Imagine yourself squaring off against potential investors to your business, what are they really after? What sections of your business plan do they go to first and which sections will make them invest or walk away?
I began asking myself these same questions while preparing my own business plan. While there are some elements that all investors look for, certain sections are going to be more important to specific investors. Here are the sections that if written well will help to attract all of the operating capitol that I need.
1) Marketing Plan & Sales Strategy: I am launching an e-commerce website. It is not designed to compete with the industry giants but it is designed to earn substantial revenue. Investors will want to know how a company with no store front and zero name recognition is going to attract enough customers to repay their investment. How will the company earn the money? An investor needs to know that our marketing plan is excellent and will help to make the company profitable. If the marketing plan and sales strategy is poor then the investor will know that they have little chance of receiving their investment and profit back. Many people have great ideas but cannot earn a profit.
2) Operations: Can the company navigate, fulfill its commitments, keep cost reasonable, satisfy customers, and manage profits? If not this may be a red flag the company will fail. It may also indicate that the company will need additional funding in the future to fix a crisis or bring the company up to snuff. The operations section will show that there is a solid plan in place to deliver on what we say we will.
3) The Financials: This is probably the first section that 9.5-out-of-ten turn to first. This is ultimately what it is all about for an investor and provides many clues to the chances of success for a business. Many investors have rules on what they will invest in based on this section. Even if they see the company is solid and can earn a profit it does not guarantee they are going to invest. Many investors will only lend their money out if they see the potential to hit their minimum returns. This section will make them want to learn more about your business until the point where they decide to invest or will make them lose all interest. It is vital this section be accurate and easy to understand.
4) Company Description: Who are you, what do you do, and how can I earn money from it? Investors want to see you have a solid idea and the potential to be successful. This section will tell them if you can be competitive and if it is something they want to invest in. Some investors invest in anything that they believe will earn a profit but others invest only in certain fields or businesses that agree with their beliefs and values.
5) Industry Analysis and Trends: Have you done your homework? Do you know what you are doing or are you a pie-in-the-sky dreamer who fails to see the real picture? This section will notify them if your research is accurate and they may verify your analysis. Is this a market that is growing or shrinking? Does your data indicate that your company has a chance to earn market share and is it a good market to invest in?
I have decided to complete several detailed reviews of my plan before asking experts to offer their notes. When they have returned their notes I will review them and incorporate what is useful. I will then adjust it and review and ask the same experts for a final review. My goals are to make sure that my information is 100% accurate, concise, and easy to understand. I want my review committee to challenge me on everything because if I can successfully explain it to them and reach consensus then I can do the same with an investor. It is a great opportunity to ensure that I am explaining clearly before seeing a potential investor. I want to reach agreement with as many investors as I need as quickly as I can. It is too hard to regain interest after a failed presentation.
I am in the process of rewriting the company description and editing my financial section so that investors can easily understand the figures based on the data that I listed.
Thank you for reading!
http://www.rhondaonline.com/
http://bpexpertviews.blogspot.com/
http://www.entrepreneur.com/article/38308
http://books.google.com/books/about/The_Entrepreneur_and_Small_Business_Prob.html?id=xYRX0FAFM0YC
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