Do Financiers or Investors look into a Business Plan? or just the executive summary?

I have been planning a dream, a dream to open my own business at some point of time [though it is decades away from happening].  But, well we all have a power and that is imagination. So I have been imagining myself as a entrepreneur and trying to convince my investors to lend me funds.

From the past few marketing/business classes I realized that business plan will be a secondary source of information to our clients but what has to be perfect, short, point-to-point is the executive summary.

All business plans must have an executive summary, details of the culture, vision of the business, marketing strategy and financial analysis. But what makes a good business plan excellent is providing the funding request with a clear and compelling reason. It also helps if the owner has spent time, money in the business. The investors or the financiers would like to know how much you are emotionally, intellectually and financially invested in the business. Another factor is providing the financiers or investors with an exit strategy in which they can leave the company in a very planned and orderly manner. No matter how good your business might be, if an investor wants to leave you should provide him/her with a way to do that in an orderly and planned manner. Finally in the business plan, it is important to do the Strength, Weaknesses, Opportunity and Threat (SWOT) analysis and compare it with your competitors and make it a point to put it into the business plan which will ensure that the investors know what will they gain or lose if they invest. This all should be summarized and put into the executive summary which should be written at the end of the business plan creation.

Errors of omission can sometimes be greater than errors of commission

For a change, I am going to write about business and especially entrepreneurship.

I saw a blog by G.Mohan which I saw a comment by Jeff Bezos, the founder of Amazon.com 

“We’ve made many errors. People over-focus on errors of commission. Companies over-emphasize how expensive failure’s going to be. Failure’s not that expensive….The big cost that most companies incur is much harder to notice, and those are errors of omission.”

Here is my critique about it: 

Errors of omission occur when the entrepreneur has a conflict of interest with an opportunity other than the idea one that he/she has in his/her mind but may exist in reality. In such a situation the entrepreneur completely ignores these opportunities and loses the first mover advantage and this could prove to be a big loss in the future. Errors of commission occur when the entrepreneur is solely looking at the loss that he/she may incur if the new opportunity is implemented. This is relevant to the business plan because the business plan is like a road map that the entrepreneur uses to make his business a success. If the entrepreneur does not document all of these opportunities and the research based on it in the “Opportunity Analysis and Research” then neither the financier nor the entrepreneur will be able to pursue the opportunity in the future. This error in omission may play a part in higher error in commission in the future.