Entrepreneur's Journal: Grabbing investors' attention ... and wallets


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)

Symbol Lookup
IndexesChangePrice
DJIA-89.2312,801.23
NASDAQ-23.352,903.88
S&P 500-9.311,342.64

Last updated: February 13, 2012: 07:31 AM

Hot Stocks

General Electric

18.875-0.255(-1.33)

Alcoa

10.29-0.35(-3.29)

Apple Inc

493.42+0.25(+0.05)

Google Inc 'A'

605.91-5.55(-0.91)

Bank of America

8.07-0.11(-1.34)

Wal-Mart Stores

61.90-0.06(-0.10)

Exxon Mobil Corp

83.80-1.08(-1.27)

Ford

12.44-0.25(-1.97)

Citigroup

32.925-0.735(-2.18)

IBM

192.42-0.71(-0.37)

Yahoo

16.14+0.14(+0.88)

Starbucks

48.82-0.38(-0.77)

Microsoft

30.495-0.275(-0.89)

Home Depot

45.33+0.06(+0.13)

DailyFinance Headlines

Benzinga Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

DailyFinance BlackBerry App

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

BioHealth Investor Headlines

Page Loaded in 1329136277894 ms.