Business Plan Chapter 8

Business Plan Chapter 8

Subheading Goes Here

Chapters: 1 2 3 4 5 6 7 8 9 10 11 Oil & Gas publications

Chapter Eight: "How To plan & Prepare To Raise Money For Your Business."

A profound wake-up call hit the capital markets about three years ago. During the second half of the 1990s, the approach to raising money was temporarily redefined. More normal metrics were replaced with the new math of first-to-market presence, customer "eyeballs", and dynamic growth. If you got all the money you needed and are still in business, Congratulations! If you were not so lucky, then perhaps this article can help.

Today, large opportunity and growth possibilities are insufficient to secure funding. Raising money has turned back to basics. Your possibilities are now dependent on a solid and fully developed business model. Secondarily, you will need to be able to articulate this plan in a persuasive manner.

The good news is that private equity funds have significant money piled up on the sidelines. In today’s low interest rate environment, both banks and individual investors have money now earning low rates of return that they would like to employ better.

The bad news is that caution is pervasive and investors are demanding onerous terms. Cash-hungry entrepreneurs might grab the first deal that comes along. If you do not have confidence in both your business plan and the value of your business, you are unlikely to be able to negotiate favorable terms.

In the process of obtaining initial interest with potential financing sources, you will likely need to make a formal presentation. The focus of the presentation is the communication of a well-reasoned and complete business plan. Your presentation (and obviously your business model) should address the items listed below.

Executive Summary – This must get initial interest, while at the same time put forth the most salient points of your entire plan.

The Market Who are your customers? What problem are you solving for these customers? What are they willing to pay for this solution? How many of these customers are there? Based on the above, how big is this market?

Your Product How does your product solve your customers’ needs? Some technical details of the mechanics of your solution (to convince your listeners that it really works) What suppliers will be supporting your development? What are the critical processes that you must perform well to deliver a quality product/service?

The Competition and your Differentiated Solution Who are your competitors? (If you claim that there are none, you will be immediately dismissed as stupid or arrogant - or both) How your product is an improvement over existing solutions? How is your product priced relative to your customers’ alternatives? What core skills does your organization have or what assets do you have that others do not?

Marketing What channels of distribution do/will you employ? How many salespeople are needed? What is the advertising and marketing plan? What alliances will you rely upon?

Leadership Who are the key members of your team? What credential and expertise do these people have? What is their record of accomplishment and success? What outside advisors are helping you?

Numbers What detailed financial models have been prepared? What assumptions are important to these models? How sensitive are these models to changes in these assumptions? What key performance indicators are important in this business (more than just profits and cash flow), and what are these showing? What is the breakeven point for the business? How do these forecasts compare to whatever historical results you have already achieved? How do these forecasts compare to what others in your industry are achieving?

Funding How much money do you need? Specifically for what will this money be used?