Did you know that the business plan you create will be slightly different, depending on who you present it to? Yes it will and it is good to remember this when writing your business plan.
For a Venture Capitalist: These are high net worth individuals or companies who want to invest in a business and go out of business for a healthy profit. Typically, a venture capitalist represents a group of investment firms and company-backed individuals. It is rare that they use their own money to invest. They also tend to invest large amounts of money after carefully reviewing the investment risk for the company seeking the investment. This means that they tend to look for companies that are already established and looking to expand or grow quickly. They expect a high rate of return on their investment, generally more than 25% on their investment. A venture capitalist will expect a high level of control over the company and usually a seat on the board of directors, as well as voting rights with their shares.
When writing a business plan for a venture capitalist, it stands to reason that you should include your possible exit strategy, such as an initial public offering, as well as the proposed contribution and stake in your company.
When you go to an Angel Investor. These investors are more likely to invest in start-ups and those seeking a lower level of funding. They also accept a higher level of risk than a venture capitalist. Angel investors typically invest in a type of company that interests them and often want to get involved with the company as part of their investment. They are the place to go if you are looking for business advice to grow your business. They expect a lower percentage return on their investment, but are still looking for 20-30%. The Angel Investor will wait for shares for his investment, but his control will generally take the form of managing the company together with the other major shareholders.
What this investor wants is to get involved in a business that interests him. That is why it is important to highlight the attractiveness of your sector, of the business and how they can get involved in your company.
When we go to a bank. Banks do not lend unless it is almost certain that they will get their money back. So when they look for a loan, they look for collateral of some kind and the usual one they look for is a charge on their property or that of their business. So if you have property, machinery, etc. who may have a position, the business plan is where you emphasize this. Banks also do not lend large amounts of money for business start-ups. What they are looking for within your business plan is proof that you have thought a lot about your business model and how you will make a profit in a short time. They, like Angel Investor and Venture Capitalist, do not lend money to pay salaries while the company is being established.
Some things to remember when writing your business plan.
• Your executive summary is vital and the first part of the business plan to read. It should summarize the key parts of the business, as well as spark interest to move on to more detailed information. Since it is a summary, a trick is to write it in draft format at the beginning of writing your business plan to help you establish your business plan. The executive summary should be ordered and completed after you have written your business plan and used as a checklist that you have included everything.
• Your business plan should be linked with logical links from one section to another. It should tell a story of how you plan to establish, manage, and expand your business.
• It should be well structured with an index and page numbers so that different people who read the plan can easily access their preferred section.
• You should write your business plan for two different types of readers: the technician who wants detailed information and figures, and the entrepreneur who wants to see how you are setting up your business and is looking for business credentials, such as a big compliance process. and the participation of adequately trained personnel.
• Ultimately, your business plan is the foundation of your business, but just as your business changes and evolves over time, so must your business plan.