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Accepting Economic Challenges Via the Business Plan

Addressing today’s economic environment in a business plan may seem challenging, but it’s also the perfect time to prove you’re up to the challenge. In fact, angel investors are aware that successful ventures in a tight economy are poised for expansion when the economy improves. Successfully starting, managing and growing a business when the GDP is expanding at a sluggish 3 percent (like now) or less is indicative of a business with high growth potential as the economy returns to normal. Though capital access may seem tight, making it difficult to obtain venture funding, the fact is that it’s time like these where some of the greatest opportunity exists.

For example, tight markets mean less competition for both customers and funding. The people who succeed in this type of economic climate are the ones who have solid business plans and excellent ideas. The general quality of brands is necessarily raised because only the best can compete. These companies are attractive to investors looking to fund companies with growth potential.

Another way to look at the business climate is that businesses able to develop business plans that accommodate tight capital markets are more likely to attract angel investors. The reason is due to the fact the investors will recognize that the financially conservative business is prepared for economic downturns as well as upswings. Too many business plans begin with unreasonable expectations given market conditions. Clearly showing how your business will succeed in tight economic conditions is, at the same time, showing how the business is prepared to successfully maneuver during periods of uncertainty or even setbacks over the long term. Compelling business ideas coupled with managed risk is an excellent formula for attracting angel investors.

More detailed information and useful advice can be found at https://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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Dot.business plan for a Dot.com

Writing business plans to find angel investors interested in funding internet entrepreneurship is similar but not identical to writing proposals for brick-and-mortar only businesses.  A company that is going to be operated solely online still needs a strategic business plan that defines the business in detail, identifies market strategies to build a customer base, analyzes competition, lays out the operations and management plan and presents the financial plan. However, there’s a twist because investors will want to know how you plan on making your website stand out in a very crowded electronic superhighway and how you plan to attract and keep customers, who you will never meet, on the website long enough to spend money. There are millions of websites already up and running, but due to a lack of business planning they are virtually alone in a virtual world.

A strategic business plan for an internet based company must include the traditional business information, but it also requires planning for online design and content, online marketing strategies, website support and upgrades, online product ordering and security. Even planning for customer service has unique features in that contact will be primarily electronic. Angel investors will want to know how you will blend online and offline promotion strategies to insure maximum exposure. Internet marketing strategies address the marketing funnel in which customers are attracted to the website and then moved along a narrowing path to ordering and payment using a variety of well-designed enticements. A well thought out business plan for an internet based business addresses plans for accessing the right kind of business management technology to insure sales are captured using a virtual gateway and online shopping cart.

In other words, angel investors will review the business plan for thoroughness on two levels instead of one – traditional and electronic. Just because the business will be internet based doesn’t mean you can skip the traditional strategic planning. It only means you need to expand and integrate the unique features and requirements of an online business.

More detailed information and useful advice can be found at http://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 Business Plans that (Really) Matter

Business plans are not all alike and neither are angel investors, venture capitalists and loans. Then why do so many business plans seem like carbon copies of each other? Rubber stamping, so to speak, a business plan and only changing the names isn’t going to generate much interest among savvy investors. How many small businesses are ready to become the next corporate success story, but can’t seem to get investor interest? There are plenty, and many will never get a chance to find success because their business plans don’t pique the interest of angel investors or any other investor for that matter. The business plans are just too ordinary and fail to convey the uniqueness of the new idea, concept, product or service.

If you took a test and it said to name the most common mistake made on business plans, would you know the answer? The answer is: The business plan begs for money but doesn’t beg for understanding. A business plan is much more than a plea for money. It’s a driver’s manual that defines goals and objectives while providing the road map to a new destination. If the directions are clear and point right towards what makes your idea market unique, investors can’t get lost on their way to the endpoint. That’s where the financing waits. Focus on what makes your concept unique and prove you have carefully thought through the components of success – people, opportunity, context or relationship to industry and market, risks and rewards. In other words, write a business plan that really matters and not just one that fills in the blanks and makes a pitch for money. Don’t be ordinary…be unique. It’s what entrepreneurship is all about.

More detailed information and useful advice can be found at http://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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In The Eyes of an Angel Investor

One of the best ways to prepare for a search for startup funding by angel investors is to pretend you are one.  Investors have money they are willing to put into new enterprises, but they also want to minimize their risk as much as possible even with the understanding there is always a certain higher risk associated with a new business. If you consider what you would require if you were investing personal funds, the element of risk becomes much clearer and you can hone in on what information you need to assemble to prove your venture is a good investment.

The truth is that funding requests in the form of business plans submitted to any type of investor, whether for venture capital or to equity partners or to angel investors, should focus on answering questions before they are even asked. So it only makes sense to ask yourself the questions first as if you are investing your own funds.

It can be difficult to look at a new business with an objective eye when you are excited about a new idea, and it’s your business under the microscope.  Looking at the proposal from the angel investor’s viewpoint can help you keep your proposal targeted on the ultimate goal which is new funding.

Question: Am I It?

In the eyes (and mind) of an angel investor approached about a potential investment, your new business is untested.  The initial questions that will arise include:

  • What other potential sources of business funding is available to the new enterprise?
  • Could the startup business find funding through more traditional sources like business loans?
  • How long has the entrepreneur been looking for funding and is there any interest in the project by other investors?
  • Is it possible that several angel investments could be pooled to establish business funding while spreading the risk?
  • Is the entrepreneur asking for funding able to prove that he/she is a legitimate requestor with a solid business plan and not simply an “idea” person who has trouble following through?

These types of questions are just the beginning of a detailed analyzation process. Angel investors considering startup funding will want comprehensive information about projected income and expenses, marketing, project team members, business organization, a SWOT analysis, management, legal matters, future capital needs and more.

Question: Is Break Even in the Picture Anytime Soon?

One of the reasons some entrepreneurs are unable to attract any type of investment including venture capital, equity partners or angel investors is because they have not looked past the initial startup. Lack of capital is one of the main reasons small businesses fail according to the Small Business Administration. In the excitement of bringing a new business idea to the marketplace, the details are overlooked like when will the business break even?

Question: Do You Have Answers Prepared

Pretend you are the investor as you prepare your business plan including the financial section. What would you expect to get answers to before approving any investments or business loans? If your business plan doesn’t answer those questions about your venture then angel investors are going to see the proposal as too risky before it even gets off the ground.

More detailed information and useful advice can be found at http://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 to access a vast network of business people, entrepreneurs, partners and service providers to help you start, finance and run your business, check out http://www.funded.com.

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Start Up Business Funding – Don’t Take No for an Answer

Your cousin Lou has told you that he wishes he could help out but start up business funding is out of the question. There’s the mortgage to pay and gas prices are rising and the kids need braces and on and on the excuses go. You received the same answer from Aunt Sally, your best friend Dave and even your own father. You have a great idea for a new business but can’t seem to convince anyone to help you get it off the ground.

Many entrepreneurs are rich in great ideas and have plenty of enthusiasm and a willingness to do what it takes to succeed. But desire and excitement are not dollars, and that is what is needed to get any business off the ground. Finding startup funding can be one of the most difficult challenges faced.  You haven’t proven yourself to potential investors, but you can’t prove yourself unless they give you business funding. It’s the proverbial catch-22. It reminds you of the time you were looking for your first job and the employers told you that you had to have experience first!

Plenty of Options for Those Who Persevere

Many entrepreneurs exhaust all of their own money before they even start looking for outside investors for start up business funding. If you were lucky enough to convince some of your family and friends to invest in your new business, there is still a good chance it was not enough money. That means you have to find other sources of funding in order to take the business to the next level which may include buying inventory, purchasing equipment, or making the next 6 months of payroll. The thought of your business never getting off the ground or coming to a screeching halt is distressing to say the least.

Fortunately, you have plenty of options when it comes to funding sources. Given the complexity of convincing financial institutions or private investors to invest in a tight credit market and limping economy, it is always best to get professional assistance. Gaining access to a network of funders is critical, and like any “private” club you need an introduction.

What are these sources of funding?

  • Angel investors and angel organizations – Earthly angel investors are really private investors willing to invest their own funds in fledgling businesses. The often invest in the form of equity or convertible debt. They truly seem like angels when you need funding, but these angels are investing because they believe they can get a higher rate of return by investing in your company as opposed to investing in traditional financial tools. Many angel investors are also interested in promoting businesses in which they have personal experience or a special interest.
  • Business Loans – These are loans from financial institutions like banks. Despite what you read, the banks are lending to businesses. But since credit is still tight due to the recession, you improve your chances of success by accessing those banks with a record of lending through the recession. That is where a professional can be of invaluable assistance in locating funds domestically or globally.
  • Venture Capital – Venture capital is money that is loaned by a venture capital firm or individual. Larger amounts usually come from firms. These firms are often looking for start-up businesses that have high potential for fast growth and early returns. They take an equity position in your business meaning the venture capitalists take part ownership. But there are innumerable ways to structure the financing and equity arrangements so don’t rule out this type of  funding as a possibility.
  • Equity Partners – This is start up business funding in which private individuals invest in your firm in exchange for part ownership.  Ownership can take the form of stock ownership, but in some cases the investor may want to be involved in a way similar to a partner.

Make No Assumptions

There are numerous types of start up business funding as you can tell. There is no reason to assume that since you are a new business that money is not available from traditional sources like business loans or non-traditional angel investors.  You can pursue startup funding from equity partners or venture capital firms. And while you are looking for business funding, you should go ahead and ask your cousin Larry if he is interested. He just might be the first one to say, “Yes.”

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Potential Investors Come in All Shapes and Sizes

Finding investors is probably one of the more difficult activities you will have to do as long as you own a business. It doesn’t matter if you are just starting a new business and need startup funding or have been in business for years. Locating organizations or individuals willing to invest in a business is the easy step. Convincing them to actually give you the money is the hard one.

There are three ways to get money for your business. You can use your personal resources. You can bring in investors who take part ownership. You can get a loan in which the investor requires payback but not business ownership. Since most people aren’t millionaires, the majority of business funding for start up or expansion comes from outside the business.

Networking with the Right People

Investors come in all shapes and sizes. For example, you can bring in a partner who shares equal decision making authority in the form of an equal partner, but many entrepreneurs prefer to maintain control. But there are other ways to bring in partners without giving up the majority control of the business. For example, you can find equity partners who take a less than 50% ownership stake and will function as silent partners. They have no interest in day-to-day operations as long as their investment brings expected returns.

If you have no interest in bringing in partners, there is a network of organizations, funders, banks, private investors and even other firms looking for ways to earn greater returns than they can get in the marketplace. That is especially true today with interest rates near zero and an uncertain recovery underway.  They include business incubators, angel investors, royalties agreements, Small Business Investment Companies (SBICs), venture capital and others. If you are not familiar with any of these sources then you are arbitrarily limiting your search for investors.

The network of funders also includes business loans from banks or other commercial institutions.  Many entrepreneurs avoid banks and commercial institutions believing they will not qualify for funding.  But there is money available and by developing a high quality detailed business plan with the right elements, banks are much more likely to approve new loans.  Assuming up front you will be turned down is self-defeating.

Give Investors Want They Need to Know in Your Business Plan

A good idea for a startup business or for business expansion is not enough. Investors will look for certain things before even considering your ideas whether they are angel investors or equity partners or banks when it comes to business funding.

  • Your personal qualities as evidenced by a background check
  • The ability of business decision makers to successfully steer the new business or project to success while protecting funding investors have put into the business as proven by past experience
  • Likelihood the business or project will be able to pay off the loan or return investor money with interest
  • Ability to create an agreement that is acceptable to both the investor and the entrepreneur
  • Availability of collateral depending on the type of funding

It doesn’t matter if you search for angel investors or venture capital, it will be necessary to have a well thought out business plan that addresses these components. With a good business plan, you can then join the network of people and organizations that enable new ideas to hit the market and businesses to grow through business loans and a variety of other funding sources.

Shorten the Search Time With an Intermediary

If you don’t know how to find available startup funding or you need the money quickly, your best chance of success is using an intermediary. Though you pay a small fee for the service, an intermediary helps people become imbedded in the network of investors and funders which will greatly increase chances of finding the one or more who can support your business plan.

More detailed information and useful advice about investors for your business can be found at http://www.funded.com.