A business with great potential often fails to secure funding because those who created it didn't do their homework and prepare a substantial business plan. Whether you're looking for a small or large cash injection, you need to have a good plan. However, if you've never had to prepare one before then what are the essential elements that you should include?
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Many people think that a business plan has to be long and complicated proposal. But as long as you explain the vision that you have for the business and include all the information that investors need, it doesn't have to be complex.
Where to Start?
The summary is one of the most important parts of a business plan, as it will help the potential investor decide whether to read the rest of the document. You should provide them with a company overview, explaining your main products and services and how and why the business was created.
The company's vision for the future is another important aspect, as along with the investment rationale it will show how you intend to use the money. This should be followed by a detailed analysis of the market and your competitors and how you intend to promote the company to potential customers.
The people behind the company are just as important to its success as the products, so explain the organisational structure and the key management team. A solid business plan should then discuss how you intend to execute the project and minimise risks. It should conclude with the financial plan. This explains the funding and equity structure, anticipated start-up costs, five-year projections and when you will start to make a profit.
Tailor the Information
Even though there is no set format to a business plan, this is the key information that you should include if you're looking for investors to take you seriously. Make sure that if you're presenting to more than one investment team you tailor the plan to suit each audience. The key points they will be interested in are what you intend to use the money for, when and how you'll pay them back, their expected return, any other funding sources, the CVs of the management team and your profit forecast.
Above all, make sure that your plan is realistic and based on the needs of the investors. Business plans usually fail due to weak management, marketing that doesn't work, forecasts that are too ambitious or poor presentation. If you know you have a strong investment opportunity, then make sure it doesn't fail to impress purely because of a weak business plan.