People go to investors because they’re looking to start a business and need to find money for their startup company funding. Starting a new business takes courage. But as they say, courage doesn’t pay the bills. Generally, People who have entrepreneurship ideas want to start their own business and fall into two categories. Here are the important questions you need to know and must ask yourself if you’re looking for investors and funding a startup.
The first group consists of people who know exactly what they want and are simply looking for the opportunity or resources to do it. The second consists of people who want to start their own business but don’t really have any definite ideas of what they like to do, and their business skills may be lacking.
What I’ve done is I’ve asked a number of these people the same questions over and over. What are the responsibilities of ownership? I ask them what’s involved in owning a business and what are the roles that you’ll have to play? Set goals. What do you guys want from your business? If they want to succeed, how will they know if they get there? Knowing what they want out of their business permeates every other decision that they’re going to make when they start a new business. It affects which business they choose, how they evaluate their business, and what their chances are for success.
I also have to ask these people, what is the impact on their everyday life going to be? How can they evaluate their skills and make good judgments about whether they’re ready to own their own business? Try knowledge about basic business concepts. Are you good in accounting, marketing, and finance? Do you have any experience and are you willing to farm this out? It’s a good place to start if they already know that they want to start their own business.
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One of the most frequently asked questions by business owners is about their business plan ideas. There seems to be a lot of anxiety. Is it long enough? Is it good enough? Does it contain the information that the investors want to see and does it really tell the story?
From my 30 years of experience and knowing what investors want to see, plan on spending between 80 to perhaps 200 hours on your business plan. A word of caution, of course, is don’t try to make it perfect. It will never happen. So, don’t try to make it so.
Let’s condense this into the simplest terms. The basics. How long should your plan be? What I like to see and what our investors like to see is between 25 and 30 pages. No more and certainly no less. You have to tell the story. And if you have to ask yourself who needs a business plan, then don’t plan on getting funding.
Types of plans. Mini-plans, working plans, financing plans, presentation plans. But before you start anything, plan your plan. Determine your objectives. How will you use your plan? The elements of a business plan? Very simple. They don’t vary much.
Executive summary, business description, your market strategies, your competitive analysis, how you’re going to develop your business, operations, management, and of course, above all, the financial components.
Above all, they have to be very specific and get to the point. I’ve seen hundreds and hundreds of business plans over the years, and the ones that grab me are the ones that tell the story quickly and succinctly. Remember, it’s quality not quantity.
A lot of people looking for investors actually have a game plan or a lot of business plan ideas. And although it’s not so much a business plan, it’s a game plan a with business plan format. But what I have to encourage them is that I want to see your business plan outline because that’s what angel investors, private investors, and the venture capital funding guys want to see.
So, you’ve decided to start your new business. Congratulations, that’s fabulous. But you have to create a business plan as your next logical step in this whole evolution. Smart entrepreneurs plan not because their accountants tell them or because their financial people say it’s a must. They plan to give them the roadmap for success.
Sure, there are successful business owners out there who had no business plan, and they stumbled along and certainly made some money for themselves, and that’s great. But I will tell you that 98% of people that walk in our doors have to have a very cogent business plan. You have to plan for your future. You need to create a road map for your success. What do you really want to get out of your business plan? It may help establish your business credentials for financing purposes. Investment by future partners? Certainly investment by the angel investors and venture capital funding groups.
So, if you’re just starting out in business, the business plan is going to help you organize every piece of the puzzle, and it’s going to come together to make your business grow and be a success, hopefully. Your well-established business plan is going to grow your business. If you’re a larger company, it could take a business-as-usual rut and turn it right around.
And if you think of it, your business plan is probably going to be the most efficient, effective, and the most important document you may ever produce.
Business plan layout and writing into 8 easy to remember sections by business plan and fund raising expert Andrew Millet, chartered accountant, principle of Wisteria, a small business advisory and accounting firm based in Edgware, North London, UK. www.wisteria.co.uk
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