One of the most critical and possibly often frightening moments every entrepreneur faces is when the business is in the expansion phase and needs for money for investment. Whether it involves raising a few thousand dollars or a few million dollars, you will be eventually required to present your business idea to complete strangers. This means that you need to give them a clear idea about your business, and what it entails. In other words, you need a good business plan.
Investors have different views about business plans. While some require a one or a two page summary, others prefer a detailed business plan to understand the various aspects of your business. This requires you to sit down and write a comprehensive business.
Here is a checklist of the minimum information that your business plan must have to increase the chances of getting the nod of funding.
An executive summary: If you cannot summarize your business in less than two pages, you cannot convince investors to read a detailed business plan. Therefore your executive summary should be a short, crisp and a convincing pitch that creates and retains the readers’ interest.
Business overview: Here you need to describe your value statement, purpose of the business, the value proposition and the business’ history so far.
Investment rationale: To put it in simple words – “Why should they invest and what will they get out of it”
Industry Overview: How is the industry performing? What stage is it in? Why is the right time to invest in this industry? What is its future outlook?
Marketing strategy: Who are your customers? Why will they buy your product and how will you reach them? Who are your competitors and how are you better off?
Management and Organization: What is the organization chart? Who will manage the business? What are their skills and expertise? Many investors focus on this section, because this would tell them how the business will be managed and by whom? In many cases, this section can make the difference between a ‘yes’ or a ‘no’.
Financial plan: Here you need to the total funding required and how it will be spent; You should also give a set of financial projections including income statements, cash flow projections and balance sheet projections. Your estimate should be based on realistic assumptions and should also highlight various analyses such as break even and ratio analysis.
Risk analysis and mitigation: This is a very important section which is often missed in most business plans. Here describe the key business risks, how these would impact the financial projections and how these are dealt with and mitigated.
Implementation: What are the key milestones? Who is responsible for each of the milestone? What are the timelines? List them here with a plan on how these will be achieved.