Before writing out any kind of a business plan, you should try to put yourself in the investor’s shoes and think about what the investor may be looking for when going over your business plan. Naturally, potential investors will want to see details about the business, such as the sort of business, the location, business structure, and markets covered.
And beyond that, there are other major areas that investors will concentrate on. While certain aspects may differ depending on the kind of investor, the required amount of funding and the nature of the business, there are other important things which investors will be focused on.
Let’s Take a Look at Them
- Investors will wish to check out your background in the business and industry experience, plus that of your management team. A lot of smaller businesses never get off of the ground due to weaknesses in the management team.
- You will need to show that there is a real need for your product or service and a big enough market potential to make the investment beneficial. No investors want to invest in small ideas, so you will have to show them the potential to be a really big success like a good property investment opportunity with White Sands Hotel & Spa.
- Attractive and unique your product or service may be, but you must still show that you are aware of your demographics and can reach your target market in a positive forward direction. The pricing and sales methods will have to be clearly described and in line with industry norms.
- The investors will wish to make sure that you have the knowledge and have thoroughly researched your competition. Plus, they will ask to see how you are going to contend with any competitors and highlight yourself. Just exactly what will give you the leading edge?
- Naturally, investors want to see a return on any investment, which means they want to see pragmatic financial projections that display how long it will take to show any kind of a profit and for them to be reimbursed for their investment.
- Ensure that your plan has all the data that the investors wish to take a look at, and put it somewhere where it’s easy to find.
A lot of would-be investment plans try to bury or ignore investors’ concerns.
And some of those are:
- How much cash is needed and how much ownership do you expect to provide. You might be asked to display the valuation of your business and if your valuation is unworkable, you just won’t be deemed credible.
- Why do you need the funds? An investor wishes to invest in growth, so always show how you the funds will be used.
- Is there anybody else involved? And if so, to what extent. Provide all details of founder shares, employee options, and investor shares.
- How they get their money back? They won’t care about any long-term business health. They need to see an exit strategy.
And that should do it, just stay realistic.