Show me the. . . evidence!
When it comes to writing a business plan, many businesses focus on speed. By rushing to complete their plans, businesses often forget to gather critical evidence to support their plans. Investors never read business plans that lack evidence or consider the claims in them worthless.
Gather evidence to build your case, support your claims, and persuade investors. When writing a business plan, use these 10 critical pieces of evidence to win the trust of potential investors and their backing quickly:
- Articles about your industry, competitors, products, trends, and so on. When unsolicited, articles about your company or products help build credibility, provide unbiased viewpoints, and often include third-party research.
- Market studies. Use market studies to support market trends, size, and growth rates. When prepared by an independent party, these studies add credibility to market related claims.
- Product or business literature. In-house product or business literature shows you are in the game. More important, it can help investors better understand your product or service and the key point of differentiation you are competing on.
- Customer interviews, surveys, testimonials. All these are effective forms of third-party endorsements in which someone offers independent testimony, comments, or opinions about you, your product, or your service. For these to be persuasive, include with them the person’s full name and an identifier, like a city or organization.
- Contracts for leases, royalties, commissions, supply agreements, subcontractor agreements and the like. To prove that these arrangements exist is to tie them to contracts or agreements. An important arrangement with a specific supplier supported by a contract or agreement gives it real value to an investor.
- Product cost and maintenance details. Claims like low cost producer are meaningless without facts and figures. Support all your claims. No matter what you claim, there is almost always someone who has tracked or analyzed the important statistic that backs it up.
- Important technical drawings, patents, trademarks, franchises, copyrights, licenses, and so on. If you claim you have these, back them up. Don’t say you hold a patent if it is Patent Pending. If you hold a patent, give the patent number and type.
- Financial statements, financial projections, tax returns, and similar financial reports. Show investors what you did financially. Where you spent and produced your money and where you plan to make it. This information is key to supporting the value you place on your business.
- Corporate books and records, information about your officers or directors. These can include charters, bylaws, minutes of meetings, shareholder list and other stock records, qualifications and registrations. All these items support your claims about share ownership, dividends and incorporation.
- Details of outstanding debt, equity securities, and so forth. Investors will want to know about the dividend rates, par values, principal amounts, interest rates, terms, and collateral about your outstanding or proposed debentures or equity securities. Use the agreements to prove important details.
Whether you want to draw in new business investors or excite current ones, write a business plan with compelling pieces of evidence that are persuasive and support your case.
Mike Elia is a chief financial officer and an advisor to venture capitalists and leverage buyout specialists. His business plan ebook "Business Plan Secrets Revealed" shows how to make your business the most appealing investment choice to venture capitalists, bankers, and other business investors. For his free business plan guide click here.