Though the Looking Glass with Business Plan Financial Statements

Business plans have several sections and way at the end is the financial plan with the income statement, cash flow statement and balance sheet. Don’t let that lull you into a sense of complacency though because the placement of the financial statements is not reflective of the importance. The statements can be thought of as a mirror reflecting the written descriptions that came earlier in the business plan. That means the investor should not find too many surprises in the way of numbers that don’t support or match the marketing strategies, operational plan or competitive analysis.

In other words, the business plan financial statements shouldn’t remind anyone of Alice in Wonderland. She steps through a mirror and finds an alternate world that doesn’t make any sense. The alternate world is upside down, confusing and leaves Alice in a constant state of puzzlement. A funder reading your business plan financial statements shouldn’t wonder how you got from your marketing plan to the cash flow projections or how you made the leap from expansion plans to the liabilities on the balance sheet.

The financial statements need to present an accurate picture of the proposal. If it’s a startup, the projections should be reasonable. If it’s an ongoing business ready for expansion, the financial statements must be historically accurate and prepared according to Generally Accepted Accounting Principles (GAAP) and projections should once again support the business plan proposal.

You won’t find GAAP in the looking glass alternate world. In the alternate world, business plan preparers make up numbers not supported by the facts, overstate revenues and profits, understate liabilities and make cash flow projections that are clearly pie-in-the-sky. Potential funders recognize financial statements that are overstated, optimistic and unreasonable.

As you prepare the financial statements, just remember this: Don’t be Alice!

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Business Plan Writing When the Economy is Less Than Desirable

Writing a business plan for a new business to secure funding in a weak economy may seem like an impossible task. That’s the wrong attitude to have though because it’s actually quite the opposite. In a weak economy funders are looking for innovative and creative ideas that give them an opportunity to make a profitable investment when other financial vehicles are experiencing low returns.

Investors have trouble making money when the Federal Reserve is keeping the federal funds rate at 0 to one-quarter percent. In fact, the U.S. Central Bank Open Market Committee just reiterated on April 25, 2012 that it’s holding interest rates to near zero levels through the end of next year. That means investors must turn to alternative investments to compensate for lack of opportunity in the traditional financial markets.

Writing a business plan in a less than desirable economy should be viewed as an opportunity rather than an impossible task. As an entrepreneur, you are presenting the opportunity to increase investor cash flow and earnings. The business plan can also prove that a weak economy offers unique competitive conditions that increase the odds of success.

For example, the high unemployment rate means specialized labor is available at affordable wage rates. Another business advantage is the fact many potential competitors have already gone out of business which creates market opportunities. Also, the marketplace is ready for innovation in an economy that demands high performance levels. Your business plan can present strategies that take advantage of these opportunities, and that’s just the kind of thinking that gets the attention of funders.

So don’t think of the weak economy with discouragement. Think of it as opportunity for innovation, and then present those opportunities in your business plan with confidence.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Crowdfunding Facilitated with New Legislation

Smaller investors can now be solicited via the internet to pool resources in a practice called crowdfunding. The recently passed Jumpstart Our Business Startup Act (JOBS Act) sent to President Obama for signing is designed to make it easier for small businesses to raise capital. The main foundation of the legislation rests in giving businesses the ability to raise a limited amount of seed money or growth capital by encouraging investors to visit an SEC registered website where projects are listed.

The SEC registered websites will be used by entrepreneurs to list their businesses and present their funding needs. To drive potential investors to the website, the business will notify family, friends, customers and other individual investors that the business is listed by using social media tools like Twitter, Facebook and other internet based communication systems. The potential investors can visit the website, read about the business idea and then operate as a community to analyze and pick apart the business idea, investment opportunity, business model and so on. Once the business idea is accepted, investment money is sent by individual investors, accumulated and eventually transferred once the funding target is met. There are a number of other requirements, rules and limitations associated with this legislation, and this is only a brief summary of the law.

Legislating crowdfunding is considered by many to be an important step towards making it easier for people to become investors in small businesses. With tight capital markets, this new form of business funding can become an important source of money for startups and small businesses having difficulty accessing traditional funding sources. Professionals who connect businesses with investors can provide more information about the new legislation, and other sources of funding, and provide critical assistance with developing a successful business plan that attracts funding.

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Is Your Elevator Pitch Ready for Investors?

Getting the attention of investors takes finesse and a quality business plan. It also takes an “elevator pitch” that can be pulled out at a moment’s notice. If you haven’t heard of the elevator pitch then there’s a good chance you are a young entrepreneur who has a great business idea but are not immersed in the business lingo. All you know is that you need start up funding.

The elevator pitch is a short speech that summarizes your business plan. When we say short, we mean very short. The elevator pitch is prepared for those moments when you have a chance to tell someone about your business idea and have the time equivalent to a short elevator ride. In other words, the elevator pitch should be no more than a minute long. It’s a summary of the summary of a business plan. You can use it during a conversation or online when potential investors ask you to quickly describe your idea.

It can be intimidating to think about compressing an entire business plan into 200 to 300 words. Yet having a well written elevator pitch ready proves two things. First, you are prepared in advance for an unexpected opportunity to sell your business idea and investors appreciate people who are prepared. Second, having a prepared concise statement about your business shows that your business idea is focused. The elevator pitch is the equivalent of a first impression, and you only get one chance to make it.

The best way to approach developing an elevator pitch for investors is to draw from the information in the Executive Summary in the business plan. The Executive Summary concisely highlights the important information in the business plan. Using it as the source document, you can pick the information that will articulate your message in a way that piques the interest of investors. It’s merely an overview designed to start a conversation between an investor and you. Obviously, you cannot include a lot of detailed information in a minute long description, so you need to pick and choose the most compelling information about your business.

The elevator pitch may be short, but it’s a powerful sales tool whether you speak it, email it, or post it on a website.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Showcase Diversity In Your Business

Some investors aren’t just interested in your business ideas. They also want to know that you embrace diversity. A business can have diverse employees or focus on supplier diversity, or encompass both in the business model. As globalization becomes standard practice for all businesses from the large corporation to the sole proprietor working at home, diversity of people and spend becomes more important.

Why do investors care? They care because the makeup of the population and the marketplace are changing. In the U.S. alone, the highest birth rates are among minorities and every state has increased in racial and ethnic diversity since the year 2000. However, the U.S. is just one segment of the total global marketplace, albeit the largest single entity. As businesses go online to find rapid business growth, they must attract a diverse customer base. It only makes sense that the business would add diversity to its internal operations in order to better compete.

When investors are considering funding a business, they want as much assurance as possible that the internal culture, systems and processes mesh well with the reality of the marketplace. An organization that is committed to diversity and has a definitive strategy for ensuring diversity becomes a reality is one that proves it fully understands the complexity of the global marketplace. In other words, diversity can be leveraged into enduring success, and that is what investors want to fund – a business that is on the path to lasting operational success.

Before approaching investors, it’s important to analyze the diversity of your organization. Awareness, alignment and sustainability of diversity in employees and suppliers are concepts that should be put into practice.

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Business Plan Show-and-Tell

Potential investors review business plans regularly. It can be tempting to think of the business plan as a tell-all document that describes current status and future plans. However, the business plan is more than a description of goals, strategies and financial projections. It’s a document should bring your business sharply into focus and add credibility to your ideas and claims of potential success. The plan must present your business to its best advantage which means adding your personal style.

In other words, the business plan is not just a “tell” document. It’s a show-and-tell document. The business plan will tell the reader about an invention, but must show how it will be turned into a profitable product or service. You can tell investors about the management team, but must show how specific capabilities and talents make the business leaders uniquely qualified. You can tell funders how much money you need, but you must show how those profits will be generated. In every section, you want to avoid simply telling investors about plans and show them with specifics how you intend on making the ideas come to life in the marketplace and why you are able to make it happen.

Another way to view the business plan is that it must clearly answer questions about uniqueness. How is the idea unique? How will the marketplace judge its uniqueness? What makes the specific product or service unique compared to those sold by competitors? The traditional sections of the business plan are always included – marketing plan, financial projections, competition and so on. But don’t forget to add the “show” to the “tell” because without it your plan will be missing the focus needed to attract investors.

Business plans are serious documents but that doesn’t mean they should be lifeless. Bring your business into sharp focus and that makes it possible for investors to imagine success.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Business Innovation Attracts Investors

Innovation is one of the many qualities investors look for when evaluating a potential investment opportunity. Angel investors, venture capitalists and even banks and other financial institutions are looking for new and creative ideas, problem solving approaches, business models and technology. An espresso machine for the car? Clean coal? Heat generated from fabric? “Green” bridge building material? New take on social media? All of these represent real and innovative products and services that attract investors.

Innovation represents a brand new way of managing something whether its products or services. Innovation adds an edge to competitive dynamics by spurring consumer demand and thus business growth. Investors look for the potential that a company can gain momentum as a startup entrepreneurship or as an existing business that is ready to use innovation for expansion.

Innovation in the marketplace is actually the foundation for commerce. Small businesses have generated approximately 64 percent of the net new jobs in the economy over the last 15 years. Small businesses also hire more than half of the employees working in the private sector. Entrepreneurship in all forms attracts a myriad of investors who are ready to fund the next innovation start ups or business expansions. That’s because innovation, by its very nature, finds untapped markets where consumer or business needs remain unmet. Innovation represents a goldmine of opportunity for the entrepreneur and the investor.

To attract the investors, you will need to put your ideas in a business plan. The plan will need to show how and why that untapped market exists and how and why the new idea can fill the gaps in these potential markets. For some entrepreneurs, the difficult part is not coming up with ideas. The difficult part is capturing the innovative spirit of the idea in a solid business plan. Fortunately, it’s easy to get professional assistance because some innovative ideas are simply too good to let them get away.

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Two Ways to Define Sustainability and Attract Investors

Sustainability is a topic of interest today, and it interests investors and businesses. There are two ways to consider sustainability. Sustainability may refer to the ability of a company to maintain organic growth as it expands operations. Sustainability also references corporate responsibility in support of the community and environment. Either way, many business opportunities are created and investors must decide which ones present the most opportunities.

In today’s economy, the two types of sustainability actually merge. There are companies that have found organic growth by offering environmentally sound products and services. As green technology advances, those businesses on the cutting edge of new product and service development need financing for research and development, manufacturing and innovative marketplace implementations. These are exactly the kind of companies that many investors are looking for because these entrepreneurs represent the future which means long term success.

Sustainability used to be a fad concept, but now it’s an imperative – either way you want to define sustainability. Businesses that can grow in the current economic climate are the operations that learn to be lean and productive and more likely to succeed and expand through the years. Businesses that contribute to the environment by offering green products and services are poised for explosive growth as global and domestic environmental issues come to the forefront. Investors are ready to accept the risks of opportunity as long as the business has a strong business plan. Whether you need startup funding or expansion funding, if you can show you’re a sustainability leader then there are investors ready to help you march forward.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Funding for Innovative MWBEs Ready to Grow

It’s true that it remains a tight capital market so finding investors in the private traditional financial institutions and locating public grant and loan funding is still challenging. Even as banks ease up on credit availability they are tightening requirements for credit approval. On the public sector side of doing business, Congress is reining in spending and that means less government money available to flow into grants and low interest small business loans. Minority and Women Owned Business Enterprises (MWBEs) must find alternative sources of capital to fund their growing businesses.

It’s a fact that MWBEs have become a powerful engine for economic growth and jobs creation. According to the 2007 U.S. Census Bureau Survey of Business Owners, MWBEs now make up the fastest growing new business segment in the U.S. To continue growing requires funding to build capacity so that small to mid-sized businesses can bid on larger procurement contracts and projects.

There is no reason to miss out on opportunities for growth because of funding when there are many alternative funding sources. These sources include angel investors, venture capital and equity partner investors. MWBEs that have a proven track record of business success and are poised to take the business to the next level of growth should not wait for the economy to pick up steam. The growing determination by large corporations to increase supplier diversity spending means that MWBEs have unprecedented opportunities to bring their innovative and creative businesses to the marketplace in expanding roles.

There are investors and there are opportunities, and that is the perfect partnership.

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Getting Down to the Details of Presenting a Business Plan

There’s plenty of information about writing business plans for investors, but what about the actual presentation? Like any job, there are details that must get attention or the big picture falls apart. During a business plan presentation, the audience is going to be considering the details of the presentation as well as the details of the plan itself.

Presentation details include things like the format, the length, the graphs and charts selected, the flow of the information presented, and the efficiency of the presentation itself. Giving investors a good impression of your organizational and presentational skills enhances the information in the business plan. Rambling or disorganized presentations can detract from the information being conveyed.

So what are these small details? The University of Texas at Dallas (UTD) business school recommends that the business plan presentation should only be approximately 30 minutes long. That may surprise some people, but we live in a society where people expect information to be conveyed quickly. Another recommendation is to keep the information on each page, slide or Powerpoint chart easy to read which means not putting too much information on it. A single page of presentation should have a maximum of 6 bullet points.

The flow of the presentation is important also. It should begin with a very brief overview of the company with a focus on why the services or products are problem solving and thus compelling. The overview is followed by a definition of the market need, the solution your products or services offer, the specific benefits conveyed to the market through your products or services and a description of the market and customers. You will also need to describe your competitive advantage. In a few presentation pages, the marketing plan and financial projections are presented.

A mistake many entrepreneurs make is developing a presentation that is too long and tedious. Investors are savvy and will ask the questions they need to know right then. However, investors and their accounting and legal advisors will study the written plan closely at a later date before making a decision. During the presentation, your goal is to get the interest of the investors to the point where they want to know more. It’s not to stuff as much information as possible into an hour.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.