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Before writing a business plan, you need to ask yourself what exactly investors will need to see in your business plan before they fund your business.
If you have ever watched Shark Tank series, KCB Lions Den or started a business you definitely who investors are.
An entrepreneur needs to know his business inside out before seeking out investment. These are some of the things investors look for in a business plan.
1. Competitive advantage
Competitive advantage is drawn from matching the core competencies to the opportunities. It’s the advantage that your business has over its competitors and hence able to generate a greater value for your company. It could be that the products are better than its competitors’ and hence generate more value for your customers. Or it could be because your company produces goods and/ or services at a lesser cost than its competitors and able to sell the same goods and/or services at a lower price leading to a greater sales margin.
If your business has that advantage over the competitors then you plan is likely to draw attention from investors.
2. Market traction
Investors often need proof of market traction shown through your business plan. Traction is basically the business progress and growth as it gains momentum.
Developing a high traction is important for startup companies because the higher the traction, the more investment the business attracts. It’s only through product or service demand that you can persuasively show that your business is worth investing. You need to show how you will generate demand for your products through sales.
3. Risks involved
Investors will take a leap of faith when they decide to invest in your startup. It is therefore important for you to understand the risks involved in your business and convince the investors of the unlikelihood of that happening.
You are advised to conduct a market research to identify the risks involved before writing your business plan. This will help you to understand the market before pitching and seeking for investment. An exclusive research will give you an informed idea of your industry and understand your competitors better and the risks involved.
4. Financial growth
Investors will require a proof of the financial stability of your business especially if you’re seeking investment based on the company’s financial performance. Financial performance is measured by company’s return on investment and losses.
Investors will need to know the financial performance of your business over a specified period of time before investing in it. You will need to show clearly in your plan how profitable your business will be over a specific period of time.