A good business plan is based on solid data and not merely an idea. For entrepreneurs who are highly creative and idea driven this may come as a slap in the face. If you are an entrepreneur with a creative side all is not lost, you can still prove to investors that your idea is worth banking on, simply put your research skills to work to obtain the supporting details!
A business plan is built upon three major elements, these make up the foundation of your plan.
Research the Market
One of the first things an investor wants to see is that your business has plenty of growth potential. This is where market research comes into play. With this research, you can show there is a market for your service or product and said market is growing. In other words, show your investors that consumers want and need the product you have to offer.
Reports can be obtained from several venues to back up your business plan, consider government, educational and trade organization reports as well as those from independent industry research and reputable leaders in your sector. You can also tap into the power of customer surveys and interviews.
Do not put all your eggs in one basket and promote only the business itself because in all honesty it is the management team your investors are interested in hearing about. Their qualifications as a management team matter more in many cases than the business itself.
Bring up the past successes of your management team, draw on and explain in detail all relevant experience your staff has in leading and building successful businesses. You can also talk about indirect examples of their leadership ability by talking about similar positions in other companies, even if they were vastly different from yours. Of course, mention awards, recognition and related education as well.
Realistic Exit Strategy
Initial public stock offerings (IPO) or a merger/buyout with another company are both common exit strategies. Any business plan worth its salt must have a realistic exit strategy, after all an investors goal is to invest money and then make a profit on the investment.
Here is where things can get a little tricky, as you want to offer a solid exit strategy while keeping in mind that investors are going to be suspicious of any guaranteed liquidation. A common mistake is to compare your business to similar companies and offer their successful liquidation event as proof that you can do the same. Remember to also include a full history and study of such exit strategies to include in your business plan.
Finally, take the time to research and profile other businesses who have a reputation for purchasing businesses like your own. You will have to prove that there are concrete reasons why these types of companies will merge or buy you out rather than create a similar situation in house.