How To Write a Business Plan for Investors.
Fundraising for your business is a big deal. You need to identify a list of potential investors and be prepared to present a convincing pitch to them. You also need to master your business strategy and be ready to explain it in detail. At the same time, you should be able to anticipate possible questions and provide valid answers.
The key to ensuring you have all of these things at your fingertips is having a detailed business plan. Many investors would request for your business plan, and your ability to provide one would send a message that you are serious about the future of your business.
Furthermore, you should understand what a business plan that would appeal to investors should contain. Investors usually want to see particular details in your business plan and having these details will be a great selling point for you.
What Investors look out for in your business plan
Before deciding to invest in your business, investors like to know that you have a clear vision from the beginning. Even though there is no perfect business plan, investors just want to see a roadmap to success. A business plan communicates your vision for success and can help them (investors) decide to either support your business or not. So, the big question remains, what do investors want to see in your business plan?
1. A Vision
They say big things start from having a clear vision, and investors know this; even moreso as a startup. Investors want to know where you see yourself and your business in a few years. Although some visions change due to many other factors, you should at least have one.
2. A Solution
Whatever product or service you are offering must be valuable to customers. Investors want to know that you have thought this through and studied the market and decided to roll out a product that would meet customers’ needs. Your business plan should provide evidence that you have done your market research, discovered a problem, and would be providing a solution to this problem.
3. Your financial needs and plan
When you have a business strategy, you will need funds to achieve your goal. But have you quantified the amount of money you need? Do you know what exactly you need these funds for? Have you drafted a plan to allocate these resources? Any investor going through your business plan would want to see these things. It gives them the impression that if they give you the funds you need, you will put it to good use because you have done the groundwork and have a financial plan.
Related: Why business plans are essential for establishing long term success https://blkpreneurship.com/2022/03/21/why-business-plans-are-essential-for-establishing-long-term-success/
4. Your management
It is important to clearly state how the business is structured.Who and who make up your team and who manages what? Every role should have defined responsibilities and targets that are measurable. Investors would like to see a strong management plan at a first glance. Ensure that you have a plan to hire people of strong character and good experience to manage all the different aspects of your business if you do not already have them. This lets investors know that you are poised for success and have a strong grasp of your business needs.
5. A return on investment strategy
When an investor puts money into your business, how do you plan to multiply these funds and give them their money back? Every investor wants to make a profit, and they sure hope that your business can help them achieve this. You could have an exit strategy if you plan to sell your business out to bigger investors eventually, or you could have a growth strategy that allows you to invite more and more investors, expand your business and eventually give investors their returns. Your business plan should state this in detail with timelines if necessary so that investors are comfortable enough to pump in funds into your business.
It is one thing to have a business plan, it is another to have one that would attract the right investors. By knowing what investors look out for before deciding to fund a business, you can draft a proper business plan that captures all these elements. By doing this, you would increase the chances of getting adequate funding for your business.
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