4 Key Elements That Make a Business Plan Fundable

4 Key Elements That Make a Business Plan Fundable

There are various reasons to create a business plan. You can create this plan for your strategic partner. Your partner might want to understand your business milestones, staffing, and strategy. They will choose to work with you if they believe in your strategy. You can also use this plan for convincing employees to join your company. Your business plan will also help you in assessing your strategic options. 

Your business plan will ultimately depend on your audience. Internal management, business partners, and future employees are going to have unique needs. They will assess your plan according to their needs. 

However, there is a very important business plan that you need to show to your lenders and investors. The difference between investors and other parties is that they are bombarded with hundreds of business plans every day. They can only fund a small portion of these plans. Thus, you are competing with other founders. In this article, we are going to give some tips that will help you in creating a fundable business plan.

1. Define your company 

You need to first clearly define your organization or company. For example, suppose that you are building an app for the tourism industry. You should start your plan with a short and concise definition. In this case, you should say that your company is developing an Android or iOS app and we are targeting the tourism industry.

If you are starting with a short and concise definition, then investors can quickly understand your business. Sometimes investors might skip your business plan because you are starting with a backstory.

2. Detail your success factors 

You need to explain your unique success factors to investors. They are only going to invest money into companies that can succeed in the future. The best way to identify these success factors is by analyzing your business.

Your management team experience might make your company qualified for success. There might be some unique think about your services that is very hard to replicate. You might have already developed some operational capabilities. All these things can boost your company growth.

3. Specify your risk-mitigating milestones 

It is very important to identify your risk-mitigating milestones. If you have accomplished these milestones, then it will reduce the chance of your company failing. 

For example, suppose you are working on a mobile app. If you only have an idea, then your risk of failure is very high. However, the chances of failure will decrease if you build a demo app. Your app will become better after gaining user feedback. The risk will be minimized further when you gain over 1 million active users. 

You should mention your risk-mitigating milestones in your business plan. Also, you should mention how much funding you will need to accomplish these milestones.

4. Present a good financial model 

Investors want to get good returns on their investment. Similarly, lenders want to ensure that you can repay your loans. 

Investors and lenders will use your financial model for determining if they are going to invest or not. You should ensure that your financial model is actually credible. 

You should research your competitors for creating a credible model. Check the growth rate of your competitors. Your company can grow faster when compared to your competitors. However, it will never grow twice as fast as other companies. You should also pay attention to other costs like labor costs. Also, it is important to consider training and hiring costs. You should think about these things before creating your model.

Conclusion

These are a few key elements that you should include in your business plan. Funding sources make money by funding startups like yours. All you need to do is get them excited about your company. 

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