subject: Good Business Plan Will Get Venture Capital Firms To Invest In Your Business [print this page] A new business or a business with limited operating history will find it tough to raise capital from the market or secure a loan from a bank. Venture capital firms that provide financial capital to start up ventures, usually come to the rescue of such businesses when they are in a nascent stage. The idea is to convince them through a business plan about the novelty of your business model and its chances of survival in the cutthroat competition that prevails in the marketplace.
A business plan demonstrates on your part, a thorough understanding of the business, its product or service, target market, the industry it will be operating in, overall budget, current and projected financing, marketing analysis and strategy and the unique characteristics of your product/services that will compel the consumers to try out your offering. We will look at certain aspects of a business plan and how will it help you secure funding from venture capitalists.
Comprehensive Understanding of your Business
A business plan should be able to convince venture capital firms that you have a thorough understanding of your business and the industry you will be operating in. Even a slight fumble can put off most of the investors. You have to know your business inside and out. This can be done by extensive research, careful observation and talking to the people already there. Your business will not remain isolated from the happenings in industry. Careful analysis will help you to be better prepared to deal with any eventuality.
Tailor your Business Plan According to your Audience
Your business plan should represent a proper fit between the organization's mission and the people you are likely to tap for the capital. A bank, for example is primarily concerned about a businesss ability to honor its debt obligation. Your business plan as such, should focus on convincing it about the organization's ability to repay the loan. Venture capitalists think about initial investment, feasibility of business and proceeds that the business will receive in case of asset sell-off or termination of liability. Please bear in mind that the confidence your business plan generates, will be the common thread that binds the interest of all investors.
Be Realistic
Your business plan should be realistic, accurate and compelling. Over-the-top profit projections are not going to cut much ice with canny investors. On the contrary, a plan, that takes a holistic view of risk and return scenario, is likely to find more favor with investors. Openly addressing the challenges that your business might face in the marketplace, helps you think ahead of time and take corrective measures beforehand. They also convey an impression of you being realistic and honest and demonstrate foresightedness on your part. A good business plan agency can greatly help in preparation of such proposals.
Remember, that a higher degree of risk is associated with new or less mature businesses. It is to be expected that venture capital firms will exercise greater control over the organization and its decision-making to compensate for the presumable higher risk. You will have to live with this fact and do your business keeping this in mind.
