Many startups or even existing businesses need outside funding to grow. In most cases, you need to prepare and present a business plan in order to raise such funding. Below we’ll share the keys to writing a business plan to raise funding.
In This Post:
Determine How You’ll Create Your Plan
The first step is to determine how you’ll develop your plan. There are many business plan writers for hire, or you could decide to write the plan yourself. In either case, you’ll have to set aside time to conduct market research, strategize the best opportunities for growth, and determine the amount of funding required for your business.
Conduct Market Research
Investors and lenders may know your market, but may not be experts in it. By conducting market research and detailing it in your plan, you not only educate funding sources, but position yourself as an expert. Plus, with the right market research, you can craft better business strategies to grow your company. With regards to research, you should conduct industry research, customer research and competitor research. Armed with all three, you can create optimal strategies. For example, if you knew competitors were lacking in an important area, you could focus on creating new products and services to exploit that.
Create Your Financial Projections
After conducting your market research and determining the best strategy to grow your business, create your financial projections. Here you will determine how much funding you need, for what purposes, and what the financial implications of executing on your plan will be (e.g., your sales, expenses, income, etc.).
Conduct research here too so your financial projections are realistic. For example, don’t assume growth rates that no other company has ever achieved. Rather, research growth rates with respect to sales, salaries and other expenses that other companies in your market have incurred.
Identify the Right Type of Funding
Before completing your business plan, you should have an idea regarding the type of funding that’s most appropriate for you. If you have an established business, and you can repay a loan and interest through existing operations, then a bank loan is typically your best bet. If you’re a pre-revenue startup, then angel funding is usually ideal. And if you have already received some traction (revenue and/or beta customers) and have large growth potential, then venture capital is typically the right form of funding to seek.
Tailor Your Plan to Your Funding Type
The funding source you seek must be reflected in your plan. For example, if seeking a bank loan, your business plan should convince the reader that the risk in your business is low and the chances your repaying the loan is high. Conversely, if seeking equity funding (either angel investment or venture capital), you should stress the huge upside potential, and exit opportunities (sale of company or IPO), so investors can imagine receiving a high return on investment from your company.
In playing the game of entrepreneurship, you typically need outside funding to grow and compete. And to get such funding, you need a business plan. Do your research to create the best strategies, and be sure to tailor your plan to the needs of the investors your seeking. In doing so, you’ll best position your company to raise the funding you need.