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Turning a Good Idea into a Prototype Can Attract Investors

When you are looking for investors to fund the manufacturing of a new product, it’s a good idea to have a prototype ready. A prototype by definition is a preliminary model or early sample of a product. It can be used to test a particular concept to make sure it can be turned into reality or can serve as the first sample of something that will be copied once funding is obtained.

Investors like prototypes because it brings a concept to life and proves that the concept is doable. It serves as proof that the business idea can be turned into a practical product that can be sold to customers. A prototype also proves that the entrepreneur or business has fully developed a concept and that the investors are not being asked to fund a pie-in-the-sky

A prototype should be market tested to prove that the product fulfills a customer need. That is like gold to a business and a business plan. Presenting a product that has been tried and accepted by potential customers greatly reduces the level of risk associated with a startup operation. However, small startups should not make the mistake of only testing the product on family and friends and need to introduce the prototype to the real target market. The business plan can include a report on the market testing to accompany the prototype itself. By validating a prototype, the business has tangible proof that the product can be manufactured, the materials are available, and the product design is workable.

Given the competition for investors, developing a prototype can give a business a competitive edge. Prototypes don’t just apply to manufactured products either. Startup software companies and websites develop prototypes to attract investors too. The key is to develop the product to the stage where the investors can easily see its potential success in the marketplace.

More detailed information and useful advice can be found at www.funded.com 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.

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What Investors Want to Find in a Business Plan

Entrepreneurs listen to professionals working with investors tell them over and over again that they need to develop a business plan. Instead of getting help, some managers finally develop one on their own, but it doesn’t take long to figure out that it lacks real effort. Investors are savvy and have read hundreds of business plans so recognize when a plan has been assembled in a haphazard manner.

In other words, you can’t fool the experts. A business plan lacking quality reflects a lack of concern about the business brand and on the business owners and management. A poorly designed business plan also sends a message that the business owners have not taken long range planning seriously and so casts doubt on the ability of the enterprise to succeed over the long term. It will be almost impossible to attract investors with this kind of business plan. Investors need confidence that their funding will be used in a successful business model that will earn the return expected.

What constitutes a poor quality business plan? First, they typically leave out important sections like the market analysis. Secondly, a plan that is poorly organized and difficult to read makes it nearly impossible to find information, and that discourages investors. Third, a business plan filled with typos and grammatical errors indicates that no one read the plan more than once or that it was written quickly with little thought. Fourth, a plan with inadequate research and lacking data and facts that can be verified will also turn investors away.

If you want to ensure investors pay attention to your business plan, then you need to pay attention to it too. To get the attention of investors, entrepreneurs need to develop a solid plan that reflects thoughtfulness, research and long range planning.  A high quality business plan is a blueprint for success, and that’s exactly what investors are looking for – success potential. If you are not comfortable writing a business plan then the first step to take is getting experienced help with the preparation. There is just too much riding on the business plan to do otherwise.

Browse www.funded.com for more advice about getting your business funded.

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The Right Investors for the Right Business

Finding the right investors for small businesses is often top of the list for entrepreneurs. It’s tempting to cast a wide net and see who shows any interest. That may work sometimes, but it often leads to a lot of wasted time and possibly loss of some control over your business – a loss that was not intended.  It’s much wiser to go after the right type of funding and maintain control over the process. There are so many different kinds of investors that you can target, and you want to attract the ones that fit your strategic goals to save time, effort and money.

Investors all have one thing in common – they want to get a decent return on their investment. However, they have different requirements concerning collateral, equity ownership, business control and investment payback time. Each of these issues must be carefully evaluated from the business and the potential investor’s perspectives. For example, venture capitalists may want to share control of the business depending on the circumstances. If you don’t want to give up control, it would be wiser to attract angel investors or apply for a business loan.

Small businesses need to exercise the same type of caution with investors as the large corporations do. Matching the right investor to the right investment is a formula for success. However, it never pays to get too excited about accepting funding from investors unless you fully understand the advantages and disadvantages of that particular type of investment. The reason there are so many types of investors is because there are so many different types of business needs.

More detailed information and useful advice can be found at www.funded.com 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.

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Social Responsibility and Investors

The relationship of corporate social responsibility and investors was studied by Ioannis Ioannou of the London Business School and George Serafeim of the Harvard Business School. The 2010 study was titled, The Impact of Corporate Social Responsibility on Investment Recommendations. As the title suggests, the social responsibility strategies were analyzed from the perspective of their influence on security analyst decisions concerning investing in companies.

The results were clear. The value of socially responsible strategies has risen in the minds of investors. The study also reported that firms seen as socially responsible are viewed more favorably by analysts and the more visibility the better. Social responsibility is value creating.

We tend to think of large corporations as being the only firms that need to be concerned about social responsibility. Unfortunately, many also view social responsibility with a bit of cynicism, believing that it’s a ploy to sell products and services. However, if that were true businesses would only do or spend just enough to attract investors and never go beyond the minimum. Yet even small businesses are found in the community as their employees volunteer time and money to local nonprofit efforts in a variety of areas. They help clean up the environment, raise money for hospitals and special causes and sponsor programs in childhood education and adult job training, to name just a few activities.

Social responsibility is a broad concept that addresses ethical business behavior and sensitivity to community issues. Those issues include economic, social and environmental aspects. All companies can increase their value by addressing the needs of its community stakeholders and by following ethical business practices. When businesses increase value, it’s easier to attract investors. Social responsibility is a win-win proposition.

Browse www.funded.com for more advice about getting your business funded.

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Think Strategically and Attract Investors

After a certain point, every business owner discovers they need to search for investors which means they need to start thinking strategically. That’s well and good, but what does it mean exactly to be a strategic manager?

Though it may sound like a buzzword used by business scholars with nothing else to do except pontificate, being strategic is important to any company that plans on being around for a long time. A strategic leader is someone who is forward thinking and anticipatory of both potential problems and opportunities that can contribute to business success. However, being strategic means much more because it implies using that forward thinking to align the business.

Alignment could arguably be one of the most important aspects of strategic management. Think of it like this: You can find investors, but if the business does not have a quality business plan and aligned operations, products and services, you won’t be able to take advantage of the opportunities to expand. Aligning a business to take advantage of future opportunities means preparing for growth and expansion in a planned manner and establishing the support system to ensure the growth can occur in a profitable manner.

Investors will be on the lookout for strategic leadership in a business. They know that a strategic minded business owner is not just running in circles trying to keep the business afloat today. Strategic leadership involves making careful decisions designed to promote business solidity and growth, understanding the needs of all stakeholders and successfully balancing those needs. Above all, being a strategic leader means thinking like investors so that ‘strategic’ really doesn’t just become a buzzword.

More detailed information and useful advice can be found at www.funded.com 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.

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Business Plan for Buying a Business

Business plans are developed for new businesses and when buying an existing business. Sometimes, entrepreneurs want to buy an ongoing business because they believe they can grow a business with new ideas and approaches. When buying a business, it’s still important to write a business plan to ensure that all aspects of the purchase have been considered and future growth is planned. In many cases, the business plan is also used to attract investors like venture capitalists or angel investors.

There are advantages to buying a business and those advantages should be highlighted in the business plan. The first advantage is the fact the company already has a financial record. That can make it much easier to attract investors if there is less risk of business failure. However, if financial projections are made by the current business owner, it will be important to verify they are not inflated. You will want to develop your own sales and expense projections for 5 to 10 years based on plans for business expansion.

Another advantage of buying an existing business results from the knowing the market already exists for the business. Current customers are identified and market proven, making it much easier to identify potential growth areas or new niche markets. Since the basic customer profile is already developed, you can build on it rather than starting from scratch.

It’s also good to enjoy the advantage of having access to insider information. Since you’re buying the business, the current owner is going to be willing to share a lot of information you would have to research if starting a new business. This information can be incorporated in the business plan, making it clear that the plan is based in solid facts and information.

Buying a business can give you a competitive advantage because the name, location, products and services, and customers are already in place. The business plan goals are to develop that competitive advantage to attract investors and to plan growth. It’s always nice to begin from a point of success.

Browse www.funded.com for more advice about getting your business funded

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Know Why Businesses Fail So Yours Does Not!

One of the most common reasons for businesses failing is failure to write a business plan. When an entrepreneur fails to plan, the chances are good that even growth can lead to serious business problems. How can growth lead to problems? It’s not growth per se. It’s when growth is too rapid and the business is unable to meet demand that causes small business failure.

Business growth must be managed. You can accept a half million dollars of customer orders, but if you can’t meet the demand in production or delivery the business will quickly get a bad reputation when unable to deliver goods and services as promised. Growth should be carefully planned so that resources are always available.

The business plan can help company owners and management avoid the most common reasons for business failure. In fact, knowing the reasons and then addressing them one by one in relation to your own business can help you avoid the pitfalls a new business typically faces.

Top of the list of reasons for business failure is lack of experience. The business plan includes a section on business management for a very good reason. Investors will want to know if the management is qualified and experienced. Even if you aren’t looking for an investor, it’s still important to identify the skills and competencies of key personnel. If gap exists, you’ll know it’s necessary to bring other talent onboard.

Lack of capital is another reason for business failure. The financial analysis needs to address money needed now and for planned growth. The keyword is ‘planned’ because unplanned growth can cause inventory, cash and personnel shortages.

That brings us to one of the most important advantages of a business plan. The elements of a business plan are integrated. For example, investing too heavily in assets can lead to a cash shortage which leads to poor customer service and lack of operating funds. Lack of management experience can lead to poor decisions that lead to marketing mistakes. The integrated nature of the business plan is precisely what makes it so valuable as a planning tool. No one starts a business expecting it to fail. Knowing why businesses fail can help you avoid a business failure. Plan to succeed in the business plan.

More detailed information and useful advice can be found at www.funded.com 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.

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Keeping the Business Plan Focused on Purpose

Business plans are used for many purposes, and that purpose can influence what is emphasized in the plan.  Every business plan has sections that include the executive summary, business description, marketing plan, competitive analysis, development plan, management and operations plan, and financial statements and plan. It’s what goes into each section that must specifically address the purpose of the plan.

Business plans are as important for startup companies as they are for the large corporation ready to expand. Small and medium-sized companies, as well as the corporate giants develop business plans because they provide benchmarks for measuring progress. That’s one of the purposes then for developing a business plan – measuring actual results against strategic goals. Each section will establish periodic goals like number of marketing campaigns to run in a year, sales growth projections and net profit goals.

Another reason for preparing a business plan is to raise money. In that case, you will need to develop a well honed mission, clear objectives and goals and an executive summary that explains the type of business being started, the amount of capital needed and the type of financing. In addition, the marketing and financial plans need to be crafted so that they make sense in terms of the market and competition. This business plan will be used to get the attention of investors so you will want to show that the business will be able to make money or grow sufficiently to service the debt. If the investors will be equity partners, then the business plan will have to indicate how the company will be able to secure the investment and produce the desired rate of return.

A third reason business plans are developed is to attract people who aren’t investors. For example, a business plan can be used as a marketing tool when pursuing new customers representing large buyers. It is also used to attract suppliers or exceptional staff. The sections of the plan these people are most interested in needs to be fully developed. For example, large suppliers want to know you will have the right kind and volume of business and that plans for growth equates to supplier success also. Executive talent will read the business plan to discover information about corporate culture and the growth agenda.

In other words, a business plan is not just for attracting investors. It’s for all businesses at any stage of development and is used for multiple purposes.

Browse www.funded.com for more advice about getting your business funded.

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Getting Competitive in the Business Plan Competitive Analysis

Every business has competitors which is why the business plan includes a section that presents a thorough competitive analysis. The analysis considers businesses in the same industry your business will be operating in and evaluates similar products or services. It also looks at the features of the competitor businesses. The goal is to pinpoint the strengths and weaknesses of the competitors and then position your business in the industry and marketplace.

A common mistake new entrepreneurs make is telling themselves there is no competition. In the excitement of starting a business, they fall prey to the belief that their products or services are so unique there are no other options for consumers to choose among. One point to keep in mind at all times is every business has competition, and you need to know your competition well.

The competitive analysis in the business plan considers a number of factors for multiple businesses. It’s a good idea to analyze at least 5 businesses to ensure your research is thorough. The factors include product and services prices, the quality level and the product lines.

However, the competitive analysis also considers how your competitors market their products and services and the structure of customer services. The more information you know about a competitor’s organizational structure, sales team, type of facilities, management, and culture, the more effectively you can compete. The analysis should also be done from different perspectives based on market segmentation.

Often, the completed competitive analysis developed for a business plan uncovers opportunities for marketing, product and services differentiation, customer service or new distribution channels. So don’t look at the competitive analysis as a tedious research process. Instead, consider it time well spent learning how to succeed. Every business has competitors and should know who they are, what they’re doing and how they’re doing it. Then your business can do it differently.

More detailed information and useful advice can be found at www.funded.com 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.

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Writing a Business Plan with Employee Taxes in Mind

Writing a business plan isn’t just a matter of writing whatever is on your mind.  It’s a carefully crafted document that considers a number of variables. One of the most important variables is a plan for hiring because salaries and wages and benefits expenses can be a substantial amount of total expenses. A couple of ways to minimize payroll expenses and prove you are a savvy business person is to manage the type of employees hired and methods of expense reimbursements to take advantage of tax credits and savings.

The first step is to research the tax credits that are available. For example, the Affordable Care Act offers small businesses hiring low and moderate income workers a health care tax credit for health insurance expenses as long as the business covers at least half of the single coverage for employees. The business plan can reflect this tax credit so you reflect higher profit.

Another way to lower employee related taxes is to institute an accountable plan. An accountable plan is one in which you reimburse employees for certain expenses and those amounts are exempt from FICA and FUTA taxes. This amount can be sizable if your business plan is written for a company that will have employees incurring regular expenses for travel, entertainment, business tools, supplies and so on. The accountable plan described in IRS Publication 463 requires that all reimbursable expenses be business related, of course. The expenses are not taxable to the employees either.

There are a host of tax credits available for hiring particular types of employees. For example, there are tax credits for hiring veterans or Indians. As you develop a business plan, consider ways to minimize taxes through savings and credits. These amounts will flow right to your bottom line, and just as importantly, potential funders will know you are a wise and savvy business person.

More detailed information and useful advice can be found at www.funded.com 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.