How Does Your Business Look to an Investor?
Writing a business plan for fundraising.
Investors recognise that the customer proposition of an ideas business might look very different from the others that they finance. However, they want the investment proposition in a standardised format, so they can compare it with other investment options. That way, they can see which of a range of different kinds of finances might be appropriate and how a deal could be structured. The standardised format also acts a bit like a pilot’s checklist before take-off: it makes sure that nothing essential to any business gets forgotten.
There is plenty of excellent advice online about how to write a plan specifically to raise investment, so we will link to that and just provide a summary here.Below is a typical format of a business plan aimed at investors:
- Executive summary (the investment proposition, ideally on one page. How much cash is required, what it will be used for and the scale and timing of the expected return on investment).
- Market (who the customers for the business are, how many of them there are, where they are, how they are currently solving the problem the new business will solve, what the customer proposition is to the market and how it can offer a unique advantage that is different from the competition, now and in the future).
- Management team (what the team has achieved before and how that is directly relevant to the new business).
- Operations (how the business will work in practice, especially how it will position, distribute, promote, price and sell itself to customers).
- Time scale and milestones (how progress will be tracked, where the big turning points will come, when the investor might have a chance to exit, where the risks lie along the path and how they will be mitigated).
- Financial projections (a picture, in numbers, that is consistent with the story told in the text).