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What Investors Look For – A Robust Business Plan

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Investors are constantly on the lookout for business plans that captures the fundamentals of a business in a clear, succinct and structured manner. Scanning through the business plan will enable a VC to evaluate your understanding of your industry’s key success factors and whether you have identified the winning formula for your company. Therefore, being aware of what VCs and other investors look out for in a business will empower you to craft an effective business plan.

When crafting your business plan as yourself these questions:

Opportunities:

Have you identified all the possible opportunities? Remember to define the opportunities clearly so that others will be able to understand them.

Have you been realistic in identifying the areas you can participate in? This is especially crucial when trying to enter an industry that may already be saturated with existing players.

Threats:

Have you been able to identify the obstacles that impede the execution of your plan?

How do you plan to overcome them?

By identifying threats, you are demonstrating your understanding of the industry which is what investors look out for. If you are able to transform the threats into opportunities will further strengthen your business plan.

Market Size and Share:

Have you conducted market surveys and understood your target market size?

Have you considered that your competitors may be looking to target the same market share?

Investors will assess your ability to identify your target market. Avoid being over simplistic when identifying your target market. Investors are not interested in arbitrarily assigned percentages. They are looking for a more meaningful description of the target market share you hope to capture.

Customers:

Who are your potential customers?

Have you understood their needs thoroughly?

Factors such as loyalty, trust and proven track record are key considerations that you need to take into account when engaging your customers.

Ask yourself this question: Why will potential customers engage you?

Marketing Strategy:

Have you been able to develop effective and meaningful marketing strategies that will enable you to engage customers?

A word of caution- most entrepreneurs falter in this aspect. So, special emphasis should be placed on developing a thorough marketing strategy .

Many entrepreneurs believe that having a good product/service is sufficient in ensuring that the business takes off. However, without an effective marketing strategy, their product/service will not be able to sell.

Competitors:

How will you as a new player be able to outdo your competitors?

This will allow you to differentiate your business from that of your competitors. Remember that your competitors will also be constantly improving themselves to gain leverage. Be equipped to respond to your competitors and changing demands.

Suppliers:

Will the suppliers be willing to support you?

Do they have confidence in you?

Suppliers are your partners for success but they are often neglected as an important factor to be included in the business plan. In reality, suppliers can make or break a business. Therefore, they should not be taken lightly.

Risk Analysis:

Have you identified all the important risks that may affect your business?

More importantly, do you have contingency and recovery plans to address each risk that you have identified?

This will show investors that you have planned for a rainy day and give them the assurance that you will be well-equipped to tackle any risks that come your way.

Financial Plan:

Is your plan realistic?

This is the main consideration investors are looking out for to determine if it will be worthwhile investing in your business. Therefore, the expenses should be carefully calculated.

Cash Flow:

How well will you be utilizing your cash?

How well can you generate a positive cash flow?

Investors are concerned with how cash is utilized in the company and therefore special attention must be given to this aspect of the financial plan.

In a nutshell, these are the important aspects and considerations that should be included in a robust business plan that aims to win investors over.

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