Business plans can ultimately reduce risk. The report summarizes all areas of the business and details how each of them (marketing, operations) affects growth.
The problem cannot be solved; if you want to get money from investors, especially if you just start a business, you need a business plan.
Any entrepreneur will be lucky enough to meet an Angel investor or venture capitalist. Initial publicity, conferences, and presentations were just the tip of the iceberg.
The next thing is the most important.
Potential investors will want to see a Detailed business plan And will conduct due diligence to ensure that you are a valuable investment. With this in mind, here is what investors look for in a business plan:
1. Powerful executive summary
Your executive summary is the first part of your business plan and should be attractive enough to make a solid first impression.
Imagine your executive summary as your website's landing page. Visitors to your website will move on to the next best content if they can't find what they're looking for.
You should explain what you do and what makes you different in your executive summary. Your business plan should summarize the key details in other parts and give investors a complete picture of your business. It should be one page long and written at the end.
2. Complete financial forecast
No matter how many sales you make or how much income you have, every investor will carefully examine your financial plan to accurately determine your financial feasibility. This part of your plan needs to be fully fulfilled, without leaving grey areas or room for further questions.
It is important to put yourself in the position of investors. Based on your financial prospects, do you consider yourself a risky investment or a promising investment? Your financial forecast should include:
Estimated income statement
Predict how much revenue you will generate and the profit you will make from these sales
Breakeven analysis
Learn more about how many products you need to sell to cover fixed and variable production costs
Projected balance sheet
Estimates of total assets and liabilities
Cash flow statement
A detailed description of all cash inflows and outflows
Business ratio
Explain the calculation of the relationship between the projects (ie total sales and number of employees).
In order to accurately build your financial forecast, you need to evaluate your market share (your market survey Part is also crucial to investors). Starting from the bottom, highlight your total target market and the percentage you will target. You can then dive deeper by outlining the segmented addressable market and market share.
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Want to provide free financial templates for your business plan?
In this comprehensive guide on how to write a business plan, you will find a lot of useful templates, such as SWOT analysis, sales forecast templates, profit and loss templates, cash flow templates, and balance sheet templates.
3. Customer acquisition cost
Investors want to know how much it costs to acquire new customers.
Knowing your customer acquisition costs (CAC) can help you grow in a healthy, scalable way and show investors that you know exactly how to attract customers.
Knowing your CAC is more important than ever; according to ProfitWell, the cost of acquiring new customers is 60% increase in the past five years.
The customer acquisition costs are determined by examining the total sales and marketing costs required to acquire new customers. Calculate your CAC by dividing the total cost of marketing and sales by the number of customers acquired.
A CAC can also simplify your decision-making process, optimize your marketing strategy to emphasize customer lifetime value and illustrate your payback period (the time required to recoup your investment).
4. Strong execution
The business plan is like a picture. As the old saying goes, “A picture is worth a thousand words.”
Likewise, your business plan reveals your identity as a business owner. Suppose you have strong sales and optimistic financial forecasts. Does your business plan lack important documents and data points to support this? Is it rife with grammatical errors and incorrect format?
The execution is convincing. The way you communicate your business is as important as the details in the plan. Hasty or ambiguous business plans will lead to more problems and hesitation.
If you can’t take the time to write a reliable business plan, what shortcut do you have?
5. Financial QA
The financial question and answer two important questions: how much do you want and what are you planning to do with it?
Business plans should clearly state the investment you are seeking (usually mentioned in the executive summary and elaborated in the financial plan). A logical plan should also be provided on how the money will be used.
You must demonstrate that you will spend money responsibly, and there is clear evidence that how you spend money will increase your income. There is a good reason for allocating every dollar to a specific destination.
