The best way to get funding for your business idea is to ensure that you have a robust business plan. It’s OK to have a great idea, but to secure funding you will need to have a clear vision on where you’re going and how you’re going to get there.
A business plan used to secure funding is not just a roadmap of your business journey; it’s a tool for ‘selling’ the value proposition of your business to investors. As such, understanding what an investor is expecting to read is the most important element of writing a successful funding plan.
And your presentation is important; your plan must flow so that the reader is engaged, drawn into your plan and made to understand what your business does and how you will use the funding to grow it. Distinguish your plan from the rest.
What should a funding business plan include?
- Executive summary
- Company information and trading history
- Complete financials
- Information about your product or service
- Presentation
- An operations plan
- Financial model
- Top tips
Executive summary
The first part of the plan is the executive summary. This is your opportunity to highlight all of the key information to grab the investor’s attention early.
Defining your business is the crucial first step. You need to give the investor a realistic sense of scale and be confident about what you are trying to achieve. Detail the progress made so far as well as any future milestones you intend to meet – both long and short-term – especially in relation to the funding you are requesting.
With nine out of ten plans being discarded before the investor has even finished the executive summary, it is imperative that you provide all of the information needed to help you through this stage successfully.
Company information and trading history
After your executive summary you should focus your business plan on your company information and any trading history to date. This should include an outline of the corporate set-up, current ownership structure including any change of ownership through previous succession, an overview of the management team and a summary of major successes so far.
Financials
You must also include a completed set of financial documents to support your business plan, including at least a full three-year profit and loss and cashflow forecasts and a robust balance sheet. This level of detail gives potential investors an up-to-date indication of your business’ future success and an idea of its projected sustainability. This should be added as an appendix with summaries in the plan itself.
A positive cashflow and strong sales traction are always favourable. Combined with a well-defined set of objectives, or key performance indicators (which are measurable) you will give the investor confidence that you have a realistic understanding of your potential success.
Product information
Then comes your chance to write about the product or service being offered. This is important. Investors are more likely to offer funding on a proposition that has a low risk of failing, so you’ll need to prove that there is a demand in the market. At this stage, it’s also an opportunity to promote your USPs and an overview of the competition should be included. In addition, if you have any market research to support your projections you should include it.
Sales and marketing
Many businesses underestimate the true value of being able to present themselves for the future. You will need to show that you are prepared for the obstacles as well as the opportunities.
The sales and marketing section determines how you’ll plan on generating profit. It describes how you intend to create exposure to best sell your product. This where you should highlight the key elements of your marketing strategy.
You should invest some quality time in presenting your company objectives too as they underpin your financial projections. Information to highlight includes the sales model and average sales cycle, three-year sales targets, a full description of the assumptions you have made based on the sales targets, as well as any planned and budgeted marketed activity over a three-year period.
Operations plan
The operations plan then follows. You have already described your offering and the route to market, but how will the business operate day-to-day?
You will need to describe the current organisational hierarchy and respective responsibilities of your team. Investors will be interested in the management team too – who they are, what is their experience and history within the business, what is the share ownership structure and future management requirements.
Outline the facilities you already have and/or will need and any equipment to be purchased as well as details of manufacturing processes and other supply chain information. When listing your future requirements, whether that be additional equipment or personnel, ensure you include your rationale.
Finally, an outline succession plan is useful to include here as it will give the investor an idea of the direction in which the business is heading.
Financial model
Last, but not least, is the financial model. This needs to include a summary and description of the financial forecasts, what the funding is specifically required for and how it will help you reach your next financial milestone. Investors will also be interested in the proposed return on their investment and the plan to ensure they will receive this; this will be influential in their ultimate decision to invest.
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Top tips
When writing your funding business plan, remember the following:
- Use a SWOT analysis to highlight weaknesses in your business, including skills and experiences that it lacks and address them with ideas such as training, recruitment or outsourcing certain elements.
- Your finances should look realistic, even if they are just an estimation. Consider any worse case scenarios so you have an idea of what might go wrong and what would be needed to put things right. Financial forecasts should be easy to digest so an investor can quickly see if the business will make money, with different scenarios shown.
- Identify your business goals and work backwards from there to calculate what financing is required to achieve them and make your business profitable.
- Relevant details are essential, including what the investor will get in return.
Following these guidelines will give you the basis of a robust funding business plan. For more information and mentoring on creating a winning plan for securing funding for your new business idea call our experts today on 0203 327 0567