Business Plan for Investors - 8 Tips for Success
So you've developed the next big thing which is going to be a huge success and everyone will want one. That's great, now the hard work begins with preparing a business plan to attract investor funding.
We talk to hundreds of people each year that have come up with a product or concept that they believe will become a commercial success. Many of these ideas are great and have merit however remain just ideas. Turning an idea into a commercial success takes a lot of hard work and in most cases, funds. Typically the business proponent has spent their money creating prototypes, patenting, etc and has none left for the last leg of the journey - commercialisation.
If you are determined to pursue your idea and traditional debt funding isn't an option then investor funding or partnering with investors may be the only option. There are many investors who fund start-up or expanding businesses, however they need to be convinced of the value of the investment.
They key is to prepare as thoroughly as possible before asking for funds. Pitching what may be only an idea to an investor runs the risk of the investor thinking 'great idea' and developing the concept themselves. One would need to ensure some protection is afforded to themselves in this instance.
Pitching an idea to an investor with a strategic and operational business plan documented, the business model and revenue model clearly explained, testimonials validating the proof of concept, a fully costed marketing plan based on actual market research, letters of intent from key customers or partners, three years of financials and an information memorandum outlining the equity deal, is more ideal. However this may be costly and take a great degree of time to organize..
So what is the answer? Put yourself in the shoes of the investor. They're deciding on what to buy with their funds. Think of the process you go through when deciding to buy a new car or a house. Visualise the process you go through and the information you require to make a decision. The investor will be going through the same process of weighing up the information and the options available to them. They need to be shown why your business is the one to invest in. The easier you can make it for an investor the better chance you have.
8 tips to getting preparing a business plan for an investor
Each matter is unique and therefore has different qualities and attributes that would appeal to investors. They also have differing areas that need addressing in terms of due diligence. However as a general rule begin with the following:
1. Explain the concept and competitive advantage
2. The potential market for the concept
3. The business model
4. The marketing strategy
5. The use of funds
6. Time frame to commercialization
7. Risks involved
8. Who is involved with the project
This list is by no means exhaustive and other aspects may take precedence over these depending on the nature of the matter, however this provides a solid foundation for you to build your case to an investor.
Final Tip
One needs to prepare a professional pitch and make a good impression from the first meeting. Remember the alternative to investor funding is paying potentially thousands of dollars in interest payments per year should you be able to access debt funding. If you need help, seek it out. As the saying goes, you only get one chance to make a first impression.
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We talk to hundreds of people each year that have come up with a product or concept that they believe will become a commercial success. Many of these ideas are great and have merit however remain just ideas. Turning an idea into a commercial success takes a lot of hard work and in most cases, funds. Typically the business proponent has spent their money creating prototypes, patenting, etc and has none left for the last leg of the journey - commercialisation.
If you are determined to pursue your idea and traditional debt funding isn't an option then investor funding or partnering with investors may be the only option. There are many investors who fund start-up or expanding businesses, however they need to be convinced of the value of the investment.
They key is to prepare as thoroughly as possible before asking for funds. Pitching what may be only an idea to an investor runs the risk of the investor thinking 'great idea' and developing the concept themselves. One would need to ensure some protection is afforded to themselves in this instance.
Pitching an idea to an investor with a strategic and operational business plan documented, the business model and revenue model clearly explained, testimonials validating the proof of concept, a fully costed marketing plan based on actual market research, letters of intent from key customers or partners, three years of financials and an information memorandum outlining the equity deal, is more ideal. However this may be costly and take a great degree of time to organize..
So what is the answer? Put yourself in the shoes of the investor. They're deciding on what to buy with their funds. Think of the process you go through when deciding to buy a new car or a house. Visualise the process you go through and the information you require to make a decision. The investor will be going through the same process of weighing up the information and the options available to them. They need to be shown why your business is the one to invest in. The easier you can make it for an investor the better chance you have.
8 tips to getting preparing a business plan for an investor
Each matter is unique and therefore has different qualities and attributes that would appeal to investors. They also have differing areas that need addressing in terms of due diligence. However as a general rule begin with the following:
1. Explain the concept and competitive advantage
2. The potential market for the concept
3. The business model
4. The marketing strategy
5. The use of funds
6. Time frame to commercialization
7. Risks involved
8. Who is involved with the project
This list is by no means exhaustive and other aspects may take precedence over these depending on the nature of the matter, however this provides a solid foundation for you to build your case to an investor.
Final Tip
One needs to prepare a professional pitch and make a good impression from the first meeting. Remember the alternative to investor funding is paying potentially thousands of dollars in interest payments per year should you be able to access debt funding. If you need help, seek it out. As the saying goes, you only get one chance to make a first impression.
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