It doesn’t matter what route you go down when it comes to any research involving ‘how to start a business’ or ‘how to land investment’ you are going to find a plethora of articles where YOUR BUSINESS PLAN IS CRITICAL is written in bold, capital letters. This is because your business plan is the single document that will keep you moving in the right direction, the very blueprint that will help you keep your progress aligned with your goals. More than that, though, your business plan is what every investor will want to see before they delve into their pockets.
Venture capitalists, bankers, angel investors, it doesn’t matter, they will all want to scrutinize your business plan as part of their evaluation of your business idea. It is how they decide whether the potential reward is worth the risk. That is why it is so important that you have a well-constructed business plan that answers all the questions they may have and all the questions they didn’t realize they had.
How do you do that? Well, the simplest way is to put yourself in the investor’s shoes and think about things from their point of view. Now, that is no easy feat so, to help you out a bit, we have pulled together a list of things every kind of investor will want to know before they sink their cash into your idea or company.
It All Starts With Money
The very first thing an investor is going to want to know about is your finances. They are going to want to see the numbers you have come up with. So it is up to you to prove – in no uncertain terms – that your financial history is excellent and your financial future looks more than positive. This is especially true if you are seeking investment from an institute like a bank where regulations are strict and criteria specific. If you are approaching venture capitalists, however, then you may find that they have slightly different wants, such as the potential for high returns and a clear exit strategy that won’t disrupt your success. So make sure you have all the answers they are seeking about finances in your plan, make sure you know the answers, and know what your future plans may entail, such as issuing shares or further investment. You will also want to show that you are capable of meeting your financial obligations and that your assets cover your liabilities.
Your Background Must Matter
No investor is going to let an entrepreneur make a mistake, not when it is their money on the line anyway. That is why they will also scrutinize your background and experience in the industry you are looking at entering. They are going to know you are capable of being your own boss. They are going to want to know what experience you have operating in this field, what experience you have managing teams, what track record you had at your previous place of employment and anything else that may be relevant. This is where you need to shine, and that means filling them with confidence and swaying them with your passion. Then put all this down in your business plan. If you have pulled together a team of people that will boost your strengths and counter balance your weaknesses, it is a great time to add this to your document as well to show that you are serious about this, not willing to take risks and that you are aware of the fact success relies on a team.
What Sets You Apart
This is your time to shine. This is your chance to show off exactly why your business will be a success and what sets you apart from the rest of the market. Your product or service doesn’t need to be unique, but it does need to offer something fresh even if that just means an improvement on what is already out there. It could be that you are looking to go into the life sciences or medical industries, and your secret weapon is your use of this laser company that specializes in precision and quality. It could be that you are going into bespoke furniture making, and you have found a way to use resin to create truly unique pieces. Whatever it is, prove that your idea holds weight and that the marketplace has enough potential to make any investment worthwhile. Basically, what you need to have is an advantage over the competition. It could be intellectual property, a clever patent, exclusive deals, licenses or even distribution arrangements. Whatever it is, make sure it stands out.
Investors Want A Large Market
The kind of investor you are aiming at attracting will change what they find attractive, but a piece of the market is important to all of them. What an angel investor will want to see is a large net; they will want to see that you have a come up with a fantastic solution that will be beneficial to a large number of people. This is slightly different from VC’s, who tend to prefer the change to grow in a market that has limited competition at the present time. Either way, if you can show that you already have a large and loyal customer base when it comes to pitching for investment then you are going to find you are in a much better position. Why? Simple. It serves as proof – it serves as evidence – that your idea works and that will sway your potential investors more than anything else. That will show that you really could impact your intended marketplace, with the right backing that is.
The last thing you will want to make sure that you can offer them is trust. They will want to trust that you can a) grow at a rate of knots and b) manage this quick growth. That is what they will want to know you can handle. Investors aren’t the most patient of people, but they also know the risks that come with scaling fast, so make sure can ease their minds and you will be fine. We promise.
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