Hi Violet, I believe that everyone that responded to your question has provided you with some great business advice. But you must also remember that a loan process really comes down to answer three basic questions, which would probably be asked by the investor or a lender. These questions are as followed: 1. How much money do you need? 2. What do you need the money for? How and when will you pay it back? And lastly, investors would likely want to see the same financial documents as a lender, which may include: Income statement, cash flow, balance sheet, business tax returns, accounts receivable and accounts payable information. I hope this information is able to help you with your investment decision making process.
I tend to agree with Cates high level view regarding headings, one thing I would add that a lot of investers and interested parties will be looking for is that you know your market, that being said spend a good amount of time putting a section together in your proposal explaining your position in the market, target consumers or businesses and how that is going to translate in to market sectors and market share control. If it is a consumer product it is always good to include some of your generated statistics and market research. Good luck
Jambo Violet, First of all I would like to wish you good luck on every step of this process. Trust me you need it. I have gone through the answers and everything that you need to write on piece of paper is there. However I would like to share my experience with you when I was doing the same not so long ago.
The Exit Strategy: I met approximately 50+ investors and all of them had one common question, "What is your Exit Strategy?". When you go for an outside investment, the investor will make money only when you sell the business. Investors are not interested in the dividends. They want to get 5 times the money they gave you in 3-5 years (unless your business has the potential to become Google or Microsoft).
Choice of Investor: This is really important. I recommend do not follow every investor because they love to invest in the sector that they know the best. This is common sense. Also this will save your time as well.
VC/Investor vs Crowd Funding Platforms: Now a days we can raise money from a group of small investors through crowd funding platforms. I recommend this should be your last option if you tech product is for B2B. In my opinion you always need someone to guide you and help you in growing the company. When you go to VCs and sole investors usually they are in a better position to help you or they can get you in touch with some relevant person through their personal network.
Assuming that you want to capture the Kenyan/East African market, I think you have good potential there. I have worked with Safaricom in Nairobi and I know they are always keen to offer new services to their customers.
Please be ready for a tiring and length process. Writing a business plan is an iterative process. I would recommend that you produce the first version asap and discuss it with some investor. Incorporate their feedback in the plan and show it to the next investor and so on. You will feel that with every run you will also become clearer about your own business! And please do not feel dejected when investors say no to you. In UK/London market, investors are investing in 1 out of 1500 business ideas that they come across. Good luck!
There are 2 most typical stumbling blocks for people in your position. 1) they are too in love with their idea and 2) they have little-to-no real market acquisition plan. The first is dangerous because you will spend a lot of time focusing on why your product is cool instead of what an investor wants to know: what is the deal, what to they get, what kind of payout can they expect, etc. The second is more dangerous long term as many new bussinesses and products have a "if I build it, they will come" attitude, which simply does not work. How exactly will you get customers? Can you model that at all? These are the questions you should be considering at this phase.
The framework I use, and recommend highly, is referred to as OUTSIDE IMPACTS. Each letter stands for part of the pitch you need to cover. You don't necessarily need a full-on business plan as some people are suggesting - most investors will never read that crap anyhow. What you do need, though, is to cover these bases:
You can read more on the OUTSIDE IMPACTS framework here: https://research.chicagobooth.edu/nvc/docs/PT2Kaplan.pdf
The document is written from the perspective of how to analyze a deal, but if your proposal & pitch can line up well with this, you should gain traction. My career is focused on helping people with exactly this type of process, so if I can be of any help, feel free to reach out to me directly. http://www.tandemspring.com
In my experience we all naturally tend to spend to much time describing our process. Most investors and clients are not particularly interested in this. They are interested in a solution to a problem or issue they have. If you state your benefits in terms of calling attention to the problems that your target market has, people tend to sit up and take notice. They will ask, how do you do that!! I want that! Now they are ready to hear about what YOU do to make it a reality.
Without mowing exactly what your product is it is hard to give specific advice, but to put it simply make sure you state the problems your technology solves and how it can make lives, or conducting business, easier.
This is a very high-level, skim the surface answer, however:
If you're looking for outside investment you're almost certainly going to have to write a complete business plan. You'll need to include:
a. executive summary
b. general company description
d. marketing plan
e. operational plan
f. management and organization
g. personal financial statement
h. financial plan including startup expenses and capitalization
Of course, the key when going after investors is to convince them that they'll make money on the deal and the way to do that is to show not just that your idea is great, but that you and your team have the chops to make it happen. You'll need solid financial projections based on in-depth market research and a clear understanding of how you will grow your business and make money for your investor(s).
There is a lot that goes into creating a good business plan that would be attractive to an investor. I used to work at a VC firm and review business plans to help decide which companies to invest in, so if you need assistance, please feel free to send me a private message.
Hi Violet, I agree with Jerry - meet investors' needs. Certainly, develop the detailed business plan with process and projected financials for yourself so you're prepared to answer any questions, but develop your presentation around feasible revenue-generating timelines and value (or cause-supporting, depending on investor interests.) The top three things I've found investors seek, generally:
1. Earning power and value proposition
2. Market adoption (valuable or not, will people buy it)
3. Owner's (your) demonstrated knowledge of the product as well as resources and timelines for points 1. and 2.
A word of advice? Investors are not your friends. That may change over time, but early on, share only what you need to. It's important for You to find a 'good investor match' as well. They're evaluating you, but you Have to evaluate them as well. Remember, this is often a long-term engagement.
I woud ask myself, "What would a potential investor for a new business be looking for?
What would they want to see that would impel them to want to invest in your venture?
Placing yourself in the investors shoes and writing a proposal from that prospective may give some insights.
Another action one can do is to ask potential investors how THEY would write a proposal for the product in question. Tell them all about the product and let THEM write the proposal essentially. You might be surprised how many would actually sell themselves the idea then, as they would then be looking for reasons to invest rather than reasons not to invest.
Hi Violet, Have a Fact sheet at the very outset which is a summary and gives all the critical and important details. The proposal in itself must address a Need, A Demand and existence of such a Need into the near future ( atleast 2-3 years). Once that is done then you need to match that need with your product as to how the two align; Need satisfaction, Willingness of the customer to pay for that product etc. at some point there should be a statistical projection based on your research ( tangible research where you have hard copies!) to forecast approximate market size, price points, entry points, exit strategy and Risk Mitigation- i.e. whats your Plan B if Plan A fails.
A good business proposal will include the following
Current Company Profile
Goals, Mission, Line & Staff, Success Factors, Key Financial Information (projections 2, 3,4 years), Strengths, weakness, Strategic Advantages
Customer description, needs & wants, how you will be meeting the customer needs and wants:
Product or service attributes
Product or service differentiation
Competitor identification, market share, Market segmentation, Product / Service Quality & price, Strengths & Weaknesses, Key objectives, Contingency plans
Your presentation should include a product overview as well as the problem that it solves. You will also want copies of patents and/or patent pending; information as to target demographic, product market, and competition; cost to make the product vs.retail; sales figures since inception; how you plan to market the product; and how you plan to pay back the money.
This may sound silly, but you may want to watch Shark Tank. You will have the opportunity to observe the way business owners deliver presentations to investors as well as the types of questions investors will ask you during your presentation.
The first thing you need to do is develop a business plan to insure that you have addressed all the possible questions an investor will need to know. Second, once you have your business plan done then you must work on a clear, concise, and simple presentation of your value proposition i.e. what is better, faster, cheaper, about your new mobile technology. You may also want to get: Guidebook to Planning - A Common Sense Approach, available on Amazon.
At the risk of being repetitive. First you need a business plan with a focus on a "large market", a great team behind and with you, and financial projections that will look good to an investor when they are cut down to 1/4 to 1/2 of what you project. Finally you need to decide how much you of the company you are willing togive up for the investment. Have you done the research to see that you will be developing something salable and scalable?
Buy a book. There are books on starting your own business. You need more help than can be answered here. www.sba.gov www.score.org
I would advise you to clearly state your value proposition, intended market sectors, current and potential number of users of the products, estimated return on investment for x amount. Leave your marketing strategy detail for more in-depth discussion with qualified potentials.
Prepare the Prospectus, that's what we do for our clients, after writing for them the business plans
I will just make a few comments and hopefully they will help.
1. Proposal depends on who and kind of investor you are seeking.
2. Most Investors regards of 1., want to see a product cost/profit, planned operations including marketing, and sales projections of which they would like to see real numbers if possible to so evaluations can be made. Investor focus is ROI (return of investment) primarily in short time and growth afterwards.
3. I think you product sounds like mobile accessories which have flooded the market by smartphone manufacturers and people like yourself. If you have a real niche in this area, keep it under wraps, patent it if you need too and do small marketing studies after that and maybe some sales. Investors like tat.
4. In a nutshell:
- who is the target audience and why are they willing to buy your product
- cost of you product versus sale price and all operating costs versus current plus projected sales
- strategic (short term) plans and longer term plans in selling your products
There are more, but I think this is core to what you need.
Check out Dragon's Den on TV too.
Violet...My experience is to keep it simple at first...A plan for an investor is similar to your business plan...but with the added focus on how the investor is going to benefit.They are investing in you AND the business idea...if you don't have a lot of legitimacy to stand behind you, then they'll establish your quality from the quality of the business idea and your ability to communicate the value to them.
Hello. The key is to have a business plan that lays out what you want to do. It should start with a one line description of what you want to do. It should have a financial model that includes expected expenses, revenue and profit. It should also include why you are uniquely qualified for this business - what makes you better than anyone else. There is a lot more to it, but those are the basics.