Paula Kalamaras who is a writer, researcher, and business owner who writes about fivethings investors want to see in a business plan. Investors want to know how much is already invested and do the individual/companies have a stake in the business. They want to know how accurate the research is and does the client know the market, competitors, and the chance of survival is. The third thing they want to know is are the financial projections realistic. They want your proposal to look professional as well. The fifth thing they want to know is the management team solid and are the people involved good people.
The reason why investors want to know how much money is already invested is because they want to know that your willing to risk something yourself. If your not willing to risk your own money on your business then why should an investor risk theirs. It is also important to fully explain what the money will be going for and if partners are involved. If other partners are involved then what they own and invested should know to the incoming investor. Having 10% already in place will increase the chances of an investor to invest.
Research such as demographics, market analysis, and your competitors are very important. Age, race, and income are important stats to have when deciding what demographics your target market is. Trends and statistics of your market should be in great detail. Having an idea of the “shelf life” of the market and what kind of demand the market has for your service. Knowing the similarities of what your company does and what your competitors should be compared.
For the financial projects you must be extremely honest. Most companies never make profits in their first year so don’t be alarmed. The investors know this already and they are looking 3-5 years down the road when there will be profits. The point here is to think long term.
Make your business plan look professional. Clear any errors, misspellings, and or formatting and headings. Include pictures, maps, diagrams, and or any other visual aids needed. Also don’t be wordy. Having long drawn out sentences can distract the reader.
The business is not about you the owner but all the people involved. Knowing that there is a team of people who work and communicate well together will increase any chance of getting a new investor. Showing the skills of the other people involved can show how solid of a team you really have. Also know what job each person will do for the company and how it all fits together is important.
When writing your next business plan remember these five areas that investors will want to know about. Think how each plays a role in the business you want to start and think how you want persuade that potential investor into investing into your company.