June 2, 2010
When seeking angel investors, venture capitalists, private equity firms, and/or debt capital for your new company, your business plan is the most important piece of presentation material you will create.
Have YOU finished your business plan yet?
Investors who you have successfully convinced to learn more about your company will always ask for a business plan. If you manage to keep your prospective investors interested in your company, they will eventually read your entire business plan. The way you present your company in this plan will greatly affect investors’ opinion of you and the growth potential of your company.
Experienced equity capitalists (e.g., venture capitalists) look for a wide range of specific information about your company before pumping money into it. They want to know your company is poised to grow quickly and smoothly towards an â€œexitâ€ or payout for the investor.
All good business plans contain an executive summary; company analysis; industry analysis; customer analysis; competitive analysis; marketing plan; operations plan; a description of the management team; the all-important financial plan; and finally an appendix containing supporting materials (e.g., charts, illustrations, full descriptions of proprietary technologies.)
This can seem overwhelming, so to orient yourself, here are three questions you need to answer in your business plan:
1. Does my company fill a market need?
Where is the â€œpainâ€? What do your customers need, and who are your customers? Your business plan must show that your company is â€œjust what the doctor ordered.â€ You need to include evidence that people are screaming for a product or service that is similar to your company’s offering. This will give investors confidence that your company can grow quickly.
2. Does my management team have the pedigree to succeed?
Unfortunately you cannot rest your argument entirely on the genius of your business idea. You and/or your management team must have experience and a track record of accomplishment. Highlight team members that have shown success at growing companies in the phase at which your company currently is operating (e.g., start-up, research and development phase, hiring phase, product release, initial revenues, and advanced phases.)
3. Are my pro forma financial statements comprehensive, realistic, and based on verifiable data?
Pro forma statements are best understood as the financial forecast of your business as you will present it to shrewd investors. This section is a fantastic place to verify the realism of your business plan as a whole. This is because, according to a business plan guide prepared by Growthink:
â€œThe figures used in these statements flow from the analyses in every other section of the business plan.â€
The first two questions above can be used as oracles for everything you write while preparing your business plan. The third question should be asked after each completed draft.
Growthink business plans have raised $1 Billion in funding since 1999. And for a limited time, you can download Growthinkâ€™s proven business plan template for just $1.
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