Successful business plan to attract an investor
There are a lot of ideas for doing business nowadays, someone grasps at their blue dreams, begins to strive forward, does not calculate all the pros and cons of such a case. Others approach this issue in a more balanced and responsible manner, drawing up a business plan for themselves in advance. So it is possible to understand whether the project is paying off, whether the goods and services with which a person wants to enter the market are relevant.
If there really are prospects for development in this direction, then it is very necessary to draw up a business plan for the investor. What can a business plan give for an investor?
First of all, these calculations will help to understand whether the project is really profitable, what actions will be taken to achieve the goal, how long the borrowed funds will be returned. On the other hand, if there is a need to take a loan from a bank, then these calculations will be the basis for issuing or refusing to a novice businessman.
Purpose of attracting an investor
A business plan for attracting an investor should be simple, convincing, well-reasoned. Figures and data in it should be given, starting from the current realities, they should not be taken from the ceiling. This is a document on the basis of which all work processes will be built, and it must be drawn up very carefully. It is undesirable to embellish the existing facts, but ambitions should not be hidden either. It is advisable to immediately indicate the existing risks for future partners, but this must be done so that a positive decision on your question is made. The difficulty is that there is no single thoughtful template for drawing up such a business plan.
On the other hand, it plays into the hands, because you can draw up an action plan, according to which absolutely every, even an insignificant moment will be taken into account.
The best option for drawing up a business plan is to use textual information, graphs, tables, diagrams. The more of the latter, the better, because you can clearly assess how relevant your proposal is.
The development of a business plan does not take a day or two. This is a rather complex balanced project that needs to be approached by all parties. First of all, the investor will be interested in the following indicators:
- How much money you need.
- What is the intended purpose of these funds.
- How long and according to what plan you will be out in order to implement your project.
- How qualified the participants in the case are.
- The company to which the infusion is required will be evaluated.
- The most pressing issue is the benefits that the investor can get from cooperation with you. There are no strict guidelines on exactly how a business plan should look. Therefore, while working on its creation, pay attention to information content and persuasiveness. In other words, it must contain reliable facts, calculations, figures, graphs that can fully confirm the information that you provide.
Types of investment injections
Business plan of the investment project: 4 goals of creation + 5 points that are of interest to the investor + detailed analysis of the structure.
Can't get investors to invest in your original and potentially profitable idea?
In 60% of cases, the problem is that the business plan of the investment project is not drawn up correctly.
No matter how ideal you think your idea as a creator, the only thing that matters for the investor is the description of economic and social benefits, which will be supported by facts.
Learn how to correctly draw up a business plan for a project for presentation to an investor, competently placing emphasis on the benefits and uniqueness of the business.
Let's consider the process of creating a document through the eyes of an entrepreneur and determine what the "whales" of the business sphere themselves - investors - want to see in it.
What is an investment project?
An investment project is, roughly speaking, a “business model” that describes a case, its specifics and key parameters.
This "dummy" represents a ready-made scheme that only requires a financial push for a successful implementation.
To understand how to make an investment project of high quality and interesting, let's look at it through the eyes of an investor.
An individual or legal entity wishing to invest in a profitable business thinks differently than a project developer inspired by his own idea.
What is an investor interested in?
- The relevance of the idea in the current realities, the economic situation.
- The timing of the first profit from the invested funds.
- Maximum income from each invested currency unit.
- Prospects for stability, growth and business development.
- How competently and intelligibly the project's business plan is drawn up.
Most new investment projects that do not have a credit history and sufficient collateral can be implemented only at the expense of their own sources or funds of private investors and funds. If it is planned to attract investors to launch a project, then the implementation of the project largely depends on the success of the presentation of the project to investors. But how do investors decide to participate in the project and what requirements do they put forward?
How to write a business plan for investors? What to include in this document? What to consider when compiling it? What should it be in terms of volume or appearance? Let's take a closer look at this article.
Business Plan Development Goals
Today, no project can be implemented without a well-prepared business plan or feasibility study. You can talk as much as you like about the feasibility and forms of business planning, but it is difficult to argue with the fact that before starting to implement an investment project, you need to decide:
- What market are we planning to operate in?
- What unmet need is?
- What problem does our product or service solve? li >
- Who is our target audience?
- What resources (people, money, time, connections) are needed to implement the project?
- How effective and economically viable will the project be? li >
- Where to get investments and when will it be possible to return them?
Business plans solve a variety of goals and objectives. In our practice, most often the development of business plans is necessary for:
Let us dwell on the most common purpose of business plans - to attract investment.
Investor requirements for a business plan
When starting to draw up a business plan for investors, it is most logical to imagine yourself in their place and understand what exactly they are most interested in?
The investor's key interest is obvious - to get a good return on investments (ROI), i.e. income exceeding the initial investment. Which ROI is “good” depends on the individual investor and his capital return and risk requirements. In general, a business plan for investors should convince them that the project can be invested in, that the project has growth prospects and will generate an increasing cash flow, with negligible risks. Therefore, looking at your business plan, investors and potential partners will evaluate the following parameters:
How to write a business plan for an investor?
Launching your own project, especially a high-tech one, is rarely complete without third-party investment. How to convince potential investors to invest in a project is a task over which many entrepreneurs are racking their brains. We turned to Naila Khalilova, an expert in public speaking, and asked her to tell you how to correctly present your project's business plan to investors.
Two years ago, at events dedicated to the Day of the Entrepreneur, I watched several small business projects make a presentation for an investor. I still remember my astonishment, which was coolly mixed with bitterness, at how many interesting projects flew past potential investors simply because they could not adequately present them! Tumbling, unreadable slides, inability to give a short and clear answer to the question played a cruel joke on many who attended that presentation. And something tells me that not only on that one. It bothered me so much that I went to collect information about presentations to investors. I purposefully went to such events, looked for sources on the network, watched videos. And then the opportunity presented itself - to prepare your customer for such a performance.
I would like to make a reservation that my customer defended his project as part of his studies at a business school and therefore already had elementary presentation skills. It was assumed that the defense would be attended by potential investors who might be interested in its development. Our task was to prepare a three-minute presentation in five days with a limited number of slides: no more than seven with a description of the project, plus two organizational ones with a title and contact information. The customer did not give his consent to the disclosure of the project in my article, so we will call it “Grocery Boutique”.
We proceeded from the assumption that we need to present the project to an investor who is only ready to invest money. No joint "finishing", expert assessment and other things were expected. Often, if a project is presented as part of a program to support startups or entrepreneurship development, then there is a high probability of gratuitous support, participation of specialists or the investor himself in growing the project, mentoring. This was not our case.
Traditionally, the algorithm for preparing for a presentation includes three stages that are universal in essence. But depending on what kind of presentation you are going to, its form and structure can vary significantly. If this is an unexpected elevator pitch ("presentation for an elevator", that is, a very short presentation. - English), then it will contain only 3-4 "downhole" catchy sentences without any visualization. If this is a planned meeting with an investor, then there will probably be more time, and it will be enough for a detailed presentation of your project. My client and I were initially preparing to perform in front of a large audience with several investors.
The first step is to answer three key investor questions.
"What do you need money for?"
This general question means answers to the following questions:
- What kind of product?
- Why will it be in demand on the market?
As you know, a business plan is a fundamental document on the basis of which investors make a decision on financing a project. Since investors have to consider many proposals from companies interested in attracting additional funds, the task of the CFO is to make all the necessary efforts so that the business plan of his particular company is at least interested in the investor, and at the maximum was chosen for investment. The likelihood of success increases when you consider the experience of colleagues and listen to the recommendations of professional consultants.
How to ensure the success of your business plan
Ella Gimelberg, General Director of S&G Partners Consulting Agency (Moscow)
According to the author, an investor primarily expects to find answers to three key questions in a business plan.
What does the company's management want to achieve. The business plan should contain specific goals and indicators that the company's management plans to achieve in 3-5 years. Goals must comply with the SMART rule (Specific-specific, Measurable-measurable, Achievable-achievable, Realistic-realistic, Timed - limited by a time period), otherwise they are unattainable. For example, the following formulation of the goal is quite consistent with the rule: "The management of the company plans to increase the annual net profit by 20% in three years by reducing the volume of defective products by 50%."
How the company's management plans to achieve the goal. When setting goals in a business plan, company management must clearly understand what steps are required to achieve them. Let's say a company wants to double its production in 5 years, but at the current rate of productivity growth, this can be achieved no earlier than in 9 years. To achieve the goal within 5 years, it is necessary to increase the number of machines by 30%, for which, in turn, it is necessary to attract investments in the amount of 20% of the current proceeds.
What is required to achieve the goal. When developing a new business project, significant factors are the sufficiency and availability of the resource base necessary to achieve the result. This includes the possibility of attracting qualified personnel, and the logistical availability of technological raw materials and materials.
The availability of resources should be reflected in the business plan, while the calculations are based on the cost of resources directly at the point of consumption, and not on the cost of purchasing them at the supplier's warehouse.
Any business plan should contain approximately the following standard information:
- history of the company, its achievements;
- organizational structure, decision-making procedure;
- founders and authorized capital;
- property of the company;
- main activity;
- the essence of the investment project (what it is, how the decision on its implementation is justified, etc.);
- marketing policy;
- production plans;
- financial plans.