When most entrepreneurs need to go to banks or investors to raise funding, they realize they need to develop a business plan. But, unfortunately, most entrepreneurs complete their business plans incorrectly, and thus fail to raise money.
Interestingly, most entrepreneurs do include much of the key information they need in their business plans, such as the executive summary, industry analysis and marketing plan sections. But, since most entrepreneurs have the wrong mindset when creating these plans, they fail to achieve their goals.
Let me explain. The mindset of most entrepreneurs when completing their business plan is to tell the whole story of their business. They think they need to include every detail about their idea, go in-depth about market statistics and studies, and include a financial model that shows every possible expense and revenue source.
While this mindset is helpful in creating a business plan for internal purposes, it generally results in too much information for investors and lenders.
Let’s look at it from the investor and lender standpoint. They don’t need to know every detail about your company. Rather, they simply need to determine whether or not your venture could provide them with an adequate return on investment or ROI.
How do you do that? By realizing that first and foremost, your business plan is a marketing document. That is, your plan must market your company to investors and lenders to get them excited about investing in your company.
In marketing your company, you don’t give every detail about it, just like deodorant companies don’t discuss every ingredient in their product when marketing it. Rather, you focus more on the benefits.
Let me give you some examples. Rather than going on and on about market trends and statistics, show the data and point out how it benefits your company’s potential success. And rather than talk about all the details of your marketing plan, discuss how your marketing plan makes your company “uniquely qualified to succeed.”
This last phrase, “uniquely qualified to succeed,” is worth repeating, since it is the crux of a business plan that successfully raises funding. Your business plan must prove why your company is uniquely qualified to succeed. As mentioned, you could be uniquely qualified based on market trends that support you and not competitors, or because you have an exclusive marketing partner. Other ways you could be uniquely qualified to succeed are that your management team has unparalleled expertise and/or experience, or maybe you have intellectual property and patents that your competitors do not.
So, how do you create a business plan that effectively markets your company and proves why you’re unique? One way is to create it yourself. In order to save time, you should leverage a business plan template that gives you the right structure and shows you the questions you need to answer to more quickly and easily complete your plan.
Another option is to hire a business plan writer to develop your plan for you. While this will cost more money, the writer should be able to save you considerable time in creating your plan. Also, if the writer has experience and a good marketing background, he or she can help position your company to investors and lenders properly in the plan.
The right business plan is often the difference between raising and not raising money, and raising money is often the difference between succeeding and not succeeding with your venture. So take the time and follow my tips towards completing a winning business plan.
This article was written by Dave Lavinsky, president and co-founder of Growthink, a consulting and publishing firm that helps entrepreneurs develop business plans and raise funding.