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A business plan, in an of itself, does not meet the legal requirements for raising capital. Under the Securities Act of 1933, as amended, any offer of securities must be either (i) registered with the SEC, e.g., and IPO, or (ii) meet an exemption (from registration). The most common exemption is known as Regulation D; another exemption is Regulation A. Both Reg. A and Reg. D provide a 'safe harbor.' Even private companies must comply with this Act.
Reg. A and Reg. D require 'full disclosure' of items such as risk factors, a description of the securities being offered and many other items typically not found in a business plan. The business plan may serve as a foundation for the full disclosure information that must be provided to prospective investors but the business plan, in and of itself, typically lacks full disclosure information and therefore most likely does not qualify as an 'offering document.'
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Do you use capital if you own a company that makes a profit and you spend the extra money to entertain customers?
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