![]() |
Strategic Planning Information |
|
|
What Every Service Provider Ought To Know About Writing A Business Plan
It's easy to lose sight of what needs to be communicated to prospective investors when writing the various sections of a business plan. Successful business owners/entrepreneurs use each section of their business plan to work up interest, to present arguments and, most important, to build trust and confidence. How To Earn The Trust Of Skeptical Investors? Usually some sort of upfront investment precedes starting or expanding a business, whether it be time, energy or cash. If you plan to raise cash from investors, you must get prospective investors comfortable with putting their money into your hands. To start you must understand that investors simply want to select the best investments, period. This means choosing businesses that earn a high enough rate of return on investment to offset the risk of the investment. That said, deciding what is a good opportunity is an investor's number one challenge. That's why investors thrive on information. Good information - good decisions, bad information - bad decisions. But, investors are often asked to invest funds with little reliable information. This, combined with the difficulty of deciphering the information they do get about various investment alternatives, leaves them fearful of getting into an awful deal and skeptical of the deals being presented. To get comfortable with an investment, prospective investors want to see results and evidence. They want to be educated about the investment opportunity and the investment options available to them. But, they won't accept this education at face value; they want to see the evidence that supports it. Even for niche businesses. Investors use this education to expand their research and use the evidence they gather to develop their expectations. In the end, investors merely want the opportunity that they select to match the expectations they have developed. When investors object to an investment the objection is usually of the "Educate me?" type. Tell me your story, show me your numbers, and then prove it. Prospective investors want information that they can validate, options and risks that they can see, and to be educated about your specific business. They want to hear why you and your team are the ones that can produce the projected results. If your business plan "educates" prospective investors on these issues, you'll win their trust. When that happens, its time to? Build Investor Confidence - Show Why Customers Will Award Their Business To You Rather Than Other Service Providers? Investors invest money in businesses based on expected cash flows. To create cash flow, you must first win business. That's why it is important for your business plan to show investors why customers will award their business to you at a price that allows investors to earn an acceptable return on their investment. When potential investors begin evaluating a service business plan, they are likely to be skeptical of your ability to consistently win business. In their minds your prospects need someone to do something for them. Something that your customers either don't know how to do, don't want to do, or don't have to do. Service provider business plans must convince potential investors of two things. First, that the customer's pain of not having this "something" done or the pleasure of having this "something" done is so great that it compels the prospect to act. Second, that the customer is willing to pay to have this "something" done. Potential investors in service type businesses expect that your customers are feeling confused about which service provider is the best at providing the solution you offer. They may also perceive your market as saturated with so much information?some of it true and some of it not so true?that customers are finding it difficult to decipher the information they have about each solution. As a result, investors in service type businesses often picture skeptical customers with fresh memories of negative service experiences. Moreover, they suspect that your potential customer's biggest fear is getting awful service. To overcome this, your business plan must show investors how you plan to successfully educate prospects about your solution and convince them that you can deliver the expected results. It must present the evidence you'll use to convince customers that you will do the job right, do it right the first time, and won't fix what doesn't need to be fixed. It has to explain how you will educate the prospect about the service and the options available to them in a way that they will understand and trust. Your plan must convince investors that you can win over prospective customers who are likely recovering from a negative experience in your market space?customers who have been promised the ultimate solution only to be disappointed. It must provide details about how the principles and techniques chosen to market your service enable customers to view you as honest. It has to help investors see how the chosen delivery method for your service ensures customer satisfaction. The business plan must also convince investors that customers can verify the service results you promise and that prospects can easily compare the results to other alternatives. This proves to investors that prospects can determine the superiority of your service and it shows them how you differentiate your services from other service providers. Points For Service Providers To Address In A Business Plan In summary, if you're a service provider trying to attract investors, these are the points you must address in your business plan:
When you address these points in a business plan with verifiable evidence to back them, potential investors will have to conclude that they would be foolish to invest in any other service provider but you. 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.
MORE RESOURCES:
Google News |
RELATED ARTICLES
Getting Started with Succession Planning: Part I GETTING STARTED WITH SUCCESSION PLANNING: PART IA survey of 4,300 small business owners by the Canadian Federation of Independent Business (CFIB) revealed about 37% said they plan to sell their businesses upon retirement to non-family members. Twenty-six per cent said they planned to transfer or sell their business to family members, and an equal percentage had no business transfer plans yet. Invalid Excuses for Poor Business Results - Rising costs Note to Northwest Airlines - It's not about fuel costsFor the first quarter of 2005, Northwest Airlines posted a loss of $458 million. The main reason cited was high fuel costs. College Students and Graduates to Run Company Outlets or Franchises Does your overall business strategy include the recruitment of college students to run your locations? Are you a franching company and looking for young, talented, hardworking and dedicated franchisees? There are some things to think about before you deploy such a strategy. There are both positives and negatives to focusing your recruitment efforts on college students, for instance best reason's to use college students include some of the following:They May Have Rich Parents Who Can Pay Outright For A Franchise;They May Have Parents Who Are Willing To Co-Sign For A Franchise;They are Young With Plenty Of Energy;They Have Little Business Experience And Will Not Try To Rewrite Our System;They Are Used To A Very Structured Environment;They Want To Succeed;They Might Have A Business Degree;They Are Sociable Animals And Good With People;They Will Study Our Operations Manual Cover To Cover;They Will Make Two To Three Times As Much With A Franchise Than Their First Corporate Job;They Love To Have Fun And This Is A Fun Job. Who is Responsible? While writing an article recently on effective ways to bridge the IT/Management communication gap, I realized that few of us are eager to take responsibility in our business lives to make something different happen and be part of the solution.Indeed, we have a culture based on blaming: sellers would obviously close more sales if it weren't for the buyer; decisions could easily get made in meetings if people could make up their minds; systems would get designed correctly if the users could get it right the first time; teammates would get along if it weren't for those in the team that were difficult, etc. Communication Strategy During A Time Of Strategic Planning "Rubbish!" shouted the large, aggressive man in the red-striped shirt (we had to pay attention to him because he owned the company). "The staff don't need to be told anything. Home Improvement Construction Project Planning The first task before hiring a contractor for home remodeling is laying out the details on what exactly you want done. This will ultimately save you time and money, as you will be able to choose the perfect contractor for your construction job, and get the job done correctly the first time. Break-Even Analysis A significant advantage of some business ideas is that the venture can break even at what seems to be an easily achievable volume. A technique for quantifying that volume, called break-even analysis, examines the interaction among fixed costs, variable costs, prices, and unit volume to determine that combination of elements in which revenues and total costs are equal. Financing Business Expansion for Your Small Company How you finance the expansion of your business is important. Borrowing and understanding the consequences of borrowing for your financing is extremely important. Pave the Way to a Successful Strategic Plan Many very successful business owners may never have had a formal strategic plan. Some think, "Why do we need to do strategic planning? We're doing great just like we are. The Six Sigma Method and Design of Experiments Six Sigma is becoming a proven approach for businesses and organizations to improve their performance. The spectrum of companies actively engaging in Six Sigma today is wide from industrials like Celanese, Caterpillar, GE, Honeywell, and 3M to service/retail organizations like Starwood Hotels, Sears, and Home Depot. Top Ten Reasons To Create A One Page Business Plan There is a story, about a business owner who wasn't doing very well. She had no business plan, but had heard, quite a bit, how creating one would help. Vendor Relations Strategies Sample Outline One of the quintessential parts to any business is your supply chain. To insure that the supplies are there when you need them; in this new day and age of "just in time" distribution where very little sits on warehouse shelves until you order it you will need excellent vendor relations. Planning for Success Business planning is widely acknowledged as one of the keys to business success. Yet there is still a great reluctance by small business owners in this area. Site Selection and Demographic Tips for Establishing Outlets Many cities have home pages on the Internet. Many of these cities use these sites to promote their town. Innovate Today for Great Leaps Forward Tomorrow How often does your company make a quantum leap forward? My guess is that, on a scale from "frequently (10) - to - never (1)" the answer is much closer to "never" because few companies have a process to innovate or think creatively. Very few attempt to formally think through their business model, their relationships with staff, clients, and vendors, and their product / service offerings. How To Kick Start Your Business And Double Your Profits This will make some people angry as hell, but it's time to debunk the myth of 'Time Management' while sharing the real secret of the super successful.Let's face it, many so called "business gurus" tell us to 'manage time better' or to become 'ruthless with time' if we want to achieve their level of success. How To Prepare A Business Plan That Guarantees Big Profits It is always said "If you Fail to Plan, you Plan to Fail" Success in business comes as a result of planning. You have to have a detailed, written plan that shows what the ultimate goal is, the reason for the goal, and each milestone that must be passed in order to reach your goal. Seasonality: Whats the Big Deal? Do you work in or own a business that's affected by seasonal cycles? Do you live in a community whose population changes significantly during the year (e.g. Consolidation in the Software Industry is Hardly New: Obsess About It or Risk Losing it All Some analysts credit [Larry] Ellison with anticipating the consolidation in the enterprise software industry and leading the charge. Ellison 'called a major shift in an entire market, which was impressive. Making a Decision to Outsource: Strategic Constraints Many companies are reluctant to dive into outsourcing ocean because of various reasons of strategic nature. As far as strategic goals are touched upon, managers are concerned with the following issues:- Risks and dangers of transferring too much managerial power to one partner. |
| home | site map |
| © 2006 |