The Types Of Business Plans That Are Funded

Not all business plans are funded. Many entrepreneurs know the statistics. Most investors fund less 1% of business ideas pitched to them. Banks fund 10% of businesses.

You are in competition with millions of other businesses seeking funding each year. It’s essential for your business plan to be great or excellent if you want to receive funding. Your business plan must stand out in a noisy field.

What makes a business plan stand out? Let’s break it down into mediocre, great, and excellent business plans.

• A mediocre business plan outlines the business’ plans in a very generic fashion. There are no specifics about the type of marketing that will be done. There are no organization charts. The reader does not understand the problem being solved, how many people have that problem, and who is willing to PAY for the solution. Mediocre business plans are generic and have a 50/50 chance of receiving funding. I don’t know about you but I want a greater than 50% chance of reaching my goals.
• A great business plan answers the top 7 questions every funding source wants to know.

1. What is the market opportunity? Great business plans calculate the total addressable market and prove that there is more supply than demand mathematically.
2. What is the marketing plan? Great business plans are specific about the types of marketing that will be done to attract and convert them into clients or customers.
3. Who is on the team and why are they qualified to grow the business? Great business plans explain how the team you have assembled can help the business reach its next milestone.
4. Who are your top competitors and what are your competitive advantages? Competitive advantages include both product and business advantages.
5. What risks are associated with this venture and how will you mitigate them? Every business has risks. Sometimes the risk is external; other times it is internal. A SWOT analysis usually exposes the risks but don’t tell the reader how you will mitigate them; therefore, I will complete a risk matrix if needed.
6. What are your financial forecasts (or pro formas) for the next 3-5 years? Financials includes Profit & Loss Statement, Balance Sheet, and Cash Flow Forecast.
7. What is your exit or payback plan? If you have an angel investor, they’ll ask when and how they’ll be repaid. You may want to have a couple of different options for investor repayment within your business plan.

• An excellent business plan represents the top 1%. If you are pursuing angel investment or venture capital, you must be top 1%. An excellent business plan includes all the items within a “good business plan” and also includes great storytelling. You may have heard the saying “facts tell and stories sell.” To sell your business plan, it should tell the reader a story of how you as the entrepreneur discovered the problem and what you are doing to solve it. An excellent business plan causes the reader to go on the journey of solving the problem with you. There’s nothing like it.

If only 10% of bank loan applications are funded and 1% of angel investor and VC plans are funded, can you really afford to be mediocre? Our company transforms mediocre business plans into excellent ones. If you need help writing a business plan, I would love an opportunity to assist you. Please contact me at theprofitpartner.com.