The 5 Most Important Things Your Business Plan Should Contain (that investors want to read about)
Posted by Dennis Lowery on August 14, 2008 in Business Financing, Business Management, Business Start Up Advice [ 3 Comments ]
Here are the 5 most important aspects of the business that investors want to read about in your business plan:
1) That The Company Has Focus
The company has clearly defined its business and can state it in a single strong sentence that says it all. Yes, your plan probably will have a more expansive description in its executive summary but you need to open your plan with that one simple declaration to show the clarity of your vision for the business.
2) That The Market Has Potential
The company has a large existing market for its products and services. If your company does not have significant growth potential then it is probably not going to be of interest to many equity investors. If you are shooting for debt based capital that may not matter most to them (market stability would be though so keep that in mind if your plan is geared towards raising debt based capital); but to an equity investor growth is of paramount importance and the size of the market signifies the opportunity potential.
3) That The Company Has Specific Solutions For Their Market
The company has identified what its customers most need and has created a value proposition for them to make it a simple “buy” decision. If there is nothing unique or distinct about your company’s products/services then you do not have a defensible position in your market. Defensibility of your market position is of key importance to investors and funding sources.
4) That Customer’s Show A Readiness & Willingness To Buy From The Company
In an ideal situation, the company’s customers have a recurring need for their products and/or services, with a reasonable sales-cycle and opportunities for premium up sell of additional products & services.
If you don’t have customers ready and willing to buy now … then that does not bode well for interest from most investors and funding sources. If your market is a long-term development type of proposition then your company will need to prove that it is truly a disruptive business model that will have people flock to it once it is functional. Its not so much “if you build it will they come” but rather “if you build it will they buy?”
5) That The Company’s Main Dynamics Are Strong
What are the main dynamics of a company? Simply put it is two components: a sellable product/service and a management team that can run the business well. Investors and funding sources want to know that the company has created unique solutions superior to their competition. And that the management team consists of smart people able to deliver products/services to their customers, control expenses and make a profit … repeatedly.
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If you create your business plan to address the above; then you are ahead of what most people end up with in their business plan. Weaknesses (dilution) caused by putting too much of the wrong content and not enough of what mattes most, kills interest in a company’s plan. It’s the answers to these 5 important aspects that investors and funding sources find most interesting. How well you answer them will affect the outcome of your search for capital.
In my next post I will get into how to use these 5 as your guide for creating (or revising) your business plan to make it an optimal document that says what it should. Be sure to watch for:
How To Really Get Your Business Plan Read (by investors & funding sources)! Learn how to create the type of business plan that investors and funding sources will enjoy reading and will take action on.