If you’re in search of investors for your business, potential investors need to see you as credible, a competent businessperson and above all, that you have the smarts to succeed. Your business plan will tell readers if you do or do not have these qualities; and potential investors will figure this out depending on what you write in your plan. You probably know not to say that you have no competition or that your management team is literally the best in the world. There are also some things which you should do and the five tips which follow are all good ideas to incorporate into your business plan if you want to be taken seriously.
1. Be realistic. Your financial projections need to be realistic and well thought out. Before you consider your plan complete, give it a thorough looking over (even if your accountant prepared your statements). Pay particular attention to your operating margins and your projected year to year growth. If it looks too good to be true, then chances are that it is. Take a second look over your projections and scale them back if needed.
Of course, if you can provide realistic figures which support your projections, then absolutely provide these, but be warned that investors will be skeptical and they will ask questions. Operating margins which seem too strong will definitely raise questions and you may want to support your pro forma statements with case studies from similar companies.
2. Explain your barriers to entry. A lot of entrepreneurs overlook this, but if you can demonstrate something besides a first mover advantage, this will go a long way towards establishing credibility after all, there is no such thing as first mover advantage until there is at least a second mover.
3. Define and explain the needs of the consumers you plan to target. Show investors that you have a detailed understanding of your market and back up your claims with reliable third party data that supports the idea that your business is ideally suited to meet the demands of the market.
4. Address the market segment relevant to your business, not the industry as a whole. For instance, many healthcare business plans discuss the entire $1 trillion healthcare industry rather than the particular niche market that the business is marketing to. Potential investors also know that the healthcare industry is huge, but what they want to know is the size of the particular sector of this industry that your business will be competing in.
5. Provide details of any relevant past achievements. The more successful you’ve been in the past, the more likely investors are to be confident in your future success.