You only get one chance to make a first impression!

The executive summary is the most important part of any business plan.I’ve heard that statement so many times. Why is it important? Well, let’s consider a hypothetical scenario. Imagine that you are a Venture Capitalist arriving into work early one morning. On your desk are twenty business plans that must be cleared that day. Now you will definitely not have time to read them all completely. What will you do? You have two choices – read the executive summaries of them all and decide which ones to study in depth, or start with the top of the pile and read the first plan completely before moving on to the next.

Are you market savvy?

The best and most successful businesses are market driven and not product driven.Your business is about delivering a compelling solution to a sufficiently large market need that gives an investor the return that they want.Some business plans I’ve seen state that the market size is huge, say, $5 billion.  A useful way to test whether this is the real market size is to ask the question: if you achieved 100% of the market then would your turnover be $5 billion?

How to stand out from the crowd!

Presentation of any business plan is important. An investor may have ten business plans to read in any one day and so yours has to really stand out. As a reader of many business plans, I’m outlining some common mistakes to minimise the risk that your plan will be an also-ran.There’s nothing worse than opening up a business plan and the first page is a mono-paragraph. There’s nothing in me that wants to read the plan. It may be the best business idea on the planet but unless it is conveyed in a manner that makes me enthusiastic and want to read on it might be consigned to the ‘No’ pile shortly afterwards.

Once you run out of founders, family, friends and fools...

Do you know your angels from your VCs?Knowing the difference between the various types of investor out there can be challenging so that we’re going to have a brief overview of them here.After exhausting the 4F’s (Founders, Family, Friends and Fools), a company may have to seek outside investment in order to bring its idea to fruition. There are three types of external investor that we are going to consider: Business Angels, Syndicates and Venture Capitalists (VCs).

Show me the money!

One of the key areas that an investor looks for in a business plan is the company’s strategy to provide the investor with an exit for his investment. As Gerry Maguire would say – you’ve got to show them the money! After management, investor surveys show the exit opportunity as the second most important criteria used by investors when considering an investment.

Does it all add up?

It never ceases to amaze me when I read a business plan from a company that has been trading for a few years that they omit their financial history from the plan. Why? Is there something they are trying to hide? That’s what the investor may take from this omission. Most companies lose money in the first year(s) – that’s nothing to be ashamed of. In fact, it can be beneficial for an investor to see the level of cash burn so they can determine how long their investment will last before the company either needs another investment or needs to generate some income on their own.

A simple guide to finance for entrepreneurs

We often see business plans and hear pitches from promoters who maybe do not have as strong a grip on the financials as they do on other parts of the plan. There’s no need for the promoter to become an accountant, but they DO need to be able to understand the basic numbers. In a bid to help promoters understand the numbers we have compiled a basic glossary of terms to help demystify the jargon when dealing with investors. ….You may know your assets from your liabilities but do you know your EBITA from your EBIT?

A sense of direction

Most new start or early stage companies don’t have a complete board of directors – yet! There’s nothing wrong with this, why spend money on something perceived as unnecessary at the very outset? However, an investor will want to know that at some point there is a proposal to build the board as the company executes its business plan.

We’ve seen it all before…

One of the questions that crop up quite frequently at the Seedcorn workshops is “can you show us an example of a winning business plan?”Well, the simple answer is “no”. We aren’t trying to be difficult – aside from confidentiality issues, investors need to see that promoters can articulate their own proposition and write a compelling business plan.