "the" primary exhibit within the PPM. Before adding the business plan to the PPM, you should review and remove any statements that are inappropriate. An example of inappropriate statement would be: "we will be profitable by year two of operation." In this case, adding a disclaimer doesn't mean you get a free pass. 

Next: Profile Your Investor