To date, we have covered all of the key sections in a business plan. Now,
your task is to make your plan as succinct as possible, and to properly package
it so it will attract the attention of investors. Today’s column will provide
you with tips for doing so, and will also show you how to choose the most
appropriate investor. Keep in mind that investors look at the way you drafted
your plan and its packaging as a reflection of your company’s self-image.
Brevity Is the Key
Investors are incredibly busy and therefore, your plan must be as concise as
possible. This means you have to edit, rewrite and then edit your plan again,
again and again, until you have a precise plan that flows smoothly and is very
easy to read. Keep in mind that automatic spill checkers do not all ways correct
every type of spelling error, especially typos, and while proof reading can bee
pane staking, it will help you locate errors your spell checker missedת, like
the for (now 5) intentional ones in this sentence.
Making Your Document Easy To Navigate
You must include a title page. This has several purposes. First of all, it is
the display case of your plan. In addition to the name of the company, its logo
and slogan, it must include the name of the main contact person, and his/her
telephone, fax and email. The title page should also include proper
confidentiality notices – you should consult a lawyer for the exact language. In
order to track the distribution of your plan, it is recommended to number the
plan and keep a record of who the copies were sent to.
User Friendly Table of Contents
The Table Of Contents should be user friendly and enable the reader to
quickly locate main topics in the business plan. This should not be overlooked.
Many investors have hot buttons and they will want to be able to quickly refer
to the particular part that they focus on, before they read your entire plan.
The Table of Contents acts as an outline of the entire business plan, making it
easy for the reader to grasp the big picture.
Some Do’s and Don’ts
Investors judge a book by its cover. From a packaging point of view, they
expect a non-restrictive binding, point headings, a plan of no more than 30-40
pages (less is more here), large, easy to read type, and charts and graphs.
Investors are "turned off" by fill-in-the-blank business plans, plans that are
incomplete, large copy numbers, typographical errors, spelling mistakes, raw
computer spreadsheets and cumbersome Appendices.
Choosing The Best Possible Investor
It is very important for your business plan to get into the hands of the most
appropriate investors. Most entrepreneurs fail to conduct research about
potential investors before they begin their quest to raise capital. This failure
has serious ramifications. Once you are turned down, it is difficult to get an
investor to reconsider. Moreover, all investors have their own specialties and
if your plan is rejected because it does not meet that particular investor’s
known criteria, then valuable time has been wasted simply because someone forgot
to do their homework.
Do Your Homework
Investors are not a homogenous group. Apart from venture capitalists and
investment bankers, other potential investors may include high net-worth
individuals (known as angels), holding companies, your rich Uncle Fred and even
current or potential customers.
If you want the best possible investors to invest in your company, learn as
much as you can about them before making initial contact. Most have easily
obtainable investment criteria, industry preferences and areas of
specialization.
The Internet can provide you with valuable information about various
investors. The Arena has an extensive list of Israeli venture capitalists. A
comprehensive list of US venture capitalists can be found at www.vfinance.com/ventcap.htm.
In addition, most leading investors distribute a wealth of information about
themselves, including seminars they sponsor or participate in. Attending these
seminars is a great opportunity to learn about and meet (informally) with
potential investors.
In sum, thoroughly researching potential investors will prevent costly
delays, keep you focused, avoid a shopped around reputation, and most
importantly, will help you find the best possible match in money terms and in
added-value.
Next week we will provide you with tips on how to approach investors.
Published by Israel’s Business Arena on August 24,
1999