An idea without a strong business plan has little chance of getting an investment. As a result, getting the business plan right is an essential task for any entrepreneur looking for funding. The last business plan I wrote was 11 years ago, when I started my first business, and since then, my new ventures have evolved from existing businesses I’ve been involved with.
I thought it would be good to revisit how to create this critical business element and thought of David Bateman, author of Business Plans that Get Investment and a previous partner of a startup asset management business backed by Deutsche Bank. I’ve had the pleasure of working with David, so I asked him for his advice on perfecting the all-important business plan. Here’s a segment of our conversation:
TC: Why is the business plan so important?
DB: Ask any entrepreneur why they need to write a business plan, and they will tell you that it is to attract investments to their business so that it can grow. But writing a professional business plan can often be the source of frustration and concern —justifiably so. Get it right, and you will raise funding and grow your business, but get it wrong and you can easily kill any chance of success.
The problem stems from the fact that there is no recognized blueprint as to how to write a plan properly. Consequently, would-be entrepreneurs do not have a reference as to what potential investors need to see in a plan, in order to make an informed investment decision.
Writing a good business plan is not some “dark art” that requires years of experience or an expensive business education. All you need to do is to put yourself in the investor’s shoes and address the questions that they will inevitably ask.
TC: So, what are these inevitable questions? Go and watch a few episodes of Dragon’s Den, and you will soon notice that the “dragons” ask the same questions time and time again:
- ‘What’s your background?’
- ‘How does this product work?’
- ‘How much does it cost to produce?’
- ‘How many have you sold?’
- ‘How much money have you put into it?’
- ‘Do you own the intellectual property?’
- ‘How much investment do you need?’
- ‘How will you spend my investment?’
Tom Chalmers is the Founder and Managing Director of seven publishing and publishing-related companies (including the Legend Times Group).
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