If you are looking for investors to infuse capital into your business, the first thing you will need is a business plan. A typical business plan includes extensive research on the market, competitor analysis, an overview of both business and marketing strategy, and financial documentation. It serves to provide investors with all the details they need to understand if the business has the potential to grow and give them the desired returns if they fund it. A detailed plan also helps the owners to keep the business on track to meet its goals. Some of the things you need to take care of while preparing a business plan investors will appreciate:
Detailed Information about the Market and Its Potential
A business plan should detail the market potential and how the company’s products or services will fulfill customers’ unmet needs. It will also provide information on the size of the market, its growth rate, potential opportunities, threats, and the state of the competition. The plan should list out the major competition, their USPs, and market shares, and point out the market gaps. It should be a critical examination of the market but should not contain any disparaging remarks about your competitors. All business plan examples you will look to for inspiration will have detailed profiles of the target audience.
Should Not Contain Empty Claims
You must review the contents of the business plan thoroughly and ensure it only contains claims that you can substantiate with facts and figures. For example, if you say you expect the business to become a market leader, you should specify the number of years. You must also back up the statement with growth projections. If you say that your product is one of a kind, you can be sure investors will want an analysis of the competing products. If you say your team is competent to take on the challenges, you must substantiate it with details of their qualifications and experience.
Be Conservative in All Projections
Investors love ambitious entrepreneurs, but you should not try to impress them with unrealistic sales projections and financial estimates. You can give them an idea of what you will try to achieve in your pitch, but all your projections regarding sales revenues, gross margins, investments, company valuation, etc. must be conservative. According to Forbes, you should benchmark your company against key industry players.
Include How Investors Can Exit
As enthusiastic as you may be regarding the potential of your venture, you need to keep in mind that investors will only want to see you succeed if they benefit significantly in a short period. A business plan will catch the attention of investors when you incorporate the likely company valuation projections under different situations. Also, be prepared to justify the asking amount with the amount of equity you intend to part with. You should lay out the exit routes possible over different time horizons.
The hallmark of a good business plan that investors will like reflects your driving ambition, a real market potential, how well you are ready with a suitable product or service, a strong management team, and above-all cold logic and prudent financial projections.
Some investors will not hesitate to take a 10-year approach and wait for the unicorn status that is so much in vogue. A good business plan will address all these issues and more.
A detailed business plan for investors should include information on the market potential, an analysis of the target audience, competitive analysis, realistic sales projections and financial estimates, and an exit strategy. The business plan should also justify the amount of equity the company is asking for. A good business plan will address all these issues and more.