Develop a Strong Business Plan

How to "wow" your investors and gain their trust

A business plan is essential for a company looking to obtain funding from investors. But how do you create a plan that will get investors excited about backing your business? Creating a strong business plan relies on extensive research and honest assessments. Follow these helpful tips to compile an effective plan that will eliminate any doubts from potential investors' minds:

1. Keep it straightforward. When writing a business plan, remember: less is more. Focus on the most important key elements that investors need to know, and state your case succinctly. If you have other important information, place it in the back of your business plan under an addendum, and reference it where appropriate in the body of the plan to give the investors the option to either read it or skip it.
2. Know your competition. Show investors that you've done your homework on your competitors. They will expect you to know about the competitive outlook in both the short and long term. Why do customers buy from your competitors, and most important, what are your competitors' weaknesses?
3. Avoid legal surprises. Create a watertight business plan by nipping any potential legal problems in the bud. Consider issues like patent infringement, former employees or business associates who might sue, or contract issues, and then have an attorney look at and resolve any issues.
4. Support financial projections. Investors want to know that your financial projections are based on reliable data. Show that your projections are solid by providing updated, targeted research data. The more data you have to support your forecasts, the more comfortable investors will be in funding your business.
5. Address any weaknesses or risks. It's tempting to ignore negative issues or potential risks, but that usually causes more damage in the long run. For example, if your investors discover that you've overlooked a possible legislative change that could impact your business, they will wonder what else you might be hiding from them. The last thing you want is to lose your investors' trust, so get any problems out in the open, and have a detailed plan to address them.