If you want your business plan to get the attention of potential investors, there are some dos and donΓÇÖts which you should be aware of in order to avoid having your business plan tossed and to give yourself the best chance of having your business plan read by investors.
Automatic Disqualifiers To Avoid
Investors will be looking for mistakes and when they see one, theyΓÇÖll stop reading. These are some of the most common:
Overestimating the size of your market. Suppose your business is in some segment of the $1 trillion healthcare industry. Naturally, this isnΓÇÖt the size of your market ΓÇô you need to give investors the size of your market segment rather than that of the industry as a whole.
Underestimating the competition or ignoring it entirely. If you claim that your business wonΓÇÖt face any competition, it destroys your credibility and will result in your plan being ignored.
Projecting unrealistic results.
If your business plan includes unrealistic or inconsistent projections of market penetration, operating margin and revenues per employee, this completely undermines your credibility and will get your plan unceremoniously tossed.
Steer clear of these mistakes and your business plan can be noticed and read rather than noticed and tossed aside. Next, letΓÇÖs look at the things your business plan should include.
Identify a Growing Market and an Unmet Need
Your business plan has to demonstrate to investors that your business will target a growing (and preferably already large) market which has a clear need for the product or service you plan to provide. You need to provide reliable data on your market segment and projected growth for this market. However, a large market usually means a high level of competition, so you also need to show investors that your business has the advantage of barriers to entry.
Prove Barriers to Entry
These are some kind of competitive edge which your rivals do not have. This could be proprietary information or technology or an exceptional management team. This is where youΓÇÖll show prospective investors that your company has something which sets it apart from the competition and can fill an unmet need in the market as laid out in your business plan.
Show Case Studies
One way to increase the confidence of investors in your business plan is to provide case studies of other companies which are similar to your own. What you need to get across is that your company can, like the businesses in the case studies you present, command a healthy share of the market and possesses barriers to entry which allow it to outcompete other businesses.