If You Build It, Investors Will Come

When you begin to write your business plan or a section within it, you probably ask yourself, "What should I talk about? What key points should I bring out that are important to potential investors?"

The best way to answer these questions is to put your business plan trial. That's right. Think of your potential investors as the jury and you as the defense attorney. You must prove to the jury ? beyond a reasonable doubt ? why they should invest in your business plan. At stake is a life or death sentence for your business venture. Your job is to come up with all the evidence and present it in a way the jury believes you.

Yet, if you look at the way most business owners and entrepreneurs prepare their business plans, they build no case at all. Instead, they mindlessly throw information down on paper, most of which is the same stuff all of their competitors are saying, just to say they have a business plan.

The typical business plan doesn't build a case

Take for example a business plan for a franchised auto repair facility. A typical business plan for this business would include claims like: nobody does what we do, we offer convenient hours to our customers, we use high quality parts, we have friendly professional technicians, we're experienced, and we'll make investors lots of money.

Does this build a case? 

Let me ask this question differently. If you were interested in investing in a business would these types of claims convinced you that this business is the obvious investment choice for you? I don't think so. There are no real claims. No proof that this business is any different or any better than any other business. There are no compelling reasons for investors to believe that they'll earn more money investing in this business than through other investment alternatives. The only hope a business plan with such weak arguments has to attract investors is pure luck.

Imagine what it would be like if an attorney did as poor a job arguing a court case as most business plans do.

Let's take the Martha Stewart obstruction of justice trial. Stewart and her stockbroker, Peter Bacanovic, told the U.S. Securities and Exchange Commission and federal prosecutors that she sold her shares of ImClone on December 27, 2001. They claimed they sold the shares because the two had previously agreed to sell the stock when the price fell below $60 a share. Prosecutors argued the story was a lie. In the end, the jury agreed with the prosecution. But why?

Maratha's attorneys failed to build a strong enough case for her innocence.  They were saying "Come on...Maratha wouldn't have done this! She's the domestic diva! She'd never risk her fortune for such a small amount...there's no way she did it!"

As simplified and ridiculous as this may sound, it's about as good of a case as most business plans ever present to attract investors to their business. They tell investors: invest in us our business is better, we're the low cost producer, we're more professional, we provide better service, we'll make you, our investors, a ton of money, and so forth.

Now, look at what the prosecution's attorneys in the Stewart case DID do. They researched and gathered all the evidence they needed to prove that Maratha did obstruct justice.

Evidence that included the testimony of Bacanovic's assistant. A phone call from Stewart to Sam Waksal, the president of ImClone, just minutes after she ordered the sale. Documents showing Bacanovic, a constant cell phone user, did not use his cell phone for nearly two hours on the afternoon in question. The absence of notes, e-mails, or phone records to prove the $60 agreement was in place. Evidence that the sole document suggesting an agreement existed was a forgery. The admission by Stewart, testified to by her best friend and travel companion Mariana Pasternak that Stewart knew the Waksals were selling when that information was non-public. 

See how powerful and persuasive evidence is?

Three steps to building a case for your business plan

Step 1: find out what prospective investors want. Step 2: give it to them. Step 3: explain your plan to them in a believable way.

You can easily find out what investors want and need to know in my article titled "Understanding the Mind of an Investor" (http://how-investors-choose.bizplansecrets.com ).

Here's how to find out what you need to tell investors about your particular business for them to decide whether investing in your business is right for them. These are the talking points to build your case around.

To start, I'm going to assume that you have researched your plan and already know a bit about your business, your industry, your targeted customers, and so on. 
Now let's say that one of your best friends is considering investing in a business just like yours and comes to you for advice on how best to evaluate the business and its prospects. What would you tell your friend to find out to make the best possible investment decision? What would you tell your friend to look out for? What specific pieces of information would your friend need to have to decide whether this is a wise investment decision?

Whatever these things are, those are the key points to build your case around. For instance, when I first started working with a start-up company to raise money for a revolutionary aircraft landing light, the company was passing out a two-inch thick business plan to potential investors for their review.

Our first steps were to shrink the plan down to twenty-five pages. We decided to focus on showing investors how the company's new lighting system would help airlines make more money. How big the opportunity is. How the company's business model differed from larger, more established competitors. And, how much money potential investors stood to make subject to certain risks. In other words, we identified the talking points of our case.

Next, we gathered the evidence to support the talking points. We gather data on the inventories of worldwide fleets by aircraft platform to show the number of lighting units per aircraft to support our claims of market size. Special reports from the Department of Transportation spelled out maintenance costs and delay costs and showed how much airlines were spending to maintain outdated lighting systems.

We used testimonials and surveys from top purchasing agents and engineers to confirm their interest in our lighting system. Background write-ups of the management team and what each manager would bring to the venture in terms of skills and industry contacts showed why this management team would get the job done. Engineering drawings served as the basis for detailed bills of materials that outlined the costs of each unit. Market studies and surveys provided support for unit pricing.

All this information provided the basis to create projected financial statements ? income statement, balance sheet, and cash flows. Finally, we gave investors a valuation model with all our assumptions outlined for them to review, challenge, or change. This allowed serious investors to decide quickly whether this particular investment fit their investment criteria.

Within in weeks of passing out our "case", our potential investor network began to spread like a spider's web that led to new contacts, management meetings, and eventually two offers for financing.

So, build your case with passion. Uncover what's important for your investors to know about your business plan. Then, present your points clearly. When you do, you'll be on your way to building an enabling investor network and becoming the most desirable investment choice in your particular investment space.

Article by Michael Elia ? mike@business-plan-secrets-revealed.com. Mike is a CPA/MBA, visit his site http://www.business-plan-secrets-revealed.com< /A> for a free business plan guide and more articles on business plans.

In The News:

---

Google News Updated : Fri, 10 Oct 2008 23:49:19 GMT Two Banks in Midwest Fail - Wall Street Journal WWJ Two Banks in Midwest Fail Wall Street Journal - 35 minutes ago By JEFF BATER WASHINGTON -- The Federal Deposit Insurance Corp. on Friday announced the closings of two banks, bringing to 15 the number of federally insured banks that have failed this year. Two banks fold, bringing total to 15 failures this year MarketWatch Regulators shut small banks in Mich., Ill. Forbes Bloomberg - Reuters - Detroit Free Press - WWJ all 37 news articles Publ.Date : Fri, 10 Oct 2008 23:14:00 GMT Emptying the Pac-10 notebook - ESPN Los Angeles Times Emptying the Pac-10 notebook ESPN - 1 hour ago USC is a perfect 8-0 vs ASU this decade, last losing to the Sun Devils in 1999. Over the 8 wins, USC has averaged 39.8 PPG. The Trojans are going for their 400th victory at the Coliseum. Trojans sense an opportunity with Arizona State Los Angeles Times USC, ASU to avoid second Pac-10 loss International Herald Tribune AZ Central.com - East Valley Tribune - Arizona Republic - Examiner.com all 266 news articles Publ.Date : Fri, 10 Oct 2008 22:31:02 GMT GOP Alleges Nonprofit Voter Fraud - CBS News Boston Globe GOP Alleges Nonprofit Voter Fraud CBS News - 27 minutes ago (CBS) This week Sen. John McCain and his running mate, Gov. Sarah Palin, went after one of the nation's leading voter registration groups which focuses its efforts minorities and low-income families and now being investigated for voter fraud. McCain Campaign Calls for Investigation of ACORN-Obama Ties Washington Post Voter fraud accusations mar presidential campaign The Associated Press New York Times - AFP - Chicago Tribune - Huffington Post all 1,109 news articles Publ.Date : Fri, 10 Oct 2008 23:21:41 GMT John McCain, Barack Obama on healthcare - Los Angeles Times Seattle Post Intelligencer John McCain, Barack Obama on healthcare Los Angeles Times - 21 minutes ago How workable are the presidential candidates' health reform plans? Here's a summary of their proposals and a list of online resources for more information. In this economy, don't count on comprehensive health reform Chicago Tribune Fact Check: Would Obama fine businesses that don't offer health care? CNN Political Ticker The New American - The Associated Press - MarketWatch - NJBIZ all 1,686 news articles Publ.Date : Fri, 10 Oct 2008 23:27:40 GMT Wall Street, markets continue roller coaster - Bizjournals.com NEWS.com.au Wall Street, markets continue roller coaster Bizjournals.com - 2 hours ago A roller coaster week on Wall Street ended with the Dow Jones Industrial Average down 128 points Friday after bouncing back from almost 700 points down in the day. Video: Wild Swings Drive Morning Trading AssociatedPress Worst Week on Wall Street Ends Down ABC News WMBB-TV - Washington Post - WMDT - NEWS.com.au all 2,033 news articles Publ.Date : Fri, 10 Oct 2008 21:29:25 GMT Notes on a Milk Scandal - Wall Street Journal Canada.com Notes on a Milk Scandal Wall Street Journal - 5 hours ago By JOSEPH STERNBERG | FROM THE WALL STREET JOURNAL ASIA It's a question I'd never expected to spend much time thinking about. France pulls tainted Chinese food BBC News Tainted milk prompts new Chinese standards United Press International Voice of America - The Associated Press - Xinhua - RedOrbit all 2,270 news articles Publ.Date : Fri, 10 Oct 2008 18:28:15 GMT Conflict Resolution Marked Career of Nobel Laureate Martti Ahtisaari - Voice of America BBC News Conflict Resolution Marked Career of Nobel Laureate Martti Ahtisaari Voice of America - 2 hours ago By Andre de Nesnera Conflict resolution marked the career of former Finnish president Martti Ahtisaari who has received this year's Nobel Peace Prize for his efforts to secure peace in various regions of the world. Video: Ex-Finland President Wins Nobel Peace Prize AssociatedPress Martti Ahtisaari gets a deserved Nobel Peace Prize for a (failed) plan Times Online The Associated Press - Sydney Morning Herald - TIME - AFP all 1,240 news articles Publ.Date : Fri, 10 Oct 2008 21:23:27 GMT RSS Software Increase Web Traffic

PARLOT::Ebooks, Scripts, Websites, and more...

Adsense websites

Policy & Procedure Manuals - Tools For Greater Productivity and Efficiency