The business plan is a comprehensive document that outlines the company’s mission, goals, finances and revenues, and market data.
The main purpose of a business plan is to convince banks and/or investors to lend you a loan, but there are other benefits.
The business plan helps establish accountability within the organization, provides a holistic view of the company, and can be used as a frame of reference time and time again.
Ultimately, business plans can reduce risk. It summarizes all areas of the business and details how these areas (marketing, operations) affect growth.
There is no way to solve it; if you want to get money from investors, especially if you just Start a business, You need a business plan.
Any entrepreneur will be lucky enough to have a coveted meeting Angel investor Or venture capitalist. But the initial publicity, conferences and presentations were just the tip of the iceberg.
The next thing is the most important.
Potential investors will want to see Detailed business plan And will conduct due diligence to ensure that you are a valuable investment. With this in mind, here is what investors look for in a business plan:
Powerful executive summary
The executive summary is the first part of your business plan and should be attractive enough to make a solid first impression.
Think of your executive summary as your website landing page. If visitors visit your website and cannot find the content they are looking for, they will move on to the next best content.
Your executive summary should introduce the company and explain what you do and what makes you different. It gives investors a complete picture of your business and should summarize the key details contained in other parts of your business plan. This section is usually one page and should be written at the end.
Start your executive summary by introducing yourself; follow up explaining why your business is important and how it can fill gaps in the market or solve specific problems.Take a look Sample business plan Get inspiration on how to write an effective executive summary.
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Complete financial forecast
Whether you have no sales or hundreds of thousands of income, every investor will carefully check your financial plan to accurately determine the financial feasibility. This part of your plan needs to be fully fulfilled, without leaving grey areas or room for further questions.
It is important to put yourself in the position of investors. Based on your financial prospects, do you consider yourself a risky investment or a promising investment? Your financial forecast should include:
Estimated income statement
Predict how much revenue you will generate and the profit you will make from these sales
Breakeven analysis
Learn more about how many products you need to sell to cover fixed and variable production costs
Projected balance sheet
Estimates of total assets and liabilities
Cash flow statement
Detailed description of all cash inflows and outflows
Business ratio
Explain the calculation of the relationship between the projects (ie total sales and number of employees).
In order to accurately build your financial forecast, you need to evaluate your market share (your market survey Part is also crucial to investors). Starting from the bottom, highlight your total target market and the percentage you will target. You can then dive deeper by outlining the segmented addressable market and market share.
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Customer acquisition cost
Investors want to know how much it costs to acquire new customers.
Knowing your customer acquisition costs (CAC) can help you grow in a healthy, scalable way and show investors that you know exactly how to attract customers.
Knowing your CAC is more important than ever; according to ProfitWell, the cost of acquiring new customers is 60% increase in the past five years.
Customer acquisition costs are determined by examining the total sales and marketing costs required to acquire new customers. You can calculate your CAC by dividing the total cost of marketing and sales by the number of customers acquired.
Your CAC can also help simplify your decision-making process, optimize your marketing strategy to focus on customer lifetime value, and paint a complete picture of your payback period (the time required to recover the cost of investment).
Strong execution
The business plan is like a picture. As the old saying goes, “A picture is worth a thousand words.”
Likewise, your business plan reveals your identity as a business owner. Suppose you have strong sales and optimistic financial forecasts. Does your business plan lack important documents and data points to support this? Is it rife with grammatical errors and incorrect format?
The execution is convincing. The way you communicate your business is as important as the details in the plan. Hasty or ambiguous business plans will lead to more problems and hesitation.
If you can’t take the time to write a reliable business plan, what shortcut do you have?
Financial Q&A
The financial question and answer solves two important questions: how much do you want and what do you plan to use it for?
The investment you are seeking should be clearly stated in your business plan (usually mentioned in the executive summary and elaborated in the financial plan). How you plan to use the money should also be clear and logical.
Investors need to know that you will spend money responsibly, and there is clear evidence that how you spend money will lead to income growth. Every dollar should be allocated to a specific destination, and for good reason.
For example, you cannot ask for an investment of $500,000 without explaining how and why you reached this number. In the following example of a functional company called Culina, the business plan explains how much they require and why. In this case, Culina raised $15 million to increase hardware manufacturing, improve user experience and user interface, expand marketing efforts, and complete bookings before the holidays.
Strong management
Your business plan should prove that you have a strong management team.
Many investors manage their investment portfolios with a people-oriented mindset. This means that who you are is as important as what you have to provide. The “management” or “team” part of the business plan is a great place to humanize your company and highlight your strengths.
What makes your team particularly capable of running this business and guiding it to profitability? What is your background? Have you won any awards or participated in any incubator program? Do you have relevant experience (operating a business or working in the industry)?
Answer these questions and show investors that you are a unique leader.
Know your market thoroughly
Is there a market for your product or service, how do you enter your market, and what market share do you occupy?
It is important to prove that you have a thorough understanding of the market and target population. Many companies fail because they do not conduct market research or talk to customers and customers. Product verification should precede fundraising efforts.
“Market size” is the basic number that every investor is looking for.Your competition analysis, Market research, indicators and customer surveys should all be taken into consideration.
If you are struggling to understand your market and location, you can start by collecting basic data from the Census and the Labor Bureau. Many industries also have formal associations and publish their research online. You can buy these studies or commission a market research company to lead the research for you.
in conclusion
Interested investors can make or break your business and should be taken seriously. You will not rush to complete the Ivy League school application, nor should you submit a business plan hastily.
Take the time to elaborate on all aspects of your business, and consider working with the business plan author to ensure that you communicate your message effectively. If investors are impressed with your business plan, you are likely to receive critical funds.
