| Think like an investor |
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| You have spent a lot of time thinking about your business, as an entrepreneur. Time to change shoes and slip into those of an investor. Think what would an investor really want to know from you. If you were an investor exploring investment opportunities in a business, what would you need to know from the entrepreneur? That’s when you will ask the hard questions, which often entrepreneurs forget to ask themselves. How big is your market? How much of that market do you want to own? How will you do it with your current team? What makes you different? Who are your competitors? What are your assumptions? What’s your contingency plan if any of this turns untrue? What are the risks? How much money do you need? How do you intend to repay it? |
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| Do remember that an investor is not out to be charitable. He is making an investment hoping to make high returns on it, as soon as possible. And if your plan doesn’t have the way he can make this happen, he will look for other opportunities. |
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| Get the numbers |
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| It all comes down to numbers. How big is the market? Do you have data that can be relied upon? If not, is there any research you have conducted to assess the market size? How many people need to be on the team? What is the unit cost? What are the expenses? What are the overheads? How long will the process take? Eventually it will all come down to numbers, so it’s best to be prepared with it. You don’t need to put all these numbers in your business plan, only that is logically required to make your case. Do not put anything extra. |
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| Keep it short and simple |
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| Many entrepreneurs like to use flowery language and tongue twisting descriptors to talk about their concept and what they do. While it could work with some investors, most only view it as a way to disguise a bad business plan. Try to simplify everything you write, so it’s easy to convey as well as understand. Not only does it show that your thought process is clear, but it also shows that you respect an investor’s time. Investors at the first instance might even reject business plans that run into pages, if they don’t make sense in the first few paragraphs. Remember no one has the time to plod through pages and pages of text. |
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| Are you really the first? Do your research. |
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| A lot of entrepreneurs think that they really are the first to have thought of an idea. It might not always be the case. So do study the market carefully and intensively to pick out businesses that seem to have an idea similar to yours. Remember your idea has to be markedly different from existing businesses to be called unique. Maybe a new way of delivering a service/product, or a drastically cheaper way of doing it, and so on. Chances are that there are others who have tried the waters, and it may help you to pay attention to how their business is doing. |
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| Play up the strengths |
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| An investor invests in a company, betting mostly on a team’s capability of turning a plan into reality. So it’s best to showcase the key skills of all in the team critical to the running of the business. This is not to say that you just add their CVs to your proposal. Spend some time writing how that member brings invaluable contribution to the team. How well you gel with each other is another aspect that investors watch out for. A squabbling team which does not respect each other is not going anywhere much, so investors will just stay out of their paths. |
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| Give out only as much as you need to |
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| Do not give all your details out; only as much is really required or what you are comfortable with. If you have some information that is proprietary, it’s best to work with a Non Disclosure Agreement (NDA) and have it signed by the potential investors. Ensure that you spend time checking up the credentials of people you are dealing with. |