Your business plan is the most important document that pertains to your business venture. Think of it as if it were a road map of your business and the progress you plan to take when starting it up. Your business plan is definitely NOT the first thing you want to show to a prospective investor. You need to remember that your full business plan has all your trade secrets, patents, and proprietary technologies and theories. If you contact a competitor’s investor, this can be a gold mine for him. Your business plan should be done in two parts, your executive summary, slide presentation, and then the full plan. You want to show them to investors in that order.

Your Executive Summary

Your executive summary is a brief overview of your business plan. The executive summary is only supposed to highlight the key points of your business plan that you feel would get an investor’s attention. You do not want to go into too much detail with your executive summary and most importantly, you want to keep it short. Typically, an executive summary should only be one or two pages long. At the most, your executive summary should be no more than three pages. This is a document that the investor should be able to read quickly and get the point.

One thing you need to keep in mind is that investors are very busy people and do not have much time to read a prolonged document. Many investors are either attending board meetings of portfolio companies, studying new potential investments, or meeting with prospective entrepreneurs which they plan to invest in. For this reason, your executive summary needs to be short and to the point.

Business Model and Expected Mile Stones

Your business model is a very important part to your business plan. The business model should also be presented in some detail in your slide presentation. The business model is the model that you are applying to your business. Your business model should also show a group of different milestones that you plan to follow. These milestones should have an anticipated date of when you plan to complete them. You might also want to prepare a budget which can cover the cost of meeting each milestone. This can determine the amount of each tranche an investor can fund you if he decides to make an investment in your venture.

Charting Anticipated Profits and Expenses

Charting anticipated profits and expenses is very important, but can also be a very challenging task. This is a task that you do not want to consider doing yourself, unless you are very good at numbers. Many entrepreneurs hire accountants or CPAs to chart expenses that their companies can incur when meeting each milestone. Things you need to think about when charting expenses can be a number of the following:

1. Seed expenses basically represent what seed capital is supposed to cover. These are the basic expenses you incur when you are just starting out. These expenses can include buying or renting real estate, office space, manufacturing space and equipment, and items alike.
2. Salaries should also be covered in anticipated expenses. Salaries should be done in several different categories. The first category should be the executive salary. This is your salary. This should determine the amount from the profits you get into your pocket. You did all the work in building your company, so you should give yourself and your partners the biggest reward. The next salary category should be the management category. This should determine the salary that managers who you employ get paid. The third category should be the general employee salary. This should determine the hourly wages of your employees.
3. Production expenses are also very important things to include. How much is it going to cost to produce your product? How much will raw materials cost and how much will it cost to run the production line? All these should be included in your expenses.
4. A rainy day fund should also be kept in mind when doing all the financials in your business plan. You never know when something can go wrong and whether you might need to have some extra expenses. You always want to have good reserves when planning for your profits and expenses.

Profits are also important to estimate. After all, if you are developing a business plan to obtain funds from an investor, he will want to know what his return will be on his investment and when it will maximize out. Typically, investors invest in a new company from five to seven years. If you anticipate an earlier profit, you’d better be able to have sound proof behind it. Investors often know the industry better than you and they have their own experts. Most ventures are not get rich quick schemes and investors know that. When doing all the financials on your business plan you do not want to look naive or like you are trying to pull a con job. This can ruin your reputation among the investment community and make it even more difficult for you to get funding in the future.

Drafting your Marketing Plan

Like any company who wants to get into business and produce, you need to make yourself known. For this, you need to develop a marketing plan. A good marketing plan needs to develop several marketing and advertising strategies that can get your product known to the public.

A high pitch concept can be one of the most effective ways to get the public’s attention about your product. Basically, a high pitch concept is a very short synonymous phrase that likens your product to something that is already known, but at the same time for a different use. For example, everyone knows that the Cadillac or a Rolls Royce is a high-class car. For this reason, many marketers will compare the products of their clients as the Cadillac of safes, or the Rolls Royce of watches to get the product known to the public and get them to buy it.

Internet marketing is another great tool to get your product out in the public stream. The fact is that most marketing done today is over the internet and it has become a multi-billion dollar business. With internet marketing, you need to know a few things, such as affiliate marketing, SEO (Search Engine Optimization), and more.

There are many other different forms of marketing out there to try out and you shouldn’t be afraid to do the market research. Many entrepreneurs hire market specialists who study trends and, based on their research, develop an effective marketing strategy.

To find out more about good business strategies, you should visit our website at www.VCgate.com and see all that we have to offer. Our guides on raising angel investor funding and venture capital can be an effective tool to help you in getting the money that you need. Furthermore, we provide the world’s best funding sources database, with access to over 5,000 investors, venture capital and private equity firms, angels, merchant banks, and more. Come and check us out!

How to Contact Investors Cold - Chapter Four