Impressing the Bank or Investors
There are key sections of your business plan that the bank or investors will review closely. It’s true that they are drawn to your bottom line. Funders want to see how you will invest the money they give to you and how you plan to make it grow and create profits. The numbers are a big part of where they will look. Some people say that this is the only area they scrutinize. Maybe so, but be aware of other factors that will impress the banker, angel investor or venture capitalist… as well as mom and dad!
The Potential for Good Business Management
Show that you are serious about making your business work. Most investors will be able to tell this by your attitude and your spirit. However, telling them on paper that you can handle the risk and are willing to make it work at whatever cost is reassuring. Most of the time “whatever cost” means long hours and low pay when the profits are low. If you have business management experience, be sure to let them know this too (even if it’s not a formal educational degree). They like to know that you’ve been down a similar road before. If you have not had direct experience managing a business, seriously consider adding a partner or hiring someone who has proven experience.
Strong Financial Information and Records
As mentioned above and in the article Estimating Your Financials, this part is crucial to obtaining funds. Bankers and investors are familiar with the correct content, organization and presentation of financial statements, and expect to see them in your business plan. Don’t cut corners or attempt to devise your own method of financial reporting. Banks and investors will often pull your personal credit report to see if you are a good risk. If your credit is not in good shape, spend some time re-sorting it before approaching investors.
Good Marketing Plan
Your funders know that how you produce, price, promote, and sell your service/product will determine how you do overall. If you don’t have a strong plan for marketing in your Business Plan, you may find that many investors are not interested in taking a risk with you.
Flexibility
Can readers tell by your business plan that you are willing to bend if needed? Sometimes business ventures take on a life of their own and for survival they need to be changed. This is not always easy. Through your business plan, show that you have ways to deal with change, and create it, when necessary to meet everyone’s goals and objectives.
Ability to Make Money
Investors care about you as a person to a limited extent. They may like you and want you to succeed, but ultimately your relationship is a business deal. Can you make a profit for them? Can you return the money they gave to your business and still make a profit? It is critically important to tell your investor how you will do this in explicit terms.
A Way Out For Investors If Things Don’t Work
Hopefully, this will not happen. But investors do want an insurance policy. When can they cash out if money is being lost with no chance of recovery? What will they receive as a return in this case? Don’t make this a goal, but show that you have an awareness of this as a possibility. Then work as hard as you can to never have to address these questions.
