How Business Plan Writers Help You Raise Capital


 

Yesterday I was looking at an online forum that deals with all aspects of entrepreneurship. I quickly found the capital-raising section and started reading a post from someone who was considering outsourcing the development of their business plan to an outside firm.

Shortly thereafter, I saw a comment from an entrepreneur named Joe, who said, "How could you even consider outsourcing your business plan? Only you know your business well enough to write it."

Well, I'm probably pretty biased on this topic, since Growthink has been developing business plans for clients for a decade. I want to put that bias aside for a minute, though, because I'd like to explain the value of letting nearly anyone outside your company help with the development of your business plan.

Here's my stance: Only outside viewpoints can ensure that your business plan includes both a solid Business Strategy and Communications Strategy.  Right now, I want to talk about Communications Strategy - I'll touch on Business Strategy in an upcoming blog post.

Before we go any further, however, I want to dispel the biggest myth about business plans.

Most people think that the goal of a business plan is to provide an in-depth analysis of your business. If you have any aspirations of presenting your plan to outside investors, then this thinking is incomplete.  But most entrepreneurs are looking for a business plan to raise capital  to market your company to investors.

Yes, your business plan is a marketing document.

Would you buy toothpaste whose packaging states, in huge letters, "Sodium Fluoride," "Tetra Potassium Pyrophosphate," and "Titanium Dioxide?"

NO.

We all purchase toothpaste whose packaging promotes the BENEFITS such as "freshens breath," "whitens teeth" and "prevents cavities."

The same is true with business plans.  You should never -- particularly at the beginning -- pile on information about the details of your business. Rather, you need to focus on the benefits that investors will care about: the size of the addressable market, the milestones you've achieved to-date, what you have that your competitors don't -- and, importantly, how you expect them to get a return on their dollars.

A great communications strategy, in business planning, or in anything else, starts with figuring out what your audience wants to, needs to, and/or is willing to hear. Then, of course, you have to give it to them.  You must put yourself in your audience's shoes and figure out the most compelling way to convey the benefits of your business to them.

Back to Joe's quote, "Only you know your business well enough..." Following his logic, there would be no advertising agencies or public relations firms.

Actually, imagine if all of your competitors decided to do all of their advertising and PR in-house, and you were the only one to seek outside, professional assistance.  Your marketing would likely dominate your competitors'.

In the same way, when your business plan brilliantly communicates the benefits of your business to investors, you give yourself an immeasurable competitive advantage over the thousands and thousands of other businesses out there competing for capital.

It's no wonder that only a very small percentage of companies seeking venture capital successfully raise it.  Yes, the majority of contenders may "know their business well enough," but sadly, not well enough to convince others to invest.

 

Related post: How a Business Plan Consultant Can Improve Your Business Strategy

Categories:
 

Gain Valuable Market Insight in 10 Minutes Flat


 

Are you looking to enter new markets or better serve your existing markets? If so, here's a technique that will allow you to gain insightful market research and learn best practices REALLY QUICKLY.

And for no cost, thanks to Google.

The other day, my son told me he wanted to take up lacrosse, so let's use lacrosse as our example. So, let's say I want to get into the lacrosse business, selling equipment through stores and/or online.

To start my market research I went to Google's new keyword search volume tool here: https://adwords.google.com/select/KeywordToolExternal

I typed in "lacrosse" and Google then shows me all the related keywords and how many times people searched on them last month. It immediately showed me the following:

Keywords_________ Approx Monthly Search Volume
lacrosse.......................... 2,740,000
lacrosse equipment........ 110,000
women's lacrosse........... 74,000
girls lacrosse.................. 60,500
high school lacrosse...... 49,500
lacrosse sticks................ 49,500
lacrosse wisconsin......... 49,500
lacrosse camp................ 40,500

From this, I see that lacrosse is a pretty popular sport; in fact, when I download Google's list of the top 150 lacrosse-related searches, I see that the sport gets 4.9 million searches per month.

To put this in perspective, and to see if the market is growing or expanding, I go to Google Trends at http://www.google.com/trends and type in "lacrosse."

Not only does Google Trends show the number of searches that people have done on lacrosse monthly beginning in 2003, but when I type in additional sports like football and basketball, I can see the relative size of lacrosse. Also, from the Google Trends graph, I quickly saw that lacrosse is a seasonal sport with peaks and valleys in search volume.

My next area of research is to determine the level of competition for selling lacrosse equipment. For this, I simply type in terms like "lacrosse," "lacrosse equipment," and "high school lacrosse." I find that general terms like "lacrosse" and "high school lacrosse" have very little competition (based on the few Sponsored Links I see on the top and to the left of the search results), thus providing a significant opportunity if I can figure out products and/or services to fulfill the needs of those who search these terms.

For the term "lacrosse equipment," which is a term that shows more buying intent (i.e., someone who searches this term has more intent to purchase a product than someone who simply searches "lacrosse"), I see several more competitors. Finally, when I search the term "lacrosse sticks," I see even more ads, since someone who types in this phrase has even more buying intent.

The next tool I use is Google's Traffic Estimator, located at https://adwords.google.com/select/TrafficEstimatorSandbox, which shows both the estimated clicks per day I would receive if I advertised on the term, but more importantly, the average estimated price that I would pay each time someone clicked on my ad.

Why is this important? Well, it gives me an estimate of how much my competitors are spending each time someone clicks on their ads.

For "lacrosse sticks," Google estimates that the top 3 advertisers pay between $0.99 and $1.26 per click.

The final stage of my research is to return to Google.com, do a search on "lacrosse sticks," and conduct competitive research. I click on the ads of the companies advertising on the keyword, and figure out how they are generating more than $1.26 per click.

I assess things like:

1. How their web pages are organized

2. Whether they are trying to generate profits from merely a one-time sale or whether they have long-term revenue generation systems (e.g., a paid membership club)

3. Whether they have a newsletter or other mechanisms to collect the email addresses of their prospects so they can market to them on an ongoing basis, etc.

This process provides me with significant competitive intelligence on current practices in the industry.

So, maybe this takes a little more than 10 minutes to thoroughly assess a new or existing market, but this technique and the tools listed above will quickly give you great information and insight really quickly.

 

Categories:
 

Martin Conroy's Billion Dollar Story


 
storyOn a beautiful late spring afternoon, twenty-five years ago, two young men graduated from the same college. They were very much alike, these two young men. Both had been better than average students, both were personable and both - as young college graduates are - were filled with ambitious dreams for the future.

Recently, these men returned to their college for their 25th reunion.

They were still very much alike. Both were happily married. Both had three children. And both, it turned out, had gone to work for the same Midwestern manufacturing company after graduation, and were still there.

But there was a difference. One of the men was manager of a small department of that company. The other was its president.

What Made The Difference?

Have you ever wondered, as I have, what makes this kind of difference in people’s lives? It isn’t a native intelligence or talent or dedication. It isn’t that one person wants success and the other doesn’t.

The difference lies in what each person knows and how he or she makes use of that knowledge.

And that is why I am writing to you and to people like you about The Wall Street Journal. For that is the whole purpose of The Journal: to give its readers knowledge - knowledge that they can use in business.

-----

The above story/sales letter, written by Martin Conroy, was used by the Wall Street Journal for 25 years starting in 1974. Doing the math regarding how many people this letter was sent to, the percentage of orders that came from it, and the subscription prices, it is estimated that this story resulted in $1 billion in sales for the paper.

So, what’s the point?

The point is that stories are an extremely effective, but often overlooked, sales tool that can allow emerging ventures to compete with large established companies. Stories allow companies to get their prospects involved in their message. It gets them excited. And then they want to learn more.

Here's an example of another startup who crafted a great story...

-----

I’m about to tell you a true story. If you believe me, you will be well rewarded. If you don’t believe me, I will make it worth your while to change your mind. Let me explain.

Lynn is a friend of mine who knows good products. One day he called excited about a pair of sunglasses he owns. “It’s so incredible!” he said. “When you first look through a pair you won’t believe it.” What will I see? I asked. What could be so incredible?

Lynn continued. “When you put on these glasses your vision improves, objects appear sharper, more defined. Everything takes on an enhanced 3D effect and it’s not my imagination. I just want you to see for yourself.”

-----

The story goes on to discuss all the benefits of Joe Sugarman’s BluBocker sunglasses… over 20 million pairs of which have now been sold!

Does your company have a great story?
Categories:
 

Landing Page Optimization, Business Planning and Google's Success


 

Over the past few weeks, I've spent a lot of time studying a field called Landing Page Optimization. It's a fascinating field that deals with improving landing pages, which are the pages of your website that visitors come to either organically or through paid marketing initiatives. The goal of Landing Page Optimization is to maximize conversions (e.g., sales, newsletter signups, etc.) of these visitors.

One of the guiding principles of landing page optimization is that landing pages need to be simple. If there is too much information on the page, the reader gets confused and either clicks the back button or closes the browser.

This principle is the same as a guiding principle of business plan development; mainly that the plan, and particularly the executive summary, needs to present the business concept concisely so that the audience quickly understands it. If not, they will simply discard the business plan.

Interestingly a concise message might not only improve your business plan and your landing page, but your entire business’ success. Consider the case of Google. The Google homepage has always had very little text on it. In fact, if you go to it, it doesn’t even say that it is a search engine. But, by having a big empty box in the middle and having a button underneath it that says “Google Search”, it is pretty intuitive that Google is a search engine.

Now, when someone was referred for the first time to Google over the past few years and came to Google.com, what do you think they did? Well, due to its simplicity, I think we can assume that nearly all people who came to Google.com typed in a search term and hit the search button. Then, they instantly saw high quality search results and were sold on the fact that Google is a great search engine.

So, by keeping their landing page and business concept/proposition extremely simple, Google was able to get people to try its product. Because the product is high quality, those trials resulted in loyal users.

While there are many examples out there, one interesting company that I think could really improve its business plan, landing page, and thus chance of success is SpinVox. I first read about SpinVox in this Guy Kawasaki post in which he says, “This service translates voicemail to text and then sends a text message to your phone and/or an email to your computer.”

While Guy Kawasaki does a great job clearly explaining SpinVox in this 22 word sentence, I don’t think SpinVox does. On its homepage, SpinVox has the following text:

"SpinVox captures spoken messages and cleverly converts them into text. It then delivers your message to a destination of your choice – inbox, blog, wall or space. Right in the moment. Giving you the power to Speak Freely... Simply put, we do one thing – turn voice into text. But it's one thing that can be applied to the many ways you communicate, from your Voicemail to your Blog. Use the finder below to find the right one for you."

If I were to come to this page without Guy Kawasaki’s clear explanation, I would most likely leave without trying the service. It neither clearly explains the most common use nor the value proposition of the service.

To sum up, KEEP IT SIMPLE. Use simplicity to hook the investor, the customer, the partner, or whoever else you are trying to influence. Once hooked, over time (which could be as little as 2 minutes later), you can tell the full story.

Categories:
 
Syndicate content

Get a Free Consultation
with a Growthink Expert

Click Here