How to Write a Business Plan to Draw Investors

Appeal to financiers with the right facts.

by Raj Tulsan
- May 13, 2013

A good business plan is the steppingstone to success for a company. Most importantly, if you are looking for investors or banks for funding to turn your dream into a reality, you should present a good business plan as the first step when you reach out to them.

A plan will convey the relevant information about your business—products as well as the strategy—which will help you popularize your products or services.

An organized business plan will give investors and lenders an outlook of your company and an indication of your professionalism. Here are a few basic points about how to write a business plan that will draw in financiers.

Describe your products, but stick to the facts

Emphasize the benefits that customers will gain from your products/services in your business plan. Give detailed information about the products and the plan to develop them.

Avoid using hyped statements like "unparalleled competition." Stick to facts and basics

Also be sure to make an outline of the time and cost involved in developing and marketing your products. Work out the comparisons with the ruling competitors in the market, but avoid using hyped statements like "unparalleled competition." Stick to facts and basics.

Evaluate the cost effectiveness with the same type of products in the market through extensive research.

Look for the right market strategy

Chart out a convincing business plan before investors to show that your product or service is aimed at resolving pertinent customer issues.

Be sure to include in your business plan growth-driving and profit-incurring potential factors to make investors see it as a tool that can grab them considerable market share. Design a solution-oriented plan to secure small-business loans from investors.

Also, lay emphasis on adopting a customer-focused promotional strategy that can help you penetrate deep into the markets to become eligible to get business loans.

Investors look for a strong unique selling point (USP) before putting their money at stake. Therefore, show them the USP of your products and services to secure adequate funding in the form of small-business loans.

Financiers shy away from putting their money on projects that entail exorbitant costs and numerable restrictions to achieve significant market power. Limitations to make an entry into foreign markets reduce a company's prospects to expand and sustain considerable market share.

Let your business plan be designed in a way that it shows an in-depth market analysis and approximate profit projections from the collected data.

The golden rule guiding investors is the greater the risk in a startup, the higher they want to see the potential rate of return

Show a transparent and viable plan

Investors get convinced to put their money in a project only when they find the return on their investment is higher or at par with the risks involved in the project.

Investment decisions by most venture capitalists are made after an assessment of the risks and rate of return. The golden rule guiding investors is the greater the risk in a startup, the higher they want to see the potential rate of return. If you are new in an industry vertical market, then certainly you will be regarded as risky, but you can lower the risks by presenting a deal that is value-enhancing and less cost-incurring.

Show your investors that your plan is to operate on a small scale in the initial phase by using self-financing and bootstrapping. Seek external financial aid from investors only once you can prove the viability of your venture. Work toward creating a plausible deal, which provides a pragmatic evaluation to let investors grab a sizeable share and also justifies their investments.

Another lure: productive, efficient management

Present a business plan that will have mention of a competent, go-getting and reliable management team in order to win business loans.

Show lenders in your business plan that you have a team of doers, who can get high-potential customers. A good plan will not be enough to convince investors if it has no mention of a knowledgeable and capable team that can execute the business plan.

Besides reflecting a high degree of market insight, a management team should also show dedication to proper execution of the venture. Commitment to the venture is a reflection of your self-belief in the business plan.

If you have been in the business for some time, you will need to include pages such as profit and loss statements

Open your financials

Stick to the basics of the business and include a repayment plan for the business loan investors will sanction, and invoke their interest by showing them how they will be paid back and benefit from investing.

Provide your company finances and, if you have been in the business for some time, you will need to include pages such as profit and loss statements. You can create an impression of trustworthiness with all the testimonials.

Simple plans can secure loans

Stick to a simple yet effective and high-potential business plan to win the interest of investors. Be careful to present a plan that is free of jargon, vague statements and unsubstantiated claims.

Keep the above factors in mind when formulating a business plan, so you can hold the investors' attention to want them to provide you with small-business loans or bigger funding.

Finally, it is not enough only to have a promising business plan, but you need to gather experience and show results to make your plan a success.

About the Author

Raj Tulsan works directly with Biz2Credit customers to help them successfully apply for small business loans. Tulsan owned and operated his own successful small business prior to joining Biz2Credit, and regularly writes and speaks on entrepreneurial issues.

Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers and complementary business tools. Biz2Credit's network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers.

Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.

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