Is Your Business Plan Credible?

When you are seeking investment capital, it is essential that potential investors see you as competent, credible and intelligent. Important details within your text will either deny or support the fact that you possess these much-needed attributes. You have probably seen a lot of advice on what you should exclude from your business plan, such as total lack of competition and your management team is hands down the best. What is hard to find is the examples of what you should include in order to be taken seriously and seen as credible by investors.

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Here are five great examples:

1. Realistic statements- The first thing to check is your financial projections, they must be based in reality. Read over your income statement, in particular your profit margins and annual growth. If there is any portion that looks too good to be fact, chances are it is! Check all your assumptions and statements to ensure they are based in reality. Remember things do not always go according to plan, even the best laid plans!
At the same time it is possible that you have the proof that your business will double its size annually and this information should be in your business plan. However be prepared for a good deal of skepticism which you should meet with detailed explanations. You may also be able to assert that your company has very strong operating margins, which many investors may find unrealistic. One way to make these projections more believable is to show data from companies such as yours that have similar projections.

2. Entry Barriers- Every company is going to experience barriers to entry, but little is usually said in the business plan about this factor. If you want to look credible to your investors, you are going to have to have more in your corner than the first mover advantage. As most capitalists know this advantage only exists until there is a second mover.

3. Customer Need- The better you can prove how you are uniquely qualified to meet the customers’ needs the better your chances of getting financing. You can use third party resources such as studies or reports from reliable sources that will show how your company can provide exactly what the market wants and needs.

4. Markets- you should understand and discuss relevant markets and not the market as a whole. This is commonly confused especially when it comes to healthcare business plans. If you look at the market as a whole it is worth $1 trillion, but it encompasses everything from simple bandages to heart surgery. You can use this whopper of a figure but you must take the time to reduce that figure down to represent your relevant market. For instance, citrus flavored carbonated drinks are a part of the entire beverage market, but this is still a specialized product for which you want to show the market size.

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5. Achievements- Do not be afraid to highlight any tangible achievements and milestones. Do you have personal business successes? If you have succeeded in the past, you are likely to do so again.

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