Any business plan is based on an idea and data. While this might be difficult for some entrepreneurs to accept it is a fact. Most entrepreneurs are quite able to find the relevant research to support their ideas and prove to their investors that these ideas are worth investing in.
There are 3 main elements that form the basis of your business plan.
1. Market Research
The first aspect any investor is interested in is the company’s growth potential in the market so your market research has to successfully indicate that there is a large and growing market for your particular product/service. Your research also should indicate that consumers both need and want what you have to offer.
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Reports for independent industry research institutions are very useful in this regard and would include: governmental, educational, and trade reports, books, articles, and even blogs by reputable leaders in your particular sector. Also include secondary research but also provide primary research including interviews and customer surveys.
2. Appropriate Management
Investors place a great deal of importance upon the abilities of the management team and very often will focus more on them than on the business.
To this end it is important to provide in-depth details pertaining to the accomplishments and achievements of your management team. Provide details that are particularly relevant as far as their experience goes when it comes to building successful businesses. Also, make use of indirect evidence of their capability to run your business including any similar positions they filled in other industries. Include relevant education, awards, recognitions, etc.
3. Viable Exit Strategy
This is a projected liquidation event such as IPO (initial public stock offering) or buyout or merger with another business.
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This is a tricky proposition because investors are careful when it comes to entrepreneurs who insist they have a liquidity event that is certain. Don’t come across as na├»ve by showing how other companies have achieved liquidation events by implementing similar strategies to yours. Always review the history of those studies and make sure to provide that info in your plan.
It is also worthwhile to provide research and profiles of businesses that have a track record for buying businesses like yours. Establish legitimate reasons for those businesses to either purchase or merge with you instead of producing a facsimile of your business in-house.