Not Getting the Investors' Attention? It's All in the Planning

There are an endless number of business plans out there trying to find a funding home, yet very few receive the funding they request. This isn't because the business idea behind the plan is poor, but because the plan itself is poorly written.

One of the reasons this occurs (and yes, there are quite a few reasons) is that those who write the plan don't understand how it's read by the investors. Investment banks, the so-called "angel investors", and other sources of funding receive a pile of plans for consideration every single day. Usually a new reader, often a young graduate, is given the task of screening the plans, cutting the most obvious failures before your plan will even be seen by the "real" executives in charge.

So what are you supposed to do in order to tip the odds in your favor? There are a few areas on which you should concentrate your greatest efforts. How you write these areas dictate the amount of interest that the reader will have when the official analysis process begins.

The summary/overview comes first. This needs to be a 2-page, clear picture of the endeavor, and touch on every facet of the business. Your summary needs to paint an enticing picture that makes the reader interested in knowing more. Unfortunately, most business plans will not be read beyond the first page-oftentimes even the first paragraph.

Then concentrate on the financial aspect. These are based on a solid set of hypotheses that are the major factor you'll use to present a realistic cash flow and income statement. Investors want to know their ROI upfront before they can consider giving you any money. The assumptions you make in the financial section must be from solid research, with facts to back them up.

Choose your management team wisely. An experienced management team should already be in place when you pitch your plan. The pitfall in this section for too many prospective business owners is a noticeable lack of management experience. In other words, don't think you'll be able to run a company someone else has paid for if you have no experience to prove you understand what you're doing.

The last few pages of your business plan ties the emotional aspect to the intellectual, convincing the reader you aren't only capable of succeeding in this business but you actually want to do it. Venture capital is a risky game, and investors know that a successful investment will have big returns in a small period of time. But some would-be entrepreneurs are unrealistic about how much their business would profit, which frightens away their potential investors. It's imperative to let them know what your exit strategy will be before they place their money in your care, and to make it realistic without inflating the projected profit.