Investors Don’t Fund Startups Without a Proper Plan

Not a Business PlanToo many entrepreneurs still believe the urban myth that you can create a pretty presentation of sorts, and investors will throw money at you.

Every investor I have met is frustrated with the poor quality of the business plans they get. This is sad, since “how to write a business plan” is a frequent topic found in every business topic ever written, and a common title in the business section of every book store.

What is the definition of a good business plan? In simple terms, it is a document which describes all the what, when, where, and how of your business for you, your cohorts, and potential investors. Forcing yourself to write down a plan is actually the only way to make sure you actually understand it yourself.

Would you try to build a new house without a plan?

Make sure your plan answers every relevant question that you could possibly imagine from your business partners, spouse, and potential investors. That means skip the jargon and include explanations and examples. A plan that generates more questions than it answers is not a good plan.

Finally, hone the result into a professional document. Remember that you only get one chance to make a great first impression. Make sure it has a cover page, table of contents, headings, page numbers, and is organized logically.

Notice that we do not say anywhere that a good business plan has to be 50 pages, or have 10 sections, or must start with an executive summary. These are good things, but we have seen great business plans that are 10 pages, or have totally non-standard formats.

But, if you ask, 10 sections is a nice round number, and would include the following:

  • Table of Contents
  • Executive summary
  • Company Overview
  • Management and Operations
  • Products and Services
  • Marketing Plan
  • Strategic Plan
  • Financial projections
  • Exit strategy
  • Appendix

Okay, so if you know that you simply are not a good writer, or do not have the time or patience to write?

No problem. That’s why they invented ghost writers, and came up with the concept that you can pay someone else to do it for you. A few thousand Rand is a small price to pay for a successful business, or for that R1M investment you expect the plan to entice.

The tougher case is where you really don’t understand the business you are about to enter, so you don’t know what to write. This is a certain recipe for failure that most investors and professionals can quickly spot, so no investment will be forthcoming, and your start-up will likely wither and die.

My advice here is to swallow your pride, and find a professional consultant or give it away to someone who has the “domain knowledge” and the business experience to get you going. Your idea may be right, but dead right is not very satisfying to anyone.

Keep in mind that thoroughness and clarity of the plan are factors that will play key roles in successfully financing, starting, and operating your business. A great business plan is one that your team can learn from, attracts investors, and will guarantee your business a future. With no plan, I hope you have unlimited personal funds or at least a rich uncle!

If you do not have any of these feel free to contact us today on 012 771 2786 for professional assistance.