5 Business plan tips to help secure your first round of funding
By Maria Onzain
When you start writing your business plan, it is natural to have certain thoughts crossing your mind, such as: “I’m not going to follow this document”, “what a waste of time”, “who wants to know about this”. However, if you spend time writing your business plan now, your future self will thank you.
A complete business plan will help you get a better understanding of the industry, your competitors, and your market opportunities. It will also make you reflect on your unique selling proposition and will keep everyone on the same page. As you go into business, your company’s structure, direction, and even your business model may see some modifications. But this doesn’t mean you don’t need a business plan.
The moment of truth will come when you try to secure external funding for your business. That’s when you will realize how important it is having all the ideas clear in a solid business plan. According to this complete guide on how to write a business plan, a survey conducted by Palo Alto companies found that “business owners with a completed business plan are nearly twice as likely to be successful when securing funding and growing their business”.
However, when you are pitching your idea to an investor, you shouldn’t present a twenty-page business plan. Investors have very limited time so you should put together a ‘one pager’ to create a good first impression and leave your business plan for future meetings when you need to get into more detail.
So, how can entrepreneurs write a strong business plan and reflect it on their one pager? These five tips will help new business owners secure their first round of funding.
1. Your personal abilities
Why are you the right person to start that specific business? Investors believe in ideas, but they invest in people. Even if you have an idea with great potential, you may not be able to make it work the first time. So, you need to convince investors that you have talent and you will find your way around any issues. You can include in your business plan and one pager examples of your previous experience in the field to demonstrate your expertise.
2. A talented team
You need to surround yourself with the best talent. Investors will risk their money for you and your team so you need to explain in your business plan why are they the best. You can include examples of their previous work and references of previous employers. A successful team should meet two more conditions: be complementary and be compatible. To be complementary means to cover all the areas of work needed without overlapping each other’s work. And to be compatible refers to getting on well with each other to be able to work in a pleasant working environment.
3. Previous learnings
Investors will be interested to know if you have started a business before, how did it go and what did you learn from it. Most entrepreneurs fail with their first idea, but failure is feedback, so you need to demonstrate that you did learn a few lessons. You can briefly explain your learnings and how you will apply them to your next entrepreneurial adventure.
4. Simplify and go straight to the point
Your one pager should be concise and go straight to the point to motivate the investor to pick up the phone and invite you to an in-person meeting. But your business plan should also be brief and precise. A good way to start your business plan is an excellent executive summary. According to Cayenne Consulting, a company helping entrepreneurs get their act together before they solicit investors, “an ideal executive summary is no more than 1-3 pages. An ideal business plan is 20-30 pages (and most investors prefer the lower end of this range)”.
5. Don’t forget any relevant data
Investors need to believe in the person who is leading the project and the team, but they also need to see a market opportunity, a real demand, and a working business model. If you already have revenue, you should include in your business plan the following: the size of the market opportunity, actual and potential demand, as well as your current revenue and a realistic projection of your sales. If you don’t have any returns yet, you may want to include the problem you are solving, how will you solve it, as well as your business hypothesis and how you are going to test them. In your one pager, you should include only the most relevant graphs and figures to help catch your investor’s eye.
Overall, your one pager needs to reflect the most significant aspects of your business plan. Both need to be concise and present the most relevant information to convince potential investors. The role of your one pager is to help you pass the first filter, so it needs to show the info that investors want to look at, no more and no less. Once you get a face-to-face meeting, you will be able to use your business plan and describe your project in a bit more detail.
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