Small Business Plans:
How to Write a Plan That Gets Funded
Tips For Attracting Investors
Investors come in many varieties. Some are looking beyond financial returns and have an interest in supporting a small business owner and simply receiving dividends greater than the return they'd see in a safer investment, such as a money market fund, government bond, or certificate of deposit. Some are professional investors (angel investors or venture capitalists) interested in leveraging their expertise in helping companies launch in order to see outsized returns.
Outsized returns for a small business will likely result only from a liquidity event. A liquidity event, such as a strategic sale of the company or the receipt of an additional round of funding, sets a market value for shares in the company and gives investors the opportunity to cash out. To prove the potential for a strategic sale or additional round of funding (such as venture capital or private equity funding), explain the target companies for such an event and show the track record they have of acquiring or investing in businesses similar to yours. A section within the financial plan devoted to this exit strategy may be necessary.
Tips for Attracting Lenders
Lenders, on the other hand, do not take ownership in the company and, therefore, will not be as interested in the value of the company. However, they will be interested in the market value of the company's assets at any given time, especially assets which can be liquidated to recover some of their loan in the case of your company's default. This is how a lender can try to minimize the downside risk they face.
Otherwise, lenders will look for financial statements that show steady cash flow starting early on, allowing loan payments to be made on time. The cash flow statement must be backed up by the income statement, revenue projections, and explanation of financial assumptions. In short, they will want to see a well thought out business idea and the ability of your management to execute it, but will be less concerned with the upside potential for returns than an investor would be.
Finish Your Plan Today with Our Business Plan TemplateWe have developed a business plan template that allows you to quickly and cost-effectively develop a professional business plan.
Download Growthink's "Ultimate Business Plan Template" here:
Call To Request a Business Plan Quote
Or, complete the form below and a Growthink professional will contact you shortly.
Important: Growthink will never share or sell your personal information and we will keep all business information completely confidential.