Most business plans are dull, badly written and frequently only read by the most junior of people in the financing organisation. One venture capital firm in the US went on record to say they received 25,000 business plans asking for finance in 1999 and invested in only 40.
Getting money from financiers is expensive, time consuming and hard work. Having said that, it is possible to get a quick decision. One recent start-up succeeded in raising £3 million in eight days, the founder having turned down an earlier offer of £1 million made just 40 minutes after his business plan was presented
Follow these steps to make your business plan stand out from the crowd:
Hit them with the benefits
You need to spell out exactly what it is you do, for whom and why that matters. For example: “Our website makes ordering office supplies for small businesses simple. It saves the average customer five hours a week browsing catalogues and £5000 a year in bank discounts, not otherwise available to firms this size. We have surveyed 200 local small firms who rate efficient purchasing as a key priority”. This statement has the ring of practical authority about it.
Future charts always look somewhat optimistic. That's fine, if you can explain exactly what drives growth, how you capture sales and what the link between activity and results is.
Say how big the market is
Financiers feel safer backing people in big markets. Small percentages of massive markets may be hard to achieve – but if you do get it at least it will be worth it. Going for 10% of a market measured in millions rather than billions, may come to the same number but it won't be as interesting.
You and your team, if you have one, need to sound like winners with a track record of great accomplishments. It will also help to have some non-executive directors, but they need to have relevant experience or be able to open doors and do deals.
You need projected cashflows, profit and loss accounts, and balance sheets for at least three years. No one believes them after Year One, but the thinking behind them is what's important. The profit margins will be key numbers in your projections, alongside sales forecasts. These will be probed hard, so show the build up in detail.
Demonstrate the product or the service
Financiers need to see what the customer is going to get. A mock-up will do, failing that a picture or diagram, but words are not enough.