This is the tale of two business plans with very different cover pages. They both contain a unique and exciting business opportunity with the potential for high investment returns. Arriving in the morning mail, each neatly bound plan lands on the desk of the same potential business investor. Both plans are competing with hundreds of other documents, worksheets, phone calls, and articles for the investor’s attention. And, they compete in time, because each one, seen for a few seconds, is either heeded or passed up and seldom returned to by the investor. The first plan is tightly bound. It has a cover page made from thick paper stock. The cover page resembles the cover page to a term paper. The company's name in the center of the page and the owner's contact information in the bottom left corner provide the first bits of information about the business to the investor. Not being familiar with the company name or the owner, the investor must now open the plan in order to learn anything...

You have spent considerable time pulling your business plan together, contacting potential business investors, making management presentations and pitching your business plan to prospective business investors. Now you finally have a serious investor who wants to conduct “due diligence” before investing real cash into your business. Great! What’s “due diligence? Due diligence is a thorough examination of available facts, references, books, records, etc. of your business and business plan. And, what exactly should you expect during due diligence? Skepticism... Business investors want to be sure there are no skeletons in the closet and that your venture is not the next Madison Priest "black box technology" -- a revolutionary technology that claimed to allow ordinary phone lines to transmit data into people's homes at rates faster than fiber optics. By staging impressive demonstrations, Priest convinced private business investors and seasoned companies, such as Blockbuster...

It’s easy to lose sight of what needs to be communicated to prospective investors when writing the various sections of a business plan. Successful business owners/entrepreneurs use each section of their business plan to work up interest, to present arguments and, most important, to build trust and confidence. How To Earn The Trust Of Skeptical Investors… Usually some sort of upfront investment precedes starting or expanding a business, whether it be time, energy or cash. If you plan to raise cash from investors, you must get prospective investors comfortable with putting their money into your hands. To start you must understand that investors simply want to select the best investments, period. This means choosing businesses that earn a high enough rate of return on investment to offset the risk of the investment. That said, deciding what is a good opportunity is an investor’s number one challenge. That’s why investors thrive on information. Good information - good...

Show me the...evidence! When it comes to writing a business plan, many businesses focus on speed. By rushing to complete their plans, businesses often forget to gather critical evidence to support their plans. Investors never read business plans that lack evidence or consider the claims in them worthless. Gather evidence to build your case, support your claims, and persuade investors. When writing a business plan, use these 10 critical pieces of evidence to win the trust of potential investors and their backing quickly: Articles about your industry, competitors, products, trends, and so on. When unsolicited, articles about your company or products help build credibility, provide unbiased viewpoints, and often include third-party research. Market studies. Use market studies to support market trends, size, and growth rates. When prepared by an independent party, these studies add credibility to market related claims. Product or business literature. In-house product or business...

Business investors are sensitive to at least three major constraints when evaluating business plans. I call these constraints The Three R’s: reality, readiness, and resources. Reality Many creative entrepreneurs with ideas for scientific breakthroughs have ended up frustrated with business investors who just don’t seem to “get it.” The truth is, however, that it’s the entrepreneur who’s not getting it. Unlike creativity or scientific breakthroughs, starting or expanding a business requires the entrepreneur be keenly aware of their customers, competition, and core competencies. Creativity and scientific breakthroughs often disregard the customer, the competition, or a company’s core competencies, which is why they are usually risky and often require significant capital over several years before they are monetized. The opposite type of investment most business investors seek. For example, suppose you had an idea for a new everlasting light bulb. After researching the...

In most business plans, no matter how striking the idea, the covers are critically important. The majority of investors may flip to the executive summary, if they get past the cover, when deciding whether or not they are interested. Exactly like the front page of a daily newspaper, a business plan cover puts the important highlights of the proposal upfront for potential investors to read. The success of an entire business plan campaign may stand or fall on what is said on the cover of the business plan. In his book, the Venture Capital Handbook, David Gladstone wrote that of the one-hundred proposals a week an investor receives, maybe ten are read. So, providing critical information on your cover is about the most important thing for sparking the interest of prospective investors. In fact, your cover page competes with hundreds of other documents, worksheets, phone calls, articles, and other information for the attention of prospective investors. And, based on Gladstone's...

The success of a business plan stands or falls on its ability to get potential investors to take a moment to read it. Nothing works better for doing this than well-written headlines designed to interrupt and engage investors. Here are five fundamental rules for writing and incorporating headlines into your business plan. More important than anything else, try to get investors’ self-interests into every headline you write. Make your headlines suggest to investors that there is something about your business plan or venture they want. This rule seems so obvious. Yet, absent omitting headlines entirely, it is the rule most often violated. Replace overused one word headings like "Company", "Products", "Market", Financials" with headlines that appeal to investors’ self-interests like making money, protecting their investment, or building trust. Be sure to get news worthy information like new products, new uses for old products, or technological breakthroughs into your headlines...

Whether you are seeking capital for your company or are optimizing your business strategy, the most important element - particularly for outside investors -may be your written business plan. You can tune-up and supercharge your plan using this 19-step checklist. When your written plan firmly answers yes to each of these 19 questions, your market/product strategy is in terrific shape plus you increase the odds of attracting investment capital. If you don't already have a written business plan - write one! Your business plan is a blueprint for your whole company. It describes in detail your goals, the financial and technical viability of your goals, and the strategy you will use (or are using) to reach those goals. And your business plan is a working tool - it is a yardstick to measure your progress and a compass to keep you on course. Must a business plan be written? Yes! A plan which is not written usually has not been thought through fully. And despite what you may have read, it...

International business plans require additional study compared to domestic ones. These require additional expense and time to resolve. Here we will discuss four critical ones for a business plan. First, we must decide on the business structure. Countries have favorite structures that evolve slowly. When considering international companies, different structures might be required. Typically, the type of business structure must be discussed with a business consultant in the country itself. This will most often be a lawyer from that country. It's possible that a lawyer in your home country would know the laws of another, but it's not very common. This information is critical for the correct filing of papers, company organization and other important details. As we are deciding which structure to use for a foreign country, the decision on how to control it is also important. Will the foreign company be a stand-alone? Will it be a subsidiary of another company? These questions...

Who needs a Business Plan? Every business needs one. It's not just for start-ups or new product launches or business expansion initiatives. Why? And what should be in one? Documenting a Business Plan is an extremely useful process to focus management and owners on their business concept, strategies, and operating plans. It forces consensus and decision making that might otherwise be neglected. It requires issues to be resolved and the decisions to be reflected in financial projections. A well-documented business plan will help you communicate the most important elements of your strategy and plans to the people who need to know them. Including you. Already in business for years and never needed a business plan? It's still a good idea for all the same reasons. And now is a good time. Ready to exit your business? Even better. A solid business plan will be the most important document in supporting the valuation of your business. The greatest value of a business plan, however, is...

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