Nowadays, structuring a business with a new and unique idea is a
big challenge. Those who are looking forward to own a small business, are
struggling on how to make their business stand out from the rest. Well, differentiation is one
essential element in a business but, there are other
important components investors are looking for in a business plan. For example, an investor doesn’t
necessarily focus first on the originality of the business, as long as if you
guarantee your business CAN and WILL make money. Remember, perhaps the business concept will not be original worldwide, but it is original in the context it is going to be built and for this reason it will succeed. How and why is your business going to
succeed is the main thing you need to explain to investors.
Andrea Cockerton is an expert advisor when it comes to pitching your business plan idea to an investor. She owns the company Mudhut which she founded in 2005. This company is in England and assists clients in
presenting their business plans in various ways. Speechwriting, investor
pitches, commercial pitches, and communication training are all
services her company offers (Experts Views on Business Plans, 2012). She has worked with clients such as Microsoft and was a board member of the MIT Enterprise Forum of the UK from 2007 – 2008 (Linkedin.com, 2012). According to Experts Views on Business Plans (2012), after seeing many presentations fall short of investor’s expectations
and fail to gain funding, she started her company to assist
entrepreneurs.
In Experts Views on Business Plans (2012), we also find what Andrea Cockerton says are the 3 most important points to mention in a pitch to potential investors:
- The target market that needs your product or service.
- The team’s credentials and ability to follow through with the business plan.
- How your product or service is innovative and groundbreaking.
"An effective executive summary and solid financials are the
foundation of a good business plan, and you should prepare your plan in
two ways: a brief elevator pitch and a detailed presentation" she says according to Experts Views on Business Plans (2012).
An investor's focus is going to be on the profit of your business. Show them you know where the numbers will come from and where are they going. Make them notice you care and know the importance of the business's income and expenses. Secondly, prove to them your business will have success and explain why. This can be with one of the 3 points Andrea mentions:
- Show there is a market, a specific location or niche that needs your product or service because at the moment, no other business is providing it for them.
- Show how your team and crew have the ability to do a better job, even though it is a similar product or service to another business.
- Show exactly how it is that you are going to do it differently and better.
Based on his experience as an entrepreneur and his experience with an internet marketing firm, he gives advice on how to interest potential investors in your business. "As an entrepreneur, it is essential to find ways to build and grow your business without increasing debt. This is more appealing to potential investors" he says according to Experts Views on Business Plans (2012).
David Gumpert narrows down the business plan pitch in 5 key components:
- Include the Executive Summary which communicates to the investor the business’s relative size and scope as well as the venture's business and profitability model
- The Company Analysis which details the company’s strategic direction as well as the products and services it offers
- The Industry Analysis which assesses the market segments as well as provides the investor with detailed industry trends
- The Analysis of Customers and The Competition which convey the company’s ability to meet the demands of its customers, and assesses the competitive landscape, respectively.
Gumpert’s expertise in business planning has lead him to say that investors are more
interested in the financials that cover some essential parts of your business,
than the business idea overall. In addition, he lets us know how investors like
to see the passion you have for your business plan. “Another key component that must be
conveyed in the business plan to the investor is 'passion'…It is
a catalyst to his success and will keep him focused and energized through the
challenges and disappointments” (Experts Views on Business Plans, 2012). In other words, the passion you demonstrate
you have for your business plan, give investors more confidence in lending you money. Make sure you prove to them that you are serious about getting this
business up and running successfully.
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