10 Things Investors Look For in a Business Plan

A business plan does so much more than layout the internal structure of an organization. It provides some key insight to the money-men, the venture capitalists, the angel investors, the private investment bankers or even the traditional bankers. Remember that these people see hundreds, thousands of business proposals a month. And they’re all looking for certain things that either make them love your proposal — or send it immediately to the shredder. We’ve worked with nearly 50 investment firms at one point or another for clients for whom we have written business plans, and based on our experiences and the people involved, there are some important factors investors look for the most from the business plan.

1.) How much money is already invested? Do the client or other individuals/companies have a stake in the business?

Sometimes the difference between getting a loan and getting rejected is as simple as that. Imagine you’re coming to an investor with a fabulous business plan and you need, say, $500 million for a resort and real estate project. In your proposal you clearly state that you do not have one single dime invested yourself (yes, we had a business proposal like this once!). Do you honestly believe an investor is going to give you the time of day? Of course not. You haven’t taken any sort of risk — why should the investor?

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Starting a Business: Plan the Work, Work the Plan

One of the most common questions we hear from potential entrepreneurs is “Where do I start?” The short answer is Plan Your Business. You don’t need a formal, extensive business plan at the earliest stages, but you do need to have a clear idea of the business idea. That is, you should know what a typical workday will look like, who your customers will be, how they will find and buy from you, where you want the company to go, and the like. Planning your startup will also give you a good idea of how much money you will need to get your venture off the ground and force you to think through any potential obstacles in your way. Here are a few options to get your business planning started.

There are hundreds of free business plan templates available on the web. They all cover basically the same topics, and most include the broad areas that you need to consider to really plan your business. However, many first-time entrepreneurs have trouble actually making a plan from these templates, and for good reason.

In general, those outlines are useful once you already have a pretty clear plan in mind and just need to organize it for the bank or investors. They do not help you decide what to look for, or how to evaluate your idea, or even really explain what each section means. For most startups, the ready-made, fill-in business plan forms are not the best option.

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Why a Business Plan?

The recession has hit two groups disproportionately: the over-50s and the under 20s. The over 50s are increasingly turning to self-employment as employers are often blind to their talents and experience and find jobs increasingly hard to find and eBusiness, trading on the internet, is ideal for those with skills to sell.

But our generation is the last generation for whom the computer and the internet were an ‘optional extra’ for our formative years.

So does my eBusiness, with its low start up costs, its access to a world-wide market, really need a business plan? Wouldn’t it simply waste time and effort better used to launch a business?

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