A great idea can lead to a successful business. But it often takes a lot more than that. And it definitely takes more than a good idea to convince investors to take a chance on you.
No matter how great your idea is, you still need a comprehensive and well-written business plan to get investors on your side. Startup mentor and angel investor Martin Zwilling recently explained the importance of a good business plan in a post for Entrepreneur. He wrote:
“There are no guarantees, but various studies have found that entrepreneurs who create a good plan generally double their chances of securing funding and building a successful business. In any context, and especially in the high-risk world of startups where more than 50 percent fail, you need every advantage that you can get.”
Zwilling also explained some of the features of a good business plan. They generally don’t need to be very long. He said some of the best ones he’s seen have been around 25 pages. But they should all cover the relevant questions that an investor, partner, or team member might ask.
In general, he said, a business plan should include these ten sections:
- Executive summary
- Product and solution
- Company description
- Market opportunity
- Business model
- Competition analysis
- Marketing and sales strategy
- Management team
- Financial projections
- Exit strategy
There are also many books and websites that provide sample business plans for entrepreneurs to model their own from. That easy access to resources means that there should be no excuse for not having a well thought out business plan before meeting with any potential investors.
So even though technology has made it easier for entrepreneurs and startups to reach out to investors, you still need to present the same type of information. Investors today are still taking the same types of risks now as they were before the days of the internet.
And while crowdfunding has done a lot to help both investors and startups, alike, it is a completely different process than going after bigger investors. The people who you want to invest a lot of money in your company are going to need a lot more information than a person who donates $5 via Kickstarter. So while the idea is the backbone of your project, you need to back it up with a great plan.
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