Tips to Write a Convincing Business Plan

Tips to Write a Convincing Business Plan

It is not easy to raise funds beyond the seed round without a thoroughly researched business plan. A plan that maps out the road to success and ultimately convince investors that you know the best route to get there. It is important that a well-prepared plan can demonstrate that if there are twists and turns in the road ahead - as there inevitably will be - you can navigate them with confidence.

Typically, investors or financial angels focus primarily on the management team, the idea, market opportunity and financials. There are also other factors that play part into their final decision to fund a business.

The following are some tips that can strengthen and magnetize your business plan; making it more compelling and convincing to the investors you seek to attract:

1.      Hook Them Immediately

You must start your business presentation with a couple of sentences that grab investor’s attention and entice them into reading more. These first few sentences must tell the reader what you do; why you are unique; what size market you serve; what share of market you expect to capture; and when you intend to accomplish that.

2.     Project Solid Management Expertise

The strength of your start-up's management team is absolutely critical to both your success and your ability to raise venture and angel financing. A start-up doesn't need to have a complete team to raise funding, but it should at least have key players on board with the experience and vision to make the company a success. You must convince them that you have an effective management team. Choosing well-respected professional resources such as accountants and lawyers will not only expand your network, but also increase your credibility.

3.     Develop Captivating and Believable Financials

Investors will also want to know how you arrived at your projections. These assumptions should be clearly spelled out. If you have an existing business, you must have a pretty good sense of how much things will cost, how much staff & resources you'll need and the sales you're likely to make. Develop your financials from the bottom up:

• Examine different distribution channels and the opportunities and costs in each.
• Source manufacturers and suppliers.
• Project staffing needs with salaries and start dates.

Depending on whether they are venture capitalists or angel investors, they will expect the numbers to be more or less aggressive. Specificity in financials may also vary in light of the stage of the plan and level of risk of the company.

You must know your numbers and be ready to explain how each item in your projections has been calculated, because any serious investor is likely to grill you in detail. You’ll also be expected to know your break-even point and burn rate. Be prepared to discuss when you are going to run out of money and what the investor’s exit strategy will be (buyout, IPO, merger/acquisition).

4.    Target a Significant Market With Opportunity

The investors may want to know that your business will serve a large market and possibly become a market leader. They also want to understand the market situation that needs to be addressed and how you plan to exploit it. Is the consumer frustrated by an industry plagued by poor quality control? Is it an untapped market niche? Are you consolidating a fragmented market? Have you developed a technological or medical breakthrough?

5.     Include a Well-Researched Market Analysis

Part of targeting a significant market opportunity is knowing everything about the market, not just its size and opportunity. Provide a full analysis of the market’s characteristics, growth potential and all relevant trends. Include a competitive analysis, which describes the strengths and weaknesses of your competitors as well as your competitive advantage.

6.    Create Competitive Barriers

Having a sustainable competitive advantage is also important. Do you have patents, copyrights, a proprietary process or technology, exclusive licenses or agreements? Are you the first to market? How long can you protect that lead if a big company enters the market? Do you have the best people or the best strategic partners?

7.     Forge Strategic Alliances

Securing strategic alliances with key players such as industry distributors and vendors shows the investors that others trust and want to work with you. It establishes further proof of your concept’s merit - particularly important for a start-up because it definitely increases an investor’s confidence. Having big-name strategic partners or an existing customer base impresses even more.

8.     Set Realistic and Achievable Milestones:

Investors don’t give a large sum of money in one chunk. You will have to address and substantiate how much will be needed, when each contribution must be made and what the goals are in that period. If you don’t achieve your goals you may not get the next contribution, so make your milestones realistic.

9.    Show Management’s Commitment:

For start-ups, a personal investment on the part of the entrepreneur demonstrates his or her seriousness and willingness to take on part of the risk. There is no greater tangible evidence of your commitment to the project. Remember, you will have to justify your commitment.

10.      Attend to the Details:

Usually investors don’t have a lot of time or patience. Thus your business plan must be:

• concise - about 30 pages
• consistent - numbers in particular need to be consistent throughout the text of the plan, the financials and the assumptions
• well documented - footnote where appropriate
• accurate - don’t make things up
• easy to read - use a font and type size that are readable, as most investors are over the age of 40
• well laid out
• written in an acceptable business plan style
• handsome - use of color on the cover and graphics can be beneficial

Be sure that the cover page has the name of your company, logo, its address, phone and fax numbers and company URL, plus the name and title of the contact with email address. Include a table of contents (with page numbers) that provides a logical arrangement of the sections of your business plan. Believe it or not, entrepreneurs sometimes overlook these small details.

Always remember, getting funding is no easy task. Hard work, persistence and following these tips will improve your chances of success.

RAMLI BARDIN | PREAPRING BUSINESS PROPOSALS | 25^TH DECEMBER 2016

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