Every month, I see abandoned attempts at business plans. Each one usually has a story attached to it…. and often it’s a story of frustration and disappointment.

But here’s what’s interesting… I estimate that in around 50% of cases, this frustration and disappointment was avoidable. Many of these plans could have been successful if they had avoided one mistake.

The mistake?

The author was trying to prepare the wrong type of business plan. Let me explain.

Broadly speaking, there are two types of business plans.

Type One: The first is the kind that you might take to a bank or potential investor. Its purpose is to persuade someone to lend you money or invest in your business.

Type Two: The second is essentially an internal plan. It’s a business success blueprint or business direction roadmap. Its purpose is to effectively convert ideas and goals into good decisions and smart action steps. If it’s a good plan, you will always be clear on what you need to do next; on your pathway to success.

So what goes wrong? What causes the frustration and disappointment?
The problem arises because of two factors:

Firstly, most books on business planning, and most of the software available, is fundamentally directed at “Type One” situations. (Remember, that’s the focus on getting finance.) The same applies to most of the business plan templates promoted on the Internet.

Secondly, a large percentage of business owners and corporate managers have a “Type Two” purpose in mind. The reason they are planning is that they want their business operation to be successful. Frequently, they are also looking to solve the difficult “how to” issues.

Clearly, a “Type One” business plan is not the solution for the latter situation.

So how do you avoid this problem?

A: If you are seeking to maximise your control to achieve business success, then the tool you need is an Internal Business Plan. Another name for this is a Strategic Business Plan. (This is my area of expertise and I will be looking to feed you lots of useful information in the future).

B: If it’s finance you need, and you are clear on your business purpose, direction and focus, then the Internet will present you with a generous number of solutions. Many are free.

A note of warning though… 80% to 90% of venture capital finance applications are declined because the business proposition simply does not stack up. In my opinion, failure to plan the business internally is a major cause.

– Andrew Smith