Let’s be clear, and as said several times; without a clearly written business plan, any idea you have and your chances of getting it off the ground, particularly through outside funding, is dead on arrival. Due to the current economic time, and in a busy and increasingly engaged world, people have less time on their hands to fritter like they did five or ten years ago, potential investors even less so.
Of course, starting a business, particularly from scratch, requires vision, grit, and a healthy dose of patience to see it metamorphose into something tangible. However, with people pursuing meeting schedules, work flights, meal dates, and important engagements, aggravated by pressing emails and memos that need responding to, exacerbated by a rush to meet personal and business targets then add a healthy dose of social media distractions here and there, and you will find it is becoming increasingly difficult to hold people’s attention for more than a few minutes at a time, and in some cases, even a few seconds.
For this reason, and as much as we have analyzed the importance of always having a Pitch Deck ready (reference an earlier article – The Pitch Deck; Your Pathway to a Successful Series A) it is important to note that as important as almost every facet of your business plan will eventually become as it, A) Provides insight as to what resources are needed to reach perceived business goals, B) Establishes clear timelines with expectant KPIs and progress trackers, C) Shows that all eventualities have been taken into precise consideration, and of course, D) Shows where the investment exist door is, when and how to use it, most potential investor may not have the luxury of exhaustively analyzing every segment of your business plan at first glance.
However, to save them time, and according to some pundits, most, if not all potential investors will certainly skip to and analyze these five (5) more particular parts of your business plan more closely as these will give them an almost immediate picture of how much, and why your idea should be given serious, if any, consideration at all. Thus, and as already stated, as much as almost every segment of your business plan is essential and most be written with careful thought, we will consider these more critical parts which you must pay exceptional attention to.
The Executive Summary: Typically, the very last portion of the business plan to be written out, this part provides a succinct overview of your idea as a whole and how you intend to move it from start–up to scale–up and further, using your investor’s monies, and most importantly, how and when they should expect reasonable returns on their stake.
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Since it is the first, yet usually written last, it is of grave importance you spend as much time as visibly possible highlighting the more important portions of your plan in this segment using bullet–points, mostly arranged to a side of your write–up, or in a way that makes them visible and easily digestible.
Remember, time is your worst enemy when pitching to an investor, thus it is critical to have these bullet–points, along with graphs, pictures, and numbers spelt out boldly and upfront to avoid any ambiguity when pushing your idea.
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Also remember, that since how much you typically require to start–up your idea comes in later segments of your Plan, it is critical to have this amount written in bold lettering in the Executive Summary, along with potential returns, as your potential investor may never get the opportunity to go this far in your Plan before moving to other things.
Thus, and as the saying goes, ‘you never get a second chance to make a first impression’. Nothing could be truer of the Executive Summary, and why your waking moments should be spent skewing its content to grab as much attention as your revolutionary idea should require.
Market and Industry Analysis: Nobody knows your target audience better than you do. And if, per chance, your potential investor gets to the end of your Summary, and yet still wishes to flip more pages in, most pundits have highlighted your need to spend a great deal of time anatomizing this segment of your business plan as most people generally tend to flip to this next part to see how much in-depth knowledge you have of your said audience, and if there is any real value to be either gained or offered them outside the traditional.
Do note, that this also takes Psychographics in consideration. Otherwise known as the IAO Variable, it stands for Interests, Activities/General Habits, and Opinions. Thus, as sentient beings, each having viewpoints of our own, borne from birth, peer circle, workplace and the home, a visual breakdown of your core target, how they think, live and also spending habits usually works best, however showing your potential investor more in-depth analysis, like a sampling survey, also goes the extra mile to win you valuable points, and perhaps gain a much needed outside stakeholder’s call for further meetings.
An analysis of whom the major players within your intended industry and a careful breakdown of how they do business, vis–a–vis how you intend to make your own business and offerings different, also matters a lot, as going almost the same route as the competition only tells your investor what they might have already gleamed from the onset, you have nothing new to offer the market.
Unique Selling Proposition: Now more commonly called Your Magic Formula, and as said in from the Industry analysis segment, your Magic Formula has to standout for something much more than just pricing and better packaging, if not, you still have nothing new to offer. Some Angel and Private Equity investors have argued that after the Summary, your Market Analysis is their next point of interest while some others have stated their keen interests in the product/service USP after the Executive Summary. Either way, one thing is clear, if your get your Magic Formula wrong, you might just never get that all-important call for further talks.
Thus, spend time critically understanding and fine-tuning your product/service to a point where it really stands for something an investor would wish to be a part of as this portion of your business plan will almost certainly be the second, or the third most important portion investors flip to get a clearer understanding of why you, and not one of a myriad ideas jostling for their attention should get their check.
Next, is your Financial Analysis: The devil is in the numbers they say, and contrary to what you might think, most investors are numbers savvy, even the seemingly less educated yet successful business owner and investor, or serial investor, have mastered a thing or two about how to decipher financial numbers to a point they can tell when numbers are made up, or have been critically considered to take in a variety of factors enough to ease their fears for certain considerations and make allowances for unforseeables.
Thus, it is always important to spend a lot of time questioning your numbers and projections yourself first and foremost, or with your team, as many entrepreneurs have been turned down at this critical point of not being able to convincingly defend their projections and numbers. Do not be surprised if you are questioned about your projected ratios as some more savvy investors, as stated by some pundits, could even make this segment of your business plan their very first point of call.
Last and not least, but least expected segment of your business plan investors really want to see, is your Cover Design: Remember that statement about ‘not having a second chance to make a first impression’, well, some Private Equity Investment managers have confessed to being better drawn to read a business plan or a written pitch when it has a really colourful Cover Design with arresting images and, in some cases, word play that catches their fancy to a point they say, “oh, what the heck, might as well…”, and sometimes, that is all you really need to get a foot through the door.
Inconsequential as you might think this is, a bland cover design, and rightfully so, might most probably get your written idea gathering dust on the Private Equity Manager’s corner table rather than in his hands during lunchbreak or a moment to herself.
Remember that images speak a thousand words, thus it is important you spend considerable time, if not by yourself should you lack design skills, then with an expert tuning your Cover Page Design to something so enchanting, an investor is left with no other choice than to at least flip to the Executive Summary just before her next board meeting. You never know, she might just find it interesting enough to bring it up.
All in all, the Business Plan has, and will always continue to be a very important tool in today’s business world, and as much as no part of it should be glossed over in presentation, style and tone, the above-stated portions have been known to pique investors interests the most and thus, they spend time analyzing them more critically than others, and so should you.
Brain Essien is a business consultant, with expertise in digital marketing, crowd funding, pitch decks and business plan/proposal formulation and design.
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