Recently, I wrote about the two tools available to small businesses to stir interest and investment – the business plan and the private placement memorandum. Let’s focus on the business plan. While this is blog is, mainly, New York businesses, the following article can apply to business throughout the world.
A business plan is a document created by businesses with a few goals in mind. It should introduce your business idea, describe the fundamentals of your business and provide financial data to show potential investors that your business idea will be profitable.
A business plan can also have multiple uses. It can be targeted to entice potential investors or simply be a road map for yourself to chart the course of your business. For now, let’s focus on how to use a business plan to raise money for your start-up.
If you want your business plan to be attractive for investors, it must be a more persuasive document than a simple analysis of business metrics. Time to sell your idea and yourself! The goal is to sell your vision to someone else so that they invest in you as much as your business with a good introduction of both. And by good, we mean polished writing in a clean and easy to understand format.
That also means including a clear statement of purpose for your business, detailed descriptions of how your business will work, including targeted customer base, a review of competitors and how you will distinguish yourself from the pack (whether it be through marketing strategy or some other method).
Finally, investors look for a detailed financial plan with estimates for initial costs and projections of revenue and expenses. Above all else, investors want to know how you will break-even, where the money is going to go and what it will cost to get to a return on investment in a reasonable amount of time.
A business plan can also be a collaborative effort between you, a writer who can better articulate your ideas and goals, a financial professional who can provide expert financial information and your attorney who can navigate you through the process and help avoid the pitfalls of business management. Consult the right experts to take your idea and turn it into a viable business. Often it is advisable to consult an attorney with significant business acumen.
*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.
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