5 Tips To Create A Business Plan That Investors Love


At some point in your life as an entrepreneur, you’ll need a business plan. In fact, any time you need to raise outside funding, you’ll need to present...

Photo: Dave Lavinsky, serial entrepreneur and Founder of Growthink; Source: Courtesy Photo
Photo: Dave Lavinsky, serial entrepreneur and Founder of Growthink; Source: Courtesy Photo

At some point in your life as an entrepreneur, you’ll need a business plan. In fact, any time you need to raise outside funding, you’ll need to present a plan for investors or lenders.

 And if your plan isn’t great, your ability to raise funding will be hampered.

To ensure this doesn’t happen to you, below you’ll find five tips to create a great business plan.

 

1. Share a clear explanation of your business

Most lenders and investors receive tons of business plans. Because there are only so many hours in a day, you need to ensure they spend more time with your plan than the others.

Luckily for you, most business plans lose the reader in the first few sentences. How? By poorly explaining what the venture does. 

Readers don’t have time to decipher what you do; they have too many other plans to read. So, make sure you start the plan with a very concise definition of your business. Then you can go into more detail regarding what makes you unique.

 

2. Discuss unique qualifications

If your business has no unique qualifications, you’ll surely fail (since even if you achieve initial success, others can easily copy you). Sometimes your unique qualifications may include simple things like having secured the best location. Other unique qualifications might include your customer base, intellectual property, and team members that have exceptional talent and experience. Be sure to explicitly state these qualifications in your business plan, since they are critical to funding decision.

 

Business model innovation
Photo: © gstockstudio, YFS Magazine

 

3. Answer investors’ key questions

Your business plan doesn’t need to answer every question an investor might have about your business. But, it must answer their key questions. If you do so, they’ll schedule a meeting with you during which they can ask additional ones.

The right business plan template will identify the key questions you must answer, which include:
 

  • What does your business do?

  • Why are you uniquely qualified to succeed?

  • What have your business accomplished to date?

  • What is the size of your market and what trends are affecting it?

  • What are the strengths and weaknesses of your competitors?

  • Who are your customers?

  • What is your marketing plan?

  • What is your operational plan to grow your business?

  • What are your financial projections?

  • Who’s on your team?

 

3. Present a realistic financial model

Lenders want to know you’ll be able to pay them back. And investors need to see your potential to give them a healthy ROI. 

In either case, funding sources will scrutinize your financial model to ensure it’ realistic.

For example, if you’re a startup, the chances of you reaching $100 million in sales in 3 years is minimal. So, don’t project this. Doing so will kill your credibility and your chances of raising funding. Rather, build a financial model based on realistic assumptions.

 

Beginners Guide to Content Creation
Photo: © iana_kolesnikova, YFS Magazine

Research other companies in your industry to understand figures such as traditional operating margins, receivable cycles and salaries. Doing so will enable you to create a financial model that better represents how your company might actually perform so investors and lenders can see that it fits their criteria.

 

4. Show you really know your market

Great companies really know their markets. They know market trends. They really understand the precise needs of their customers. And they know the strengths and weaknesses of their competition.

Without this in-depth knowledge, it’s hard to build a great company. And without this knowledge, it’s hard to convince investors and lenders to fund you. So, make sure you have thoroughly researched your market, customers and competitors, and concisely present this information to them in your plan.

 

This article has been edited.

Dave Lavinsky is a serial entrepreneur and the president and founder of Growthink. Growthink has written business plans for over 4,000 entrepreneurs, and their business plan template has been downloaded and used by over 100,000 others. Dave is also the founder of BusinessPlanTemplate.com, which provides templates for specific niches ranging from restaurants to internet businesses. Connect with @davelavinsky on Twitter.

 

© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.

   

In this article