When working on a business plan there are many components to
keep in mind. From target market and
industry competition, to financial and sales projections, there are many
details to be aware of before pitching a business plan to a potential
investor. As someone currently working
on a business plan, I found it very helpful to research some experts on the
topic and their experience when it comes to what is important to investors and
what sometimes goes unnoticed by them.
Andrea Cockerton is a former concert pianist turned business
advisor. She has worked with over 300
entrepreneurs to strategize business plans and pitch their businesses to angel
investors and venture capitalists.
Andrea Cockerton is also the founder of Mudhut Consulting, a firm that
works with entrepreneurs of start-up companies as well as more established ones
that need to pitch their ideas in order to get funding, investments, and deals.
There is no doubt that Andrea knows the
best and most effective ways to make a business plan stand out in the most
positive ways. As stated in an interview
with The Next Women Business Magazine, Cockerton explains that the most
important aspects of a successful business plan can be summed up in three (3)
points:
- First, it is crucial to explain how your business is targeted at a growing market that needs your product or service
- Second, the investors must know that your team is capable, talented and able to execute the business plan (and get them to make money)
- Lastly, it is important to explain that the product, service, or idea that is being pitched to them is groundbreaking and unique.
Cockerton stresses the importance of an elevator pitch where
not only the idea or business is explained, but where potential investors can
see that they will make money. This is a
great suggestion for myself as I work on my business plan, since I’ve noticed sometimes
we get caught up in too many details that potential investors are not really
interested in or don’t really understand yet, when all they need to know is
that the idea is great, it has potential to be executed and it can make money.
Another expert on business plan with an interesting and
helpful point of view on the subject is Dr. Steven Gedeon, PhD, MBA. As an entrepreneur and venture capitalist
himself, Dr. Gedeon has seen both sides of the matter. The reason his advice is so meaningful is the
fact that he understands the worries and cares of the business owner while he also
knows what potential investors are looking for in a business plan they will
want to invest in.
In an interview
with Ryerson University’s Ted Rogers School of Management, Dr. Gedeon
states the importance of the thought process that goes into what makes a
successful business more than the business plan itself. Similar to Andrea Cockerton’s advice, he
explains the most important parts of a successful business plans are:
- Figuring out a clear idea of what the business is. Dr. Gedeon explains: “If you can’t describe it in two sentences or less, it’s not clear in your mind”
- Figure out who your company’s target demographic is and why they care about your product or service
- Figure out who your competitors are and how your business is different from theirs
- Keep defining and changing your business plan, as time goes on, make changes to better your business plan
When it comes to what venture capitalists and investors look
for in a business plan, Dr. Gedeon explains that these can be summarized in
three (3) key points. Investors are looking
for a clear concept of the business idea, they are looking for a capable
management team to run the business, and they are looking at the business’s
financial information.
Both experts share great points about what is important to
pay attention to when building and pitching a business plan. As I work on my business plan, I found very
helpful to learn that investors are interested in the core of the idea. While details are important in a business
plan, the purpose and core of the business idea must be clear and explicit to
investors if they plan to trust their money with it.
References used:
- http://bpexpertviews.blogspot.com
- http://www.thenextwomen.com/2008/12/27/expert-interview-13-questions-on-funding-pitching-part-1
- http://www.mudhut-communication.co.uk
- https://sierrainvestmentgroupinc.wordpress.com/2011/12/13/dr-steven-gedeon-on-business-plan-writing/
