Before you approach a bank or any other form of financier to fund your start-up or business expansion, you need to be sure that you've done your research and have confidence in your Business Plan.
It's your responsibility to provide as much information as possible in your business plan, to show:
- That your business is feasible (i.e. fulfils a need, has long-term prospects, has a competitive edge, etc);
- That you have the knowledge, skill and passion to effectively manage the business; and
- That you have some security or collateral to put into the venture, as a show of your confidence and to minimise the financier's risk.
You will be more impressive if you have carefully thought-out and become familiar with your business plan.
The core elements of a good business plan
Before an investor will even consider financing your venture, he will want to see that some thought and research has gone into your start-up idea or expansion plan.
A well-motivated business plan should provide a thorough understanding of your business, your goals and your financing needs. Whatever you do, don't get someone else to write it for you. No one understands your concept or has the vision that you do. Writing it yourself will ensure that you can answer any questions coming out of the document.
Other points to ponder:
- Length: A business plan should not be long, boring or complicated. For a simple business idea, it could be between three and five pages. A more complicated plan might need 20 pages.
- Stick with the facts. Don’t waffle. Keep detailed and non-essential information out of your plan and relegate it to an attachment in the appendix.
- Packaging is important: Without going overboard, a nice layout and effective headings will make the document look appealing and professional.
- Review & Editing: Remember, you only have one chance at making a good impression. Get feedback; ask someone to check your grammar and see how reader friendly it is. Remember, the business plan that opens doors and attracts lenders is a plan that has been revised and reviewed.
Now it’s all about selling yourself and making the potential backer as excited about your idea as you are.
It's time to pitch
Your first face-to-face meeting with a potential investor can make or break your chances of getting financing. Make an appointment and arrive on time. But most importantly, be prepared!
A well-presented pitch will show that you have taken the time to prepare and are not only taking your business idea seriously, but also value your potential investor. Have a good presentation of your business plan, highlighting the most important aspects and show that you truly understand your business. Then:
- Be prepared to say why you need the money, i.e. what you will be using it for. "I just need it," doesn't inspire confidence or the fact that you have thought it through. Provide some detail around how you came to the amount and how you exactly will use it to start/grow your business.
- Virtually all lenders will do a personal savings and credit check. Be prepared to discuss any prior credit issues/problems.
- While your enthusiasm for your idea is important, back this up with facts and research.
How you conduct yourself is almost just as important as the pitch itself. Do you look presentable? Are you passionate about your idea, yet willing to listen to advice or comments made by a potential investor? The reality is that if an investor doesn't like you, they're not going to give you money.
And remember, if you're not successful the first time 'round, ask for feedback as to why you were unsuccessful. If possible, do more research, adjust your business plan or presentation, and try again.
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