For Entrepreneurs, Professionals and Growth Businessess Developing a Business Plan to Guide Growth and Secure Venture Funding

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Jon Hunt is the Lead Consultant for The Business Plan Team which works with growing businesses, entrepreneurs & start-ups that need help developing a professional business plan to secure funding and guide internal management. It has developed business plans for a wide range of businesses and corporate clients looking to raise funding of between £250,000 and £200million in many different industry sectors including Social Media, Retail, Construction, Mining, Renewable Energy, Technology, Healthcare, Interior Design, Sport & Leisure, Investment Banking, Wealth Management and Trading. Testimonials from these clients illustrate the high levels of service TBPT provides.

Tuesday, 25 September 2012

Business Plan: Securing Funding Part 2

In "Business Plan: Securing Funding Part 1" we looked at "How" you write your plan and how a professional business plan gives an indication of your professional approach. We looked at avoiding hype, writing about a "plan" rather than an "idea", being realistic and paying attention to editing and presentation.

In Part 2 we look at content. What are the key elements that you must address in order to secure funding? There are, of course, no guarantees. However, you will significantly increase your chances of funding if you include the following:

1) The Opportunity to Solve a Problem - Your Market Opportunity
Be clear in your business plan what problem you are solving. If you are not solving a real world problem your product or service is simply a "nice-to-have" rather than a "must-have". Must have propositions have a much better chance of getting funded. Once you are clear that you are solving a real problem get clarity on the size of the problem - both in terms of volume and value. You then have an indication of the market opportunity. From there you can go on to show exactly how you are going to reach that market with your solution to the problem.

2) Delivering the Business Plan - Management Team Experience and Expertise
You wouldn't let someone who can't drive and hasn't got a license borrow your car. Whilst they have nothing to lose and will be more than happy to get behind the wheel, you are lining yourself up for an expensive fall! In a similar way, an investor is not going to lend you money for your business unless the management team has proven track record - in particular the knowledge and experience driving your type of product or service to market. Banks or investors need to be assured that the management team will deliver the business plan in front of them. If you haven't got the experience yourself, get it, or get someone on board who has. Investors also like to see that the management team are prepared to get their hands dirty and shoulder some of the risk. You are more likely to secure funding if investor and management risk are aligned.

3) Delivering a Return - Return on Investment (ROI)
You need to convince investors that you have a real market opportunity and that the scale of it has the potential to generate significant profits and cash-flow. You also need to show that they can exit their investment at a future date. Avoid the temptation in the business plan to over-analyse projected revenues, market growth, industry norms and financial valuation models. All this can end up with a highly speculative future business valuation / ROI that can easily be dismissed as over-optimistic by a potential investor. So, you might want to work out funding round valuations yourself, but concentrate your efforts in the business plan on justifying the commercial case. Let them see the potential for themselves and you can then discuss potential ROI with them.

Good Luck!

Jon Hunt
Lead Consultant
The Business Plan Team
www.TheBusinessPlanTeam.co.uk
The Business Plan Team specialises in helping entrepreneurs, start-ups and growing businesses translate their vision into a coherent and executable business plan that can help secure funding and guide internal management. It provides a range of services from early feasibility studies through professional business plan development, to introductions to sources of funding. It is based in just outside Oxford, UK.

3 comments:

  1. Great post! It is all about convincing your investors of the potential ROI! Thanks for sharing this info! Check out my thoughts on project financing here: http://www.dmitrijharder.com/business-plan-mistakes-that-will-have-your-potential-investors-taking-an-immediate-pass/

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