Many entrepreneurs believe that investors will fund their “great” idea because it is a “great” idea. Actually, investors will like an idea and maybe even think it has great potential, but it is the explanation in the business plan that describes how you plan to implement that idea, which convinces the investor to make a check to write. That is the difference between raising successful capital or not.
It is your job to explain both the pros and cons of investing in your project. In fact, you have a legal requirement under federal securities law, so screw it up here and you’re screwed. The best way to start your plan is with a plan overview, also known as a business plan template.
The template or sketch should contain many of the categories of information to be included in your plan. Start by manually filling in the categories. Answer the questions you can easily answer. Don’t gamble. Do not lie. Later, in another article, we will talk about investor documents, the plan should eventually be included in your Private Placement Memorandum, also known as PPM. The, PPM, is a legal document and you will be held liable for everything it contains. Don’t worry about the spelling or phrase right now. You can tackle the latter. Make a short list of your answers in the business plan.
It is important to organize all possible information for the subject. Seek help in the categories you cannot provide. A well-known example is the composition of a financial statement. Do your best and then seek help or advice. Don’t go too sophisticated or the reader won’t understand.
Do not use acronyms or short hand explanations unless you explain what each means. An example is in this article when I used the term PPM. The most difficult of all capital raising tasks is preparing the plan. Take your time and if you really think you’ve written all the information successfully, start writing your plan. You will also find it helpful to obtain an example of a professionally written plan.
We offer both a 15 page, free plan overview and a 35 page, free business plan example, on our website. This will help you visualize the level of quality your business plan needs to achieve in order to successfully entice investors to invest in your idea. Keep in mind that the quality of the business plan you write gives the potential investor the first insight into your competence. If you present the investor with a quality plan, have you passed the first critical test in the process of asking for their money?