Business plans are taken as a given for raising equity money.  That is not the case for raising bank debt.  Far too often, a forecast is done and sent along with historical numbers and tax returns.  Maybe some product brochures or other company information is passed along.  That becomes the bank package.

The rest is covered in meetings, if you get that far with a prospective bank.  The banker then does his internal write-up to present the opportunity within the bank.

An opportunity is missed by not having a business plan.  You miss a great opportunity to market your company more effectively and stand out from the crowd.

Suppose you get that.  You are prepared to do a business plan for the prospective banks.  You wonder, how much should you put into it?

You want to put a good plan together, but recognize the role of the business plan.  It has its limits.  The goal of the business is not to get you the loan.  Nobody is going to read the plan and give you a loan site unseen.

The goal of the business plan is to get you the next meeting.  

It is similar to what a job seeker faces.  She needs a resume.  However, the resume by itself will not land her a job.  

Keep that in perspective.  Have a plan together.  Make it a good one.  But then let it go.  It is art, not science.  It will not be perfect.  That’s OK.

I have seen companies pour heart and soul into a business plan.  That is good, but not when it’s overdone:

• The markets could dry up or get more expensive while you are perfecting your plan.  A deal that could have gotten done with a good plan a couple months before can get shot down even though a perfect plan a couple months later.  If not slammed shut, it could cost you big interest, 100 basis points or more.

• Lots of management time is tied up producing the plan instead of running the business.

• No matter how great a plan is, you almost always pick up new ideas on the plan and presentation after talking to a couple banks.  It’s never perfect until it has been out there, field tested and refined.

Timing matters.  Make sure you aren’t so busy in the back room that you miss the timing in the market or chew up major chunks of your own time.