Most entrepreneurs know if they need funding, they also need a business plan. Like a prospective employee needs a resume, every entrepreneur needs a business plan to present to funding sources.
And just like a solid resume doesn’t ensure you’ll get the job, neither does a solid business plan ensure you’ll get funding. In both cases, the initial goal of the document is to get a meeting with the decision-maker. During that meeting you will explain the details of your resume or plan to try to cement the larger deal.
It is important to consider your business plan with this in mind. Specifically, you need to understand that the initial goal of your plan is to sell the reader on investing their time to meet with you.
Later in the process, after agreeing with the premise of your venture and that you and your team can execute on it, the investor will do a more comprehensive assessment of your business plan as part of their due diligence process.
Now that you know how your business plan will be used, here are some ways to improve it:
1) Make your business and the business opportunity crystal clear. After reading the first paragraph of your business plan, the investor must understand your business and the opportunity. If not, rarely will they read on.
2) Present your business’ unique success factors. Your business plan should not give every detail about your business. You’ll have the meeting and other opportunities to give more details. Rather, the plan should concisely explain the venture and focus on why it’s uniquely qualified to succeed. That will help get you the coveted meeting.
For example, does your management team have unique credentials? Have you already secured customer agreements or partnerships? Have you developed intellectual property? Figure out your business’ unique success factors and proudly present them in your plan.
3) Leverage a good business plan template. There’s no need to reinvent the wheel when a template already lays out the questions you need to answer. If you’d like to look at business plan templates for your specific industry, plenty are available at http://www.businessplantemplate.com.
4) Create a flexible financial model. You need to know your numbers. How much money do you need to raise? What might the expected returns be? Importantly, your financial model must be flexible; that is, if the investor disagrees with one of your assumptions, you should be able to quickly and easily adjust that assumption to determine the new projections.
5) Present your future milestones. Sophisticated investors want to know how you’ll use their money. And they want to understand what milestones you will achieve and when. For example, if you are building a new product, how much money and time will it take to create a prototype? How many weeks do you expect to do beta testing? After beta testing, how long might it take until you improve your product based on customer feedback and launch it?
While you’ll never predict these events with 100% accuracy, drafting these goals and milestone is important. They affect investors’ willingness to fund you, and setting goals is a proven tactic to increase your organization’s productivity.
6) Make it look nice. While a business plan need not look as fancy as the brochure for the latest Apple product, it also shouldn’t be something you typed up in an hour. Your business plan should be easy to read. This means having enough white space, so the reader is not overwhelmed with text. It also means having images and charts and avoiding typos and grammatical errors.
Without a great business plan, you will not get the investor meetings you need. And without these meetings, you won’t get funded. So, use these tips and spend the time needed to create a great business plan, and funding could be yours.
