Right now, investors are holding things very close to the vest. if you’re writing a business plan seeking investment funding, you must make your case well, with a solid pitch backed by a full understanding of the business’ prospects, financials, and cash projections.
First, all investors want to see right away how much money you need, how it will be used, what return on investment they will receive, and when they will get it.
Professional investors (venture capitalists) will also want to see an exit strategy, when their shares are bought out or the company goes public.
If you are seeking investment from friends and family (which we don’t necessarily recommend), remember that spelling out who owns how much of the business, who has the final say on all business decisions, and what happens if the business fails, are crucial to maintaining good relations with your investors. Investment is always a risk.
Your Start-up Funding (for start-ups) and Cash Flow tables show where new investment comes into the business. The Cash Flow table has a line for after-tax Dividends that will be paid to investors.
Long Term table can show projected growth and equity for up to 10 years, although forecasts, of course, become less reliable as you get further out.
Essentials of the investment offering — how much money for how much ownership — should show up in the Executive Summary. Additional topics should cover the Exit Strategy, Valuation, and Shares of Stock. Many plans will include a section on Risks and Contingencies. Put this in your Financial topics, or click Topic on the Insert menu to add as many new topics to the plan Outline as necessary to spell out the details. Users with the Premier Edition can put this information in the topics surrounding their investment tables.
Remember, however, that investors don’t invest in plans – they invest in people. Make sure you understand the numbers, and can back them up with real research. Your plan should reflect the commitment, energy, and hard work behind your entrepreneurial drive.