Business ideas are great; however, your business plan is going to have to be based on hard facts. This is a bitter pill for some entrepreneurs, who excel in the creativity and idea department but it is fact nonetheless. Thankfully, most entrepreneurs are also pretty adept at researching and finding the necessary data to back up their ideas and prove they are a worthy investment.
Your entire business plan is built on three main elements; call it the foundation if you will.
1. Research the Market
Investors first want to know about a company’s growth potential in the current market climate. This is where your market research will be essential; you must show that there is a current market and that it is growing. Customers not only must want your product or service, they should need it desperately.
Where do you get this type of research? From various sources! Look for independent industry research, governmental, trade and educational organizations, articles, blog posts and books from leaders in your field. Interviews and customer surveys are also great primary research tools.
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2. Management
Your management team is going to be a critical factor in finding investors, even more so than your business itself. Investors want to bet on the jockey not the horse!
Explore your management teams past accomplishments in detail. You should be able to outline any relevant experience these members have when it comes to building a business. Indirect evidence is good too, bring up related education, recognitions, awards and similar positions they have held in other companies, even if they are different from your business.
3. Realistic Exit Strategy
Exit strategy is basically the day you and your investors cash out the business, this could be from a buyout from a larger company or an IPO, initial public offering.
Talking about exit strategies can be a risky situation and you want to be careful not to promise a guaranteed event. This will only make you look foolish or at least naïve, when you propose a guaranteed liquidity. Present case studies of businesses similar to yours that have used a similar exit strategy successfully and present it in your business plan.
Finally, do your homework on companies who generally purchase businesses such as yours. Provide proof positive that these companies may be interested in purchasing or buying out your position instead of simply doing the same thing, you are in house.