written by MO.com Subject Matter Resource Dave Lavinsky
Most entrepreneurs know that if they need funding they also need a business plan. Like a prospective employee needs a resume, every entrepreneur needs a business plan to present to funding sources.
Similarly to a resume, the paper alone won’t cause the reviewer (employer or investor) to say “yes.” Rather, initially the documents serve mostly as a screening mechanism. Specifically, they allow those reviewing the document to make a decision as to whether or not they should invest one of their precious resources in the candidate. And that precious resource is not their money, but their time.
That is, the initial goal of both a resume and a business plan is to convince the reader to take the interview or meeting. In the case of raising funding, you want the investor or lender to schedule a face-to-face meeting. Regardless of how good your business plan is, rarely if ever will they fund you without meeting you first.
Later in the process, after agreeing with the premise of your venture and that you and your team can execute on it, the investor will do a more comprehensive assessment of your business plan as part of their due diligence process.
Now that you know how your business plan will be used, here are some ways to improve it:
1) Make your business and the business opportunity crystal clear. After reading the first paragraph of your business plan, the investor must understand your business and the opportunity. If not, rarely will they read on.
2) Make sure to show your business’ unique success factors. Your business plan should not give every detail about your business. You’ll have the meeting and other opportunities to give more details. Rather, the plan should concisely explain the venture and focus on why it’s uniquely qualified to succeed. That will help get you the coveted meeting.
3) Create a flexible financial model. You need to know your numbers. How much money do you need to raise? What might the expected returns be? Importantly, your financial model must be flexible; that is, if the investor disagrees with one of your assumptions, you should be able to quickly and easily adjust that assumption to determine the new projections.
Without a great business plan, you will not get the investor meetings you need. And without those meetings, you won’t get funded. So spend time creating a great business plan.
If you need help with your business plan, consider a business plan writing firm and/or developing your business plan yourself with a simple business plan template.
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