Developing a business plan is among the most important measures that an entrepreneur should take in order to attract investors. A business plan is a roadmap to your business and a well-developed business plan will outline to the investors how you will accomplish your objectives and how they will appreciate your success. This blog will take you through the much-needed elements of a business plan and tips on how to make one that will attract the attention of interested investors.

Learning the Purpose of a Business Plan

It is important to consider the importance of a business plan in attracting the investor before delving into the details. The purpose of a business plan is more than one:

Creates Your Vision: It is what assists you to state what you have, what you intend to have and what you are in business.

Direct Decision-Making: A business plan is a plan that provides strategies on how you make sound decisions as you expand your business.

Brings Investment: Investors desire to have a properly developed strategy that will show that your business idea is viable. A good business plan will help you to increase the likelihood of getting funds.

Establishes Goals and Milestones: It enables you to have quantifiable goals and milestones, which are easier to monitor and make any necessary changes.

Major Business Plan Elements

Executive Summary

The first portion of your business plan is the executive summary and it is usually the most important. It gives a picture of your business such as your mission statement, products or services, market targeted, and projected financial. This part must be interesting and brief and that it contains the gist of your business and it should attract the attention of investors.

In the process of writing your executive summary, you should put emphasis on what is most interesting about your business. Explain your business uniqueness and describe your future growth plan. Keep in mind that this section can be the only one that is read by investors, and not to be wasted.

Company Description

Here, give an in-depth description of your company, its legal organization (LLC, corporation, etc.), physical address, and background. Talk about the issue that your business is going to solve and what the market requires. It is also a good time to put on record your team experience and qualifications, on why you are the only team who has the right to implement this business proposal.

Market Analysis

The investors would like to know that you are keen on understanding your industry and target market. Carry out a comprehensive market research in order to determine the trends, market size, and your target audience. Competitor analysis- examine your competition and point out their weaknesses and strengths and how your business will be different in the market place.

Show data and statistics to prove the fact that you researched your market well. A good researched market analysis will not only bring credibility to your business plan but also demonstrate to the investors that you are ready to overcome the hurdles.

Organization and Management

In this part, describe your business organization. Describe the positions and duties of your management team, their backgrounds and their experience. Investors would like to know the person in charge of the company and whether he/she possesses the skills to make the business plan successful.

It is advisable to provide an organizational chart that can illustrate the organization structure of your team. Note any advisors or board members who can be of good experience and contacts to your business.

Products or Services

Give a global summary of your products or services. Describe what you are selling, how they satisfy the needs of the customers and what will make it stand out against the competition. In the event, you have some details regarding your product development process, price determination, and any other intellectual property (e.g., patent, trademark).

Emphasis on the different selling points (USPs) of your products or services will enable investors to know why customers will prefer your products or services over others, which will make them have more confidence in your business.

Marketing and Sales Strategy

Your sales and marketing strategy describes the way you will attract and keep customers. Talk about the means of marketing that you will employ, which can be social media, email marketing, content marketing, or the old school advertising. Describe your strategy of how you are going to establish your brand in the market and what strategies you will use to create leads and transform the leads into customers.

Also, describe your sales strategy including the sales process, sales team structure and any form of partnership that will assist you to reach your target market. Strong marketing and sales strategy illustrates to the investors that you have growth plans.

Funding Request

When you are in need of funding, then be clear with the amount of money you require and how you intend to utilize it. Give a comprehensive account of your requirements in terms of funding, either in terms of start up funding or operating expenses or growth funding. Include any possible funding opportunity, including loans, grants, or angel investors.

Explain to the investors how you will use the money to meet your goals and give them returns. This part is very important in earning trust and credibility among the potential investors.

Financial Projections

Shareholders would like to know that you have a sound knowledge of your finances. Provide comprehensive financial forecasts of at least three or five years including income statements, cash flow statements, and balance sheets. You should make plain assumptions behind your projections and how you came up with such numbers.

Use important key metrics like your break-even, profit margins and ROI. It will also help to have well researched financial projections to prove that you not only know the business environment, but you also can use money wisely.

Appendix

The appendix is optional and may have a contribution of other information that may substantiate your business plan. This can consist of the resume of the important team members, legal documents, product pictures, and extensive market research information. The appendix is used to give the extra information that helps to improve your business plan without filling the main parts of your business plan.

Suggestions on How to Prepare a Powerful Business Plan

In your business plan, you should be concise and interesting. Simple language should be used and jargon should be avoided as they may confuse the readers. Make a compelling story that explains what your business is all about and a story that investors identify with.

Focus on Visuals

Your business plan can be more interesting and palatable in terms of visuals by including charts, graphs, infographics, etc. Your plan can be more effective with the help of visuals, as it can be used to explain major facts, including market trends or financial forecasts.

Low Expectations, Open Door

It is necessary to be positive about the potential of your business, but you must not overstate or do unrealistic things. Shareholders like transparency and honesty. Be realistic on what your business is likely to achieve and accept the risks or challenges that your business is likely to encounter.

Seek Feedback

Prior to making your business plan final, consult with some perceived mentors, advisors, or other people in the industry. Criticism will also be constructive and will help you to spot areas to improve and make your plan complete and convincing.

Keep It Concise

A business plan must be very detailed; nevertheless, it is necessary to make it brief and to the point. A target of about 20-30 pages is good and each section should be pertinent and should be value-adding. Time pressed investors might not be able to read voluminous documents and clarity and brevity are important.

Conclusion

Development of a business plan that would appeal to investors is an important step in raising money to fund your business start ups. It is possible to create a powerful story that presents the potential of the business by adding the most critical elements like an executive summary, market analysis, and financial projections.

Always remember to be clear, engaging and realistic in your plan. Through a well-considered business plan, you are likely to build trust in prospective investors and this will give you a higher chance of getting money to make your dream a reality. Having a good business plan would enable you to start your entrepreneurial life with the knowledge and boost of confidence that would see you through.

Frequently asked question 

Why do we need a business plan?

A business plan is a document that defines your business objectives, plans, and financial estimates and it can be said to be a roadmap of your business venture together with an instrument that is used to attract investors by showing that your business idea has the potential of succeeding.

Which are the main elements of the business plan?

Among them are an executive summary, description of the company, market analysis, organization and management structure, products or services, marketing and sales plans, funding request and financial projections.

What is the guarantee of the length of business plan?

A business plan usually has a length of between 20 and 30 pages and should be detailed, but not too long as to lose the interest of the prospective investors.

How do I present my business plan in the eyes of the investors?

Pay attention to clarity and interest, visualize the most important points, give realistic financial forecasts and present a strong story of your business and how it grows.

Is it necessary to have financial projections in my business plan?

Yes, it is important to include detailed financial projections because it will prove your knowledge of the business environment and your financial management skills and instills confidence among investors.