A variety of factors will influence how investors will receive your business plan. As is the case in all things, the list of what will make an investor lose interest is much longer than what will keep them reading. As you consider the core information of your plan, consider these five signs that will influence investors negatively.
- What are You Selling?
You likely know intimately what your startup sells. But is that message being effectively conveyed through your business plan? Too often, business plan writers make the assumption that a reader is as familiar with their business as they are. The end result of this is that investors will simply say “no” to your idea.
Spend time defining and describing your product as if you were telling someone who knew nothing about your industry. Elaborate not only on the features of your startup, but also the benefits of your product. Tell the readers what need you are fulfilling and why it is better than what already exists.
- I Sell to Everyone
This is a rather naïve statement that many young entrepreneurs fall into believing. No one business sells to everyone. More often than not, your product is only applicable to a very specific group of buyers who have the need or desire to purchase your product or service. Understanding your target audience will become the difference between success and failure. Define your target audience in as much detail as possible and include information about their demographics and personality types which will influence their need to buy from you.
- Your Competitors Know You Exist
When a business plan puts an inadequate amount of effort into a competitive analysis, investors will lose interest quickly. You should spend a significant amount of time looking at your competition. An understanding of other competitive forces can oftentimes have a very positive effect on your company’s attitude and performance. Microsoft has Apple, Coca Cola has Pepsi and
- You Have No Sidekick
Running a company isn’t easy, and it’s especially difficult to do it by yourself. A well-rounded team of professionals (like pr agency Snapp Conner PR) is critical to the success of any startup business. There is only 24 hours in a day, which still isn’t enough time to do everything on your own. Investors expect you to have a team of experienced professionals to back your idea. Once you’ve assembled your team, provide readers with a description of the backgrounds and job responsibilities for each member.
- You Have No Exit Strategy
Investors want to pledge money to companies with a strong probability of being able to recoup their initial investment and gain a healthy profit. You must be able to illustrate how quickly this will happen and establish confidence in your startup idea. The lack of a solid and believable exit strategy can turn off many sources of capital. Take into account various factors like your industry, competitive environment, business lifecycles and so on. Each of these will influence how quick of a payback the person writing the check will receive.
Getting capital for your startup can be a difficult task. But if you focus on alleviating the risks associated with each of these points, you’ll become a more viable option to investors. They want to know that you’ve not only done your homework, but you are already dedicating yourself to your company’s success. If you’re uncertain how to demonstrate this understanding, consider looking at other sample business plans. Numerous other companies have gained the capital they need to get off the ground, so odds are they’ve done something right with their business plan.