A business plan is a great tool for helping you run your business. The process of putting together a business plan can also help you better understand your business model and what it will take to succeed.
And while we all know that investors like to see good quality financials, they also want to see detailed plans on how to address challenges in the industry and how you’ll reach customers with your product or service.
If you’re looking for funding but don’t have the time (or budget) to develop a full-fledged business plan, this article will guide you through the steps needed to create an investor-friendly pitch deck that will impress even the most skeptical lenders or investors out there today all without having them think twice about handing over their hard-earned cash!
| Takeaway |
|---|
| A well-crafted business plan is crucial for |
| securing funding and turning your |
| entrepreneurial ideas into a successful |
| venture. Ensure your plan answers critical |
| questions, appeals to investors, and serves |
| as a roadmap for your business’s growth. |
Understand Why You Need A Financial Plan
A financial plan can help you to think about the future. A business plan, on the other hand, is not enough. A financial plan helps you to understand your company’s cash flow and where your money comes from and goes.
If you understand where your money is coming from, then you can figure out how much money it will take for the business to grow for the value of that growth to be greater than what was spent on it.
A good example would be if a restaurant owner decided he wanted his restaurant to expand by opening two new locations (a franchise).
The owner would need more capital for this expansion move to happen because he has no other source of income besides selling food at his existing location the one he owns now which makes up most of his revenue stream right now.
So if an investor were considering investing in this venture but wasn’t sure whether or not they should do so yet because there’s no guarantee that their investment will pay off later down the road once those two new locations start making profits themselves (like maybe five years down),
Then they would look closely at all three documents (business plan & financial statement) before deciding whether or not this was something worth investing in right now based on past performance alone instead of future potential growth potential alone.”
Crafting a solid business plan is the first step towards turning your entrepreneurial ideas into reality. Discover how to write a compelling business plan in 9 simple steps by following our guide on how to write a business plan in 9 simple steps.
Understand What Investors Want To See In Your Business Plan
Investors want to see that you have a good business plan.
They want to know why your business needs capital in the first place and how much money you need. What is the purpose of your business plan? What are its goals? How will it help you achieve those goals?
You may think these questions are obvious, but if an investor asked them of you, would you be able to answer them clearly and concisely? Would they be able to visualize what your product or service is going to look like when completed?
Create a rough table of contents for your business plan.
Write down the goals of your business plan. Why did you decide on this particular industry/niche after careful research into all possible options available in today’s market space (for example: How many customers do I expect each year? What percentage profit margin am I aiming for)?
Address any challenges in front of us head-on rather than trying our luck hoping no one notices them! This can be done by simply adding sections such as “Challenges” or “Potential Challenges” at appropriate places throughout our document so investors can easily refer back at any point in time if necessary!
Write Down The Right Goals
Before you start writing, it’s important to set the right goals. Your business plan should include only goals that are specific, measurable, attainable, realistic, and timely (SMART).
An example of a bad goal would be “I want to make more money.” A good goal would be “I will increase my revenue by 10 percent over the next six months by selling more widgets in our online store.”
In addition to defining your company’s objective for funding and how much money you need for each phase of the project or expansion plan, it outlines how much time it will take before you see results from this investment. You should also give yourself some room for error or unexpected costs; don’t expect everything to go perfectly according to plan every step along the way!
Looking to secure funding for your business? Writing a business plan that investors actually read is crucial. Learn essential tips and strategies from our comprehensive article on how to write a business plan that investors actually read to make your plan stand out.
Address The Challenges You Will Face
Now you have the basics of what a business plan should look like, and why it’s so important. You are ready to start writing your own. But before you do, two more things need to be addressed and that we want to share with you:
- Address the Challenges You Will Face
- How To Address The Challenges You Will Face
Have The Right Management Team In Place
One of the most important parts of your business plan is to have a good management team in place. You need a team of people who are committed to your business and will put in the time needed to help you succeed, and take on roles that need filling.
When it comes to funding, this can be key. Investors want to see that you have strong leadership at the top and that they will have no issues with management after they invest their money.
Know Your Reach And Potential
When you’re preparing a business plan, you must have a clear understanding of your reach and potential.
You need to know who is your target market, what are the competitors in the industry and how can you beat them.
You should also be able to answer questions like: Who are my customers? What do they expect from me? What are our team’s strengths and weaknesses? What resources do we currently have at our disposal (money/equipment)?
For what goals we are aiming for this year or during the next five years? Finally, how does our product fit into an overall industry picture what will it competwithinin the marketplace as well as who else competes in that arena right now?
Compile Data, Financials, And Forecasts
As you prepare to write your business plan, gather up all the financial data you can. Include the following:
- Income statements, which show where your revenue is coming from and how much of it you have been making
- Balance sheets, which show what assets and liabilities you have on hand for keeping track of your company’s money flow
- Cash flow projections (also called financial forecasts or budgets) show what trends in income and spending look like over time
Every successful business plan addresses critical questions to ensure its viability. To discover the key questions your business plan must answer, check out our insightful post on 12 questions every business plan answers for a comprehensive guide.
How To Create A Financial Plan That Investors Will Like
To help you create a financial plan that investors will like, follow these steps:
Include a financial plan in your business plan. A financial plan is usually a separate document from the main body of your business plan, but it can be included as an appendix as well.
Set up the financial plan in a way that shows how you will use the money once it’s invested. The best way to do this is by creating an income statement for each year covered by the budget, then showing how much revenue and expenses were expected for each month during those years.
Describe the financial plan in the executive summary section of your business plan (if there is one). If there isn’t room for this information elsewhere in your main body text, include it here so investors have access to it at all times while they’re reading through their documents!
Use tables and graphs when possible – they make reading easier for everybody involved!
Include The Cover Page And Table Of Contents
The cover page is the first thing that people see when they open your business plan. It’s a chance for you to show off your creativity and make an impression on the reader. You can use a plain, boring typeface in black or white, but why not go all out? Make it fun and eye-catching.
If you have any photos, use them! Try adding images like flowers or animals (if they’re relevant) or even clip art of office supplies anything that makes it look unique will work!
Also, keep in mind that this isn’t just an aesthetic choice; it’s also going to be used as an index for your document. So if there are any words or phrases which appear repeatedly throughout the text (like “business” or “Company”), list them here as well so they’ll be easily accessible when someone searches through their copy of the plan!
In addition to providing instructions on how readers should navigate through your document, table of contents pages should also include:
Include An Executive Summary
An executive summary is a brief overview of your business plan that introduces you and your company to an investor. It’s essentially a short version of the main body of the document, but with just enough details to pique interest.
This can help you get funding since it gives investors an idea of what they’re investing in and lets them know where else they can find more information about your company (and if they need anything else).
If you’re writing an executive summary for yourself or another person who needs to understand what they’re reading, here are some tips:
- Keep it concise no more than 2 pages long
- Include some numbers and statistics (if relevant)
Make sure it answers all questions about how much money you need, why this project isn’t already funded by someone else (or “self-funded”), and what exactly makes this business idea so great.
A well-crafted business plan not only helps you secure funding but also provides a roadmap for success. Uncover the reasons why you should write a business plan and effective strategies to do it right with our article on why you should write a business plan and how to do it.
Describe Your Company’s Product Or Service
All business plans should include a description of the product you sell, what problems it solves, and how it differs from other similar products. This section will help you answer questions like: What is the value proposition of your product or service? How does your product or service differ from others in its category? How different are they?
What problem does your company solve for customers? Think about what motivates people to buy things; do they buy them because they need them, want them, or think that someone else will judge them if they don’t own one (or two)?
You should also explain why someone should choose to work with you rather than with another local business providing similar services. Who are your competitors and how do their products stack up against yours?
Explain In Detail How Your Product Differs From
A business plan is an opportunity to detail how your product differs from the competition. Compare yourself to competitors and explain how your product is better, how it’s different, and why this makes a difference for customers.
You might find that people are paying more for the same thing or using another product because they don’t know about yours yet. If you can show that you’ve been able to attract customers without much marketing effort, you’ll likely be able to make even more money once they realize what they’ve been missing out on!
Describe Your Target Market And Customers
Describe your target market. You need to define your target market, which is the group of people you want to serve with your product or service. For example, if you’re creating a new app for the fitness industry, you would need to figure out who in this industry will use your product and why they will use it.
If you don’t have a clear understanding of your target market before drafting this section, come back and complete it later once you’ve done more research on who will be interested in what you are offering.
Describe your target customers. Your next step is to describe the psychographic traits of selected members of your target audience: What do they think? What do they feel? How do their feelings and desires influence their behaviors?
The better that these questions are answered during this step, the better chance we’ll have at drawing them into our story or sales pitch down below!
Outline Your Marketing Strategy And Sales Funnel Design (If You Have One)
Outline your marketing strategy and sales funnel design (if you have one).
Determine how much time it will take to implement your marketing plan and how much money you expect to spend on different aspects of the marketing process, including:
Creating content for social media, blogging, email newsletters, or other methods of communication with customers.
Advertising on search engines like Google and Bing. You should also consider advertising on platforms like Facebook, Twitter, Instagram, and others as well.
PPC (pay-per-click) ads appear in search results when people use keywords related to what you offer your business.
These ads are usually less expensive than traditional forms of advertising because they don’t require any space in print magazines or newspapers; however, they can be very effective at driving traffic directly back into web pages where people can learn more about products.
Services are advertised before making purchases online through credit cards linked directly with accounts set up by companies such as PayPal which acts as an intermediary between buyers purchasing goods/services online while protecting them from fraudsters trying to scam them out of money when buying products/services online using a credit card.
Information is stored securely within their accounts without having access to other types of sensitive personal information such as names addresses etcetera which might give identity thieves access opportunity steal financial data sellers wouldn’t want falling into wrong hands if someone hacked a system containing personal details
About consumers’ purchases made throughout their lifetime shopping history databases like these might contain enough information hackers could use blackmail victims to threaten them unless paying exorbitant amounts of ransom demand payers to comply with the demands blackmailers
Even though no actual case threats were made against the victim’s security firm hired a guard to protect privacy interests and ensure safekeeping protected.”
Transform your innovative business ideas into a lucrative venture by creating a business plan that serves as a blueprint for growth. Discover how to write a business plan that lands investors with our in-depth guide on how to write a business plan that will land investors.
Set Up Sales And Lead Generation Channels (If You Have Them)
If you have an existing sales and lead generation team, use them. If you don’t, hire one.
Use a sales team with expertise in your industry to sell to new customers. You can also hire an agency or use a partner who specializes in this area.
A lead generation team can help companies attract potential clients by offering services like content marketing (such as writing blog posts), SEO (search engine optimization), PPC advertising, social media management, and more.
A partner could be useful if they have experience with these types of services but keep in mind that this may cost much more than hiring your employees or using another company’s services directly so consider whether hiring someone externally is worth the cost.”
Develop A Detailed Business Model Canvas (If You Have One)
If you’re not familiar with the business model canvas, it is a tool that helps you to understand how your business works. It can also be used as a roadmap for the future of your company.
The canvas is divided up into 9 columns and 11 rows. The first column is about customer segments and user personas, while the second column focuses on value propositions.
Next are price tiers or plans (column 4), channels (column 5), key resources required (column 6), core activities/processes (column 7), network effects (column 8), and finally, ecosystem partners that help make up your complete offering (row 9).
The canvas can help you identify where gaps in service are or what needs improving. You can use it as a checklist when developing new features or making changes to existing ones so that no stone goes unturned!
Conclusion
By following the steps outlined above, you can create a business plan that will attract investors. Keep in mind that this is just one tool you can use to get funding for your company. You should also consider other options such as venture capital and crowdfunding before deciding on whether or not this process is right for you.
Further Reading
The Importance of a Business Plan: Learn why having a well-structured business plan is crucial for the success of your venture.
Business Plan Definition – Investopedia: Find a comprehensive definition and explanation of what a business plan entails.
Why Business Plans Don’t Get Funded: Discover common reasons why some business plans fail to secure funding and how to avoid them.
FAQs
What is the importance of having a business plan?
A business plan outlines your company’s goals, strategies, and potential challenges, serving as a roadmap for your business’s success.
How can a business plan help in securing funding?
A well-structured business plan demonstrates your company’s potential, growth prospects, and financial projections, making it more appealing to potential investors.
Is a business plan necessary for startups?
Yes, a business plan is essential for startups as it provides a clear vision and direction for the business and helps attract investors or lenders.
How often should a business plan be updated?
A business plan should be reviewed and updated regularly, especially when there are significant changes in the business, market, or financial conditions.
Can a business plan be used for internal purposes only?
Yes, a business plan can be used internally as a tool to guide decision-making, set objectives, and measure progress within the organization.
Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.