What every plan needs to get funding
Business plans can get pretty lengthy, especially for companies with very complex business models or proprietary technology. Let’s face it, not every investor or lender is going to read the whole thing. If you’re wondering where you can focus your efforts to have the greatest impact on the readers of your business plan, you need to know what investors and lenders are looking for.
The executive summary
The executive summary is your place to show off. It can make or break your presentation. When writing it, ask yourself what you would tell investors if you only had five minutes to pitch your idea. What do they most need to know? Usually, they want a quick snapshot of your product or company and they want to know what’s special or unique about it. Then briefly – why are you the best person to run it? How much money do you need? And when will investors see a return? Make it succinct, compelling and clear. And one page long.
Cash flow
It is possible to have positive net income and a negative cash balance. That’s not good. If your cash balance ever goes into the negative, it means your business can’t pay its bills. You might have plenty of revenue coming in but if it comes in after your bills are due (which is often the case with businesses that sell on credit), your company can’t stay afloat. Investors want to see how you’ve planned the flow of cash into and out of your business, so they know you’ll always have a positive cash balance.
Return on investment
If an investor funds a company, she is going to want her money back one day, plus profits. However, many business plans don’t describe how these returns will be structured, or when and how the investment will be returned. Investors need to know that you’re aware their money won’t be yours forever. The more money you ask for, the more important this is.
Also, don’t forget to assess investment risk in your business plan. What happens if your assumptions turn out to be inaccurate? What if you run out of money and can’t deliver to your investors?
Ensure these three elements are strong parts of your business plan, and you’ll be well on your way to a successful meeting with investors or lenders.
Jessica Oman owns Write Ahead Consulting, a business plan writing, copy writing and editing firm in Vancouver and Toronto. Jessica is co-author of Communicating with Confidence: The Creative, Ambitious Entrepreneur’s Guide to Better Business Writing. She’s a keen BC Lung Association supporter and obsessive cyclist. Find her on Twitter at @writeahead and Facebook.
