A business plan is essential to find investors for funding. It is the first thing that investors investigate to decide whether or not to invest. No matter how good your plan is, it’s enough to attract your investors. In your business plan, you have to show the investors how your business will make a profit.
However, funding depends on a lot of factors. Your management team, business model, associated hazards and risks, and several other factors impact investor’s decisions. Every investor has specific preferences. They look for a business plan format from a diverse perspective. That depends on their specialty and geography they cater to. “The main reason investors turn down a proposal is that the business is not growing fast enough,” says Scarborough.
What are investors looking for?
Investors are wondering when they will be able to realize a capital gain on their investment and hope that it will return them a lot. Therefore, they care about your growth potential.
- Is there a growing market for your product or service?
- Is technology a significant innovation, or is it just a new version of an already existing product?
- What would be the exit strategy?
- What return will investors get, and when?
Typically, investors only meet entrepreneurs once and want to hear them present their business for a few minutes or less.
Prepare a short and compelling presentation. That describes your business and explains how you will meet the needs and wants of your customers. Tell them what you have accomplished and why it makes sense to invest in your business.
Establish your credibility
No matter your new business is not yet producing substantial income and positive cash flow. It is even more essential to demonstrate that you’re credible and that the risk is worth it.
All the right things need to be in place:
- In-depth knowledge of the market,
- A competitive product or service,
- And enough self-confidence to overcome inevitable setbacks.
You will need to demonstrate that you’ve the skills, determination, and confidence to build your business successfully. And you can complete the project you are applying for a loan for. If you don’t believe in yourself, your business, and your project, why would others?
Investors like to see an executive summary in your business plan. Nobody has time to read the business plan of 50 to 60 pages.
So your executive summary is such that it makes the investors read it. This operational summary consists of 3 to 4 pages, and synthetically represents your business’s key elements. It helps them to know what you are planning to do with your business.
It should be smooth and clear so that your grandparents can understand it. In this way, venture capitalists will be aware of the opportunity that you are giving to them.
Your management team is another thing the investors look at in your business plan, more precisely. Investors see heaps of enterprises daily that are pitching the same business idea. That’s why they investigate, which one is the best team between them. And which management team can efficiently execute the idea and bring good results.
So, it’s imperative to showcase your team of experts in your business plan that know their job. It is challenging at the startup business as your team might not have the expertise and skills to add. In this situation, we recommend you get some assistance and guidance on representing the management team.
Make sure that you pick the illegible team that can accomplish the project proficiently. If you trust your team and have reliability, you’ll gain the trust and credibility of investors.
It is the most crucial section of your business plan that investors might want to see. They want to see the figures in your fiscal statement. However, add the numbers in a way that makes sense. You have to be careful in this section.
You’re not going to become a millionaire in two years, so relax your mind. Think prudently, the amount you’re asking for funding can bring a beneficial profit as well as the wage of you and your team.
Convincing investors to participate in the financing of your project cannot be improvised. Preparation is necessary to present your project and to seduce. Show the interest of your project in terms of idea and market, competitive positioning. And know how to put it forward, by answering this essential question: how are you going to make money?
Your executive summary, competent management team, and financial projections are the things investors look for. Keep in mind if your executive summary is not right, your plan will go straight to the bin.