Outline for a Business Plan for Potential Investors
Last week I posted the world's shortest business plan, which is really an internal document to help business owners focus. But there are different types of Business Plans, and usually the term refers to the sort of plan you would give a potential investor. These plans are a lot more formal and are fairly standard in terms of what information is provided. Of course how you provide it can be creative. But at a minimum you should include:
- An Executive Summary - no more than one page, preferably one paragraph summarizing your business, what you're looking for and where you're going.
- Industry Background - this includes a market analysis, a discussion of the size of the market, who's in it already, who you are going to compete against and why you're better than they are.
- Your specific product or service - what makes it unique, better, more profitable. This is where you talk about your technology if that's an issue.
- Marketing plan
- Company information - describe the organizaation of your company and the existing management team.
- Funding request - if you're asking for money, ask for it. "We need...." then discuss what you'll do with the money. Be sure to explain the risks too. Don't try to paint an unrealistic picture. And also explain the investors' exit options. When and how will they get their money back, and how much profit will they make.
- Financials - provide historical, and pro forma (forward looking) financials, revenue and growth charts.
If your executive summary doesn't grab someone's interest, they will never read past it. So it should be written first, and last. Use it as a jumping off point, and then re-write after the whole business plan is completed. Then re-write it again. Have several people you trust read it.
There are many business plan software packages around. Make sure you get one that meets your needs. Do you want an internal plan that is meant to help you with your planning? Or do you want to create a plan for potential investors? Don't confuse the two, they are very different animals.
