Every entrepreneur will tell ya that the business plan is the most important step in starting a business. Your business plan will be the blueprint for your company. It will dictate its structure and operations. This is the only thing you will have that will be relevant to your business in the beginning stages. It’s also what you will use to pitch your ideas to investors and to appeal to potential partners.
It is always time-consuming to create a business plan for potential investors. However, if you want your chances to appeal to potential investors, you will need to spend more time refining them. This guide will show you how to create a business proposal from scratch. This will help you to effectively capture your business idea and package it efficiently for presentation to investors.
The Goal for Business Plan for Prospective Investors
Let’s begin by identifying your main goals in this process.
- Great first impressions. Startup investors are often busy. They don’t like to spend their time listening to pitches that aren’t likely to succeed. In their many years of being an investor, they’ve probably heard many similar pitches. You must make a strong first impression if you want to have a chance of making your case and pitching your business. These investors must be convinced that your business plan is worthy of consideration.
- Competitive dominance. There’s a good chance that you are not the only one pitching your business idea to these investors. You may not be the only entrepreneur pitching the idea on the same day. There are likely to be many other businesses similar to yours that are already in operation. You must convince investors that your company has a competitive advantage if you want to get the funding you need. You will need to show that you are better than your competition.
- Accuracy and reliability. A business plan serves to outline a path for your business creation and development. If the foundation is not correct or unreliable, It could have a devastating effect on your chances of funding and your long-term success. Your business plan is crucial for accuracy and reliability.
Although it may seem small and insignificant, ensure your business has a professional appearance. Your investors will first see your text’s external binding and internal formatting. These will form their impressions. Use a professional font with sufficient spacing between lines. This will make it easy for your readers to understand.
A table of contents can help you organize and present your top-level ideas, If possible, have your business plan professionally bound using spiral binding (or similar) to make an even better impression. To make your business plan stand out, you can invest in higher-quality stock paper and a glossy cover.
Sections to include
After you have made a good first impression, investors will start to dig into the “meat” portion of your business plan. You’ll either win or lose investors here.
These sections should be included when writing your business plan
The executive summary
Although the executive summary is the first section of your business plan, it’s the most important. This section will summarize all the key points that you plan to address in the remainder of your business plan and give readers a sense of what to expect. This is a crucial point to make a first impression.
The company description is an extended section that describes what your company is and how it’s going to operate. The industry and operational model will be defined. These are the key variables that will determine your success.
Products & Services
This section will describe the services and products your company offers. What makes these services and products so appealing? Start with a few products and expand as you go. How much will these products cost?
Market research/target demographics.
Next, create a section that proves people are willing to pay the prices you have set for your products or services. To explain why your business is appealing to this market segment, you will need to define your target audience using demographic data, surveys, and focus group data.
Next, you’ll need to describe your current competitors. What other businesses are currently operating in this space? Who dominates the field? How does it relate to the business that makes you think you can compete with them, how can you differentiate yourself?
Also read: Top 12 Competitor Analysis Tools
Leadership and team.
This section will describe your qualifications to lead this business. Referring to your disposition and experience. You will need to identify the credentials of the chosen CEO if you are not the leader of the business. This is a chance to establish the organizational hierarchy and to list any partners that will assist your business in its growth.
This section is perhaps the most important for investors.
- What is your business’s chance of making money?
- How can you budget for expenses during the initial stages of development?
- What is your business’s potential growth in revenue and profitability over the next few years?
You can be flexible about which sections you include or how they are arranged, but it is important to understand the basic idea behind each section.
Preparing for a Presentation
After the business plan has been written, it’s time to prepare it for presentation. You will most likely pitch your idea directly to investors. In these cases, your business plan acts as an additional reference document.
Do you want to nail your presentation?
- Do your research. Don’t stop researching because you’ve finished the last sections of your business plan. It is important to be familiar with the industry that you are about to enter. You should also be able to recall statistics relevant to your business in a flash. Every page of your business plan should be familiar. You shouldn’t be surprised by anything.
- Rehearse but don’t over-rehearse. You should practice your presentation. This is best done in front of a mirror, or with video. However, it is also possible to over-rehearse. You’ll sound robotic and boring if you over-practice your phrasing. If you get lost in a phrase, it can also make you unable to improvise. Practice a few times and only take a few notes. Don’t attempt to memorize everything. You will soon learn to vary your words and speak from the heart.
- Add new insights. Be prepared to add additional statistics or facts to your presentation that aren’t included in the business plan. This is a great way to show that you have more knowledge than what’s in your business plan. This shows that you have done your research and know how to make a presentation engaging.
- Anticipate criticism and questions. Investors are often savvy and sometimes ruthless. After you’ve presented your business plan and they have read it, investors will have questions for you. They may also have criticisms about your plan. Take every step necessary to anticipate these criticisms and objections and be ready to answer them.
Additional Tips to a Successful Business plan
These tips can help you achieve success.
- Plan conservatively. Throughout the tenure of your entrepreneur career, you’ll probably encounter many variables, situational twists, and surprises that will defy all your expectations. These could include unexpected fees or new competitors. It’s crucial to plan your finances carefully. Investors will appreciate your thoughtful planning and will be more impressed by an entrepreneur who is too ambitious or unrealistic.
- Tweak the plan for your audience. It is not a good idea to write the same business plan for all investors. Different investors will look for different characteristics of value. Some investors may be more interested in the growth trajectory of your business, while others may be more concerned about its leadership and staffing.
- Appeal to long-term ROI. Most investors place the highest priority on achieving a return on their investment (ROI), especially in the long term. This should be your main focus. How can you make the investment of your investors worthwhile? This question is more specific if you can answer it. Be prepared to back your claims up with objective evidence and logic.
Even if you follow these steps and put together a great business plan, there is no guarantee that your plan will succeed. There may be stiff competition from other entrepreneurs or investors who feel you are not qualified to run this business.
If this happens, If you are rejected, ask for feedback and include that feedback in the next version of your business plan. New investors will always be available or other funding opportunities to consider if you believe in the business idea.