I recently reviewed a business plan (for a school). It was well written and had lots of supporting financials.
The problem? It didn't have the kinds of things that investors look for. That is, when I read the one-page overview, there wasn't much talk about why investors should shell out big bucks. Instead, there was a focus on the quality of the school and the importance of education.
As should be no surprise, the plan got little momentum.
So, here were some of my recommendations:
Proof Points: What kind of traction does the business have? Are there more customers? Revenue growth? New partnerships?
Basically, show evidence of growth – using a variety of metrics. For example, in the case of the school, there was an investment in advertising, which produced strong growth in student enrollment. Clearly, the school has formulated useful marketing strategies.
De-Risk: Investors also want to limit their downside. In other words, what kinds of things protect your business? Is the customer churn rate low? Do you have patents? Long-term contracts?
I also look for owners who have committed their own money to the venture. This shows "skin in the game."
Strong business model: Investors like to see multiple revenue streams. It shows that the business model is powerful and, more important, there are opportunities for growth.
So, in the school example, some of the new revenue stream possibilities included: dorm fees, book and yearbook fees, technology usage fees and application fees.
Helpful Resources: Checking out the web, you can find some real-life examples of good investor overviews.
One approach is to check out IPOHome.com, which has recently filed IPOs (that is, companies raising capital). If you find a company that is in your sector, you can then click to the prospectus. In it, you'll get an executive summary, which can be a great reference point.











Reader Comments (Page 1 of 1)
6-16-2008 @ 7:44AM
Gchaoma said...
I persoanlly don't think a school should be thought of as a place of business where the investors only thinks about making the big bucks.
I am currently attending college. I had to buy a book from the school bookstore and it cost $100 for one philosophy book. I went home and checked amazon.com and the same exact book was for $40.
This is why we have crime and poverty.
If schools were built to teach and educate the mass public instead of trying everyway to make a profit from the mass public. Then our economy will be booming due to a high level of educated civilians. There will also be less crime.
People don't go to school because they can't afford it. This is just my thought. Let me know if you think otherwise. Thanks =)
6-16-2008 @ 8:11AM
Pam said...
I agree, you can make money if you just know how and offer people something that does have value. ItTakesAPlan.com shows a path for making a seven figure income the right way.
6-16-2008 @ 10:39AM
Enalasys1 said...
Gchaoma,
You make a great point but this post is not about schools. The post is about building the right business plan. This business plan is an example used here for reference and highlights very important factors like “Where are the children?” I am not saying that I do not agree with you on the subject of schools and honestly, we could go on for a long time about my thoughts on public and private school systems.
Pam, nice try to open a back door (gorilla technique) to drive people to your site or engender some revenue. Nonetheless, do you really think people are that gullible and don’t see where you are going with this? Surely you have better and more unique ways of attracting customers.
My commit to this thread is how someone like me would get past the creditability factor while maintaining honesty as well, integrity while developing a business plan? In addition, develop a plan for a business that is not the norm pertaining to a unique business? How does one find investors not looking for opportunities not related to technology and or the medical industries?
6-16-2008 @ 10:50AM
just saying said...
If your business was unique, that is, something that had long range potential, then this wouldn't be a problem.However, , if it is one of those "I had a thought last night" type of deals then yes you are going to hit many road blocks and the best laid plans in the world aren't going to convince anyone that you are serious. It doesn't take much to convince someone of a great plan, provided you have actually planned it in the first place!!!
6-16-2008 @ 11:24AM
Burcy said...
You make a good point, however with children and schools how to present the "De-Risk point?
6-16-2008 @ 12:57PM
Pam said...
Gchaoma, I think people read an article like this because they are looking for ways to make money without it being a scam. Nothing gorilla about it. People get lost in all the scams today - like the price of those school textbooks - and wonder how they are going to make it. People need a bright spot of good sense and hope and sometimes it is found in unusual places. We are offering a FREE newsletter to help people benefit and we also show them an example way to earn. No gimmicks. They can choose if they want to do it or not. This company GIVES many of the type things referred to here in this article, which also was sharing about its business!
6-16-2008 @ 4:18PM
Steve said...
The mortgage crisis can and will go away sooner then anyone thinks. I have searched and found that an on-line homeowners association has conducted a fund-raiser with homeowners sharing funds to help homeowners in need and their membership has grown to thousands. It won't be long before we will hear about this one. OMASH.org has developed from with homeowners helping homeowners.
6-16-2008 @ 8:47PM
mR.bILL said...
IM NOT SURE IF I UNDERSTAND THIS WHO ORDEAL,THE AUTHOR WAS USING THE SCHOOL AS AN EXAMPLE,SO WHY TAKE IT AS A RULE?
AFTER BEEING IN MY SHOP I USUALY CHECK OUT PRICES FOR MY MANUALS AND BOOKS BEFORE I GO BUY THEM IF YOU WOULD HAVE DONE THE SAME THEN YOU WOULD HAVE (A) PRACTICED GOOD BUSINESS (B) FELT GOOD BUYINGTHE BOOK FOR $40.00 (C)BRAGGED TO EVERYONE HOW MUCH MONEY YOU SAVED INSTEAD OF COMPLAINING ABOUT HOW MUCH YOU SPENT AND (D) YOU WOULD HAVE BEEN $60.00 AHEAD
BUT THEN GOD GAVE US ALL A BRAIN AND SOME OF US THE KNOWLEDGE OF HOW TO APLY COMMON SENSE
6-16-2008 @ 9:59PM
super fish said...
I think the School was just a bad example.
A better example would be a new invention with a united states patent that was granted the patition to make special. My question is how do you attract a serious invesstor to a spectacular product that doesn't yet show a profit. Profit is impossible when ALL of the revenue from the sales goes back into materials, but mostly marketing.
Thanx, chuck@superfishlight.com
6-16-2008 @ 10:35PM
J.S. said...
I have an Idea in a 500 Billion Dollar Industry and tried to offer it to eBay and guess what, It looks like there are not interested. Even if they would make 5% off the world market in this business, that would be 25 Billion. ( This kind of e-Business does not exist, not yet !! ) If there is someone out there who is interested, let me know. e-mail me.
Bayview@Bayviewint.com
6-16-2008 @ 11:14PM
Doug said...
A good course in writing a business plan will cover the subject of attracting investors. It seems it is a sticky business (with an underscore on "business"). Question: Do you have to use investors per se? Can you find other means of launching capital? Fund-raising was mentioned (although I was not impressed with the scheme on the site given).
On one hand, it is unfortunate that schools are becoming more and more commerce-driven enterprises, and yet historically they were pretty much the same in different clothes (which is why mainly the wealthy were educated). On the other hand, perhaps it is fortunate, for most schooling today is geared to forging through the underbrush, looking for a way to be a corporate-minded capitalist...which of course, puts those successful at this quite often in the mode of doing exactly that...making all their business endeavors with the bottom line clearly in mind (good meaning forcing people toward other avenues). Question: Why is it that in fairly recent history, families took care of educating their own, with the goal in mind of making the children grow into reasonably savvy, responsible land and business owners who owned their own home, their own business, their own transportation, etc., and avoided credit where possible? Ever heard of "open source education"? (links on request)
So...business plans. Perhaps it's time for a revision of what a business plan is, and what it should or could be. And how it might be used to enrich the individual rather than simply attracting investor attention and facilitating a business through money that is essentially exchanged for labor (just not as employment). Yes, this is the real world, but it doesn't have to remain as it is...and there is a great deal of change going on that is positive, changing even the face of governments and corporations toward being more supportive.
6-17-2008 @ 6:50AM
Chris said...
This is my first time participating in a blog, suffice to say it caught my interest. The suggestions were more like common sense when it comes to what someone wants to know about a possible investment, but I have a different concern, and would appreciate hearing what others have to say.
Based upon my experience, there are few things that can kill a business quicker than a lousy mix of partners. What concerns me is not so much external issues of liability, but rather internal at this point. I've read about many things that investors like to see in a proposal or business plan/model, but few about what the investors themselves bring to the table other than money. Venture capitalists appear to expect full disclosure, but do not offer the same to the individual or company that is making the offer of profit.
What I don't want are "partners" who are control freaks, or who have an exagerated sense of self and/or unrealistic expectations that go far beyond any agreements. Again, my concerns at this juncture are internal and not external, and taking great care who I bring into the mix at this juncture regarding a national marketing campaign I am developing.
Is there some kind of rating system in place for venture capitalists/lenders/investors, that might include thier track record and/or portfolio of investments, a history of some description for that investor (or group investor)? I am looking for 1 investor, a responsible, reasonable, mature individual and/or group, more than I am the money at this point. Such an individual (or group) would have no problem signing a nondisclosure/secrecy agreement, and offer some very clear, defined, realistic expectations as to shares and return.
Any resource or advice would be most appreciated while sifting through potential investors. Again, does anyone know of a rating system for possible investors that I could include in my rationale before approaching anyone else for funding?
6-25-2008 @ 2:46PM
Randolf said...
VC's are not for most startups. They are looking for huge opportunities, low risk and a sure cash-out at the end. The school was a great example of both a poor fit and a lack of business perspective in the plan. What you say in a business plan is different from what you say in your sales literature. Different audience, different goals.
A better fit is an Angel investor or 'specialized' investor from within the industry. You should always look for both $ and contacts or expertise.
If its a good business model, then you can make it work. If you have an idea you want to discuss, send me an email and I'd be happy to help.
7-13-2008 @ 7:22PM
Tim said...
Right now I'm in the middle of trying to get a business started for myself. A Storage Room Business for people to rent and lease different size rooms for needs they may have. Rooms of 5 seperate sizes. What I have on my thoughts right now is, How to get in touch with investors and companies that would come towards helping myself with this project. Here's something I do have in mind. I have (3) Buildings going up with this business now And where I live there is plenty of Air Traffic around. Air Traffic? Planes, Helicoptors flying over the spots daily. Seeing about Advertising on the top of these roofs. I'm wanting to search for some Investors / Companies that would be interested inputting some of their names on top of them. Now I'd see about a 3 to 5 years of FREE advertising on top of that 30 ft Wide by 110 ft Long building if someone would help me get a $250,000 GRANT from an Organization or what. The advertising space would be FREE not costing 1 red cent just a little time on helping my business get started. Like how this looks EMail me at this Add.