Every entrepreneur who needs significant capital to take their venture to the next level must face the challenge of putting together a compelling business plan. Your business plan has to convey why the investor should choose to take a risk on your ideas and team and show that you have enough traction to go from bootstrapped to startup or startup to well-funded venture.
Whether you're a serial entrepreneur or this is your first time seeking funding, your pitch deck needs to be on point. Here are some tips to keep in mind so that you're more likely to get picked for a second look and possibly become one of the 0.05% of startups that receives venture capital.
Keep it short and to the point.
It is of the utmost importance to be concise with your information. Investors are busy people and want to get right to the punch: how can you communicate the viability of your business model, current and forecasted revenue and growth, and why your team deserves this funding in as few words as possible?
Just like how publishers receive thousands of manuscripts every day, the same is true of investors and business plans. Countless business plans find their way onto investors' desks and they're not going to read a long narrative about your mission statement and how you got the idea for your product. The business plan should be no more than 15-20 pages, and preferably closer to 15 pages as there will be additional appendices for financial information.
Clean formatting is imperative.
While there's no one "right" way to format a business plan, your document should be easy to read and have consistent formatting. Page margins and fonts should be consistent across the document and headlines should be bold and noticeable. If you are using multiple text sizes, it should make sense such as using one size for plain text and another for headings and highlighted points.
Use one-inch margins so the business plan is readable and doesn't appear cluttered. Include a table of contents so that key pieces of information, such as financial statements or information about your market base, can be easily found.
Don't be afraid to use visuals.
In keeping your most critical pieces of information brief and easily digestible, visualizing data can work to your advantage. Show pictures of your product in action alongside data on your sales, growth, and other relevant data that is likely to get the investor's attention.
When inserting photos, charts, and other visual aids, try to align it with your brand as best as possible, such as using design principles and color schemes from your logo and branding art. This not only makes for compelling visuals, but also demonstrates that you have invested in your branding.
Show that you did your research.
You're not just pitching your product, story, and financial data to the investor. You're pitching them an opportunity.
To correctly assess the scope of that opportunity, your business plan must show that you've thoroughly researched your market and competition. What are you offering and how are you different from the competition? Is this opportunity worth capitalizing on?
You also must demonstrate you have a deep comprehension of your own product and company along with the industry that you are entering.
Explain how you plan to sell your product.
Investors want to know not only how you will be making money, but also how they will be. Revenue figures and projections alone don't explain this, so you need to include a strategic marketing section as well as an explanation of your sales channels.
For instance, is your customer base strictly B2C, B2B, governmental, or a blend? Is your product purchased directly through your company's website, freestanding stores, or through authorized resellers? Your business plan must clearly communicate how you plan to make money. This will make it much more likely to make the next round as opposed to simply reporting financial figures alone.
Tailor the business plan when needed.
Think about how when you were applying to jobs in the past: your resume conveyed about 80% of the same information every time but the other 20% was tailored to the specific job rather than a complete retelling of your whole work history and life.
It's a similar concept with the business plan. Most of the key information in your executive summary, company profile, and financials will be the same. However, certain investors may be more well-versed in your industry than others so you can feel freer to "talk shop" with them. If the investor you are contacting is likely to give you funding for a different reason (e.g. your location or focusing on women and minority-led businesses), you may need to emphasize those aspects more — for instance, location-specific competitive advantages or the problems your company can help solve for the non-dominant group in question.
Just like with pitches and job applications, you may make it to the next step or you may not. If you are consistently not reaching that next step, it could be your cue to revise your business plan and seek feedback from other entrepreneurs on what you need to change and how to be more successful.
Frank Jenkins, CPA writes for CountingWorks, an accounting news and advice website. Reach him at [email protected].
About Frank Jenkins Jr
Frank Jenkins Jr. CPA is the managing partner of Adams, Jenkins & Cheatham, a CPA practice based in Midlothian, VA. Frank specializes in Consulting services, tax planning, audit & assurances. "I genuinely care about our clients because I have a personal connection with them." He is active in the community and belongs to the AICPA and the VSCPA.
