June 25, 2010
Seven Keys to Keep Your Business Plan From Ending Up In the Garbage
Iâ€™m sure that you are one of many frustrated entrepreneurs who has spent lots of time and money in drafting a business plan yet you never hear back from the investors whom you sent your business plan to. Chances are that your business plan was never even read by those investors, instead it was thrown away. This actually happens quite frequently when investors receive business plans.
Click here to see how you can access the resources to get your business plan read and taken seriously!
To help you get your business plan read by investors and get your investors interested, we have developed seven key points for you to follow to keep your business plan from being trashed.
1. Never present your business plan first to the investor. If the business plan is the first thing you present the investor, it is already going to be doomed to the garbage. This is a lot of information and most investors are very busy people and do not like to be overwhelmed with an entire business plan right away. Instead, you should start by building rapport with the investor or if you contact him cold, write a good teaser email to get him interested. Remember, your teaser email should be brief.
2. Have an executive summary together with your business plan. Your executive summary should be brief and it should reveal more about your venture than the initial teaser email. In fact, the executive summary should be part of your business plan but as a stand-alone document that summarizes your business plan and points out the highlights of your business plan. Typically, your executive summary should be one to three pages long and should contain more of the information that the investor would like to see.
3. Do your homework before submitting your final business plan. Remember, investors expect that you are an expert of your industry and so you need to play the part if you want to receive funding. You should research your industry well and you need to present yourself that you are very knowledgeable in your field. Investors have their experts too and this can be very testing to your expertise. If your business plan shows that you do not know what youâ€™re doing, it will be trashed.
4. Know your competition and how you stand against them. Research your competition intensely. What are your competitors strengths and weaknesses. Are you capable to take advantage of your competitors weaknesses and can you overcome your competitorâ€™s strong points? If investors see that you do not have a chance against the competition, you will not be funded and your business plan ends up, well, you know where.
5. Be certain your numbers are realistic. This is very important. Investors like numbers, but they like numbers that are realistic, not too low or too high. You may want to hire a CPA and a good bookkeeper to make sure that your numbers are right. Investors are very good at assessing the risks and the potential profits. The higher the risk and the lower the profit will cause your business plan to end up in the trash.
6. Do not look naive before the investors. Be sure that all your information is backed up with serious research and that your numbers are accurate. Though it is hard to predict the future, thatâ€™s what investors do in a way. They take calculated risks and they want to see a good ROI or return on their investment. Investors will have their CPAs and market analysts to do their research as they do the due diligence phase. This can make or break your business plan.
7. Never use phrases that are too good to be true, such as this is a guaranteed success or your investment in this venture is pure profit. Phrases of this nature should be avoided at all costs. When an investor sees or hears phrases like this, heâ€™ll think that you are either dreaming or you want to take him to the cleaners. In general, overhyping your venture will not put you in a good light with the investor. Tell the truth. Be sincere and show that you believe in your venture and that you are convinced that your venture would be a good opportunity for the prospective investor and back it with hard core evidence proven by research.
Remember, these seven key points are what make a winning business plan that will not end up in the garbage.
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You will be successful if you put your own efforts in seeking capital for your company, and your friends here at VCgate are here to help you have the resources and the contact information to access the funding sources you need to start your company.
All the best and good luck!
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