Great Ideas for your Small Business: Write a Killer Business Plan
If two down-on-their-luck beggars approach you on the street asking for money, are you more likely to give money to the dirty, dangerous- looking guy or the sincere, clean guy who asks politely for spare change?
I’m not saying you are a panhandler, but too many entrepreneurs send out bum business plans and wonder why they never get funding. Remember this: Your business plan has less than a minute to catch the eye of a serious investor.
Messy, typo-filled, poorly written plans end up in the trash, according to the private investors and busy venture capitalists I’ve interviewed. They receive thousands of business plans a year and don’t have time to waste on second-rate pitches.
My sister, Dr. Andrea Weisman Tobias, a venture capitalist and consultant, has some good advice to offer. An expert in biotech, she says that a well-written business plan will stand out from the pack. She looks for succinctly written plans printed in an easy-to-read type font.
Tobias, who read hundreds of business plans each year, said: “The lighter, the bet- ter. I always leave the weighty, two-pound ones until last.” Tobias said that although you’ll need a detailed company history, marketing summary, and management biographies, the most important element is the executive summary. It should be clear and concise, yet comprehensive, she advised. If snappy writing isn’t your strong suit, hire a business-plan consultant or freelance business journalist to help.
“Of course, the content is very important, especially in a technical area like biotechnology,” she said. If you are in any sort of engineering or technical field, always include the most compelling research results and data. Your plan should also explain the benefits of investing in your company rather than competing firms. Consider the investor’s perspective and include all the perks beyond making money. For instance, if your product is really popular, your investors will benefit from the press coverage it generates. Some investors like to be invited to glitzy parties and industry trade shows when they have money in a high-profile deal. List all specifics that will make your company more attractive to investors.
Good products and great writing aside, luck and personal contacts play a significant role in raising capital. Although U.S. venture capitalists invested more than $25 billion in 2000, thousands of great companies never attract a dime. Timing is essential. Your company has to be poised for growth to appeal to venture capitalists.
Because people lend money to people, not companies, picky investors put a lot of weight on where the deal came from. “The source of the deal is very important to a venture capitalist,” said Tobias. “If we like the source, we’ll pay attention to the deal.”
So if you want your business plan to land on the right desks, take advantage of every possible contact. Attorneys, accountants, and successful business people can often help you get your business plan to the appropriate investor. Then it’s up to your plan to be a magnet for money.