A killer business plan does not guarantee funding but definitely increases your chances to get funding.”
Funding depends on a lot more factors than just a business plan. For example, the management team, business model, risk associated and various other factors influences the decision of an investor. With our experience of working with over 250 entrepreneurs across 40 countries, we can definitely vouch that in today’s competitive landscape having a well-documented business plan is definitely a key to attract investor’s attention. Each investor has specific preferences on the business plan format based on the sector they specialize in or based on the geography they cater. However, there is definitely a global standard for business planning which encompasses the salient features of your venture that an investor might need to know before investing in your venture. It is very important for an entrepreneur to invest time and resources in creating a well-documented business plan to attract investors.
What is a well-documented business plan? What should it cover to ensure investor’s attention?
Here are some of the key highlights that investors look out for in a business plan.
- Business Model: The clarity of the business model and the revenue model is key to a business. This is one of the most important aspects of a business plan. If you do not have a clear business model in mind, let’s face it your planning needs some more homework.
- Product & Services offered: Your business plan must include the exact product or service you plan to offer along with the target market you are aiming at. Everything for everybody is not a very good idea.
- Competitive Advantage: Your venture does not necessarily need to be an unique innovation. It can be a traditional business but it is imperative to highlight the competitive advantage that you are offering to the market. It can be a gap in supply and demand, or it can be a product or service with better performance and price or simply your offerings are more convenient.
- Scalability: Everybody starts small. However, does your venture have the potential to achieve exponential growth? The scalability factor excites investors. It justifies the risk reward mechanism; a typical investor would be interested in.
- Research: You must have extensive research done to substantiate your business case. A business plan without proper research has no rationale. Adequate market research and competitor analysis must be a part of your business plan.
- Strategy: A business plan without the implementation strategy is like talking in the air. Let us be honest everybody has great ideas, but the ones who knows how to implement them are true entrepreneurs. Your business plan must contain the strategies you will need to ensure seamless implementation of your business.
- Realistic Financials: This is the last but definitely the most important section of your business plan. We have seen most entrepreneurs struggle with this section. Primarily because of entrepreneur’s myopia (biasedness towards own idea) or unrealistic assumptions. The financials must be realistic with a rationale.
Business plans should never be prepared with the presumption of impressing investors. Most entrepreneurs do that and it is a mistake. Business plans should be constructed to mirror your idea and rationalized through research. The data and information in the business plan cannot be based on hunches and belief. It must be prepared to ensure that the business case in itself sounds appealing.
At the end of the day, a badly prepared business plan can pull down an excellent idea.
Our suggestion to all entrepreneurs would be to spend adequate time on the planning process and if required, seek professional support. Let us not forget the old proverb; “Failing to plan is planning to fail”