There are scores of business plans hovering around hoping to find a funding home. Even you will have received several business plans each year and most of them would be somewhat lacking as presentations of thrilling investment prospects. I am not talking about the product itself or its value, but the presentation that tries to pass on the investment as an exciting proposition. The financials which are part of the business plan are also included. One of the main reasons why business plans are so badly written is that the writers themselves are not aware about how these business plans are read. Venture capital firms, investment banks, angel firms, family offices, blind investment pools, and banks get heaps of business plans for consideration each day. Normally a junior reader is allowed the task of reading and screening the business plans eliminating the ones that are complete losers. The other business plans are then evaluated by reading the Executive Summary first followed by the financials; next comes the Management and lastly the Exit Strategy. Like they say you get just one opportunity to create a superb first impression. Your project’s first impression is its business plan. It is the base of your opportunity or you may choose to call it the foundation or skeleton. Just like a house with a foundation that is not strong will not stand up long, so also a business with a weak business plan. It is really sad why business people do not submit documents that do not appropriately mirror the excitement they believe lies in their invention. A badly written Executive Summary nullifies all the investment, innovation, energy, and time spent in a new venture. Based on the assumption that the business plan submitted has a very good Executive Summary, and passes the first inspection, financials are the next section to be read. If we said that the Executive Summary forms the skeleton of your project, then the financials form the muscle. financials are the result of a series of suppositions that are the answer to putting forth a practical and understandable cash flow, income statement and balance sheet. Investors have particular Return on Investment or ROI factors that they must try to realize before they can think of committing to an investment. The suppositions on which the financials are based must be the result of meticulous research, prevailing market conditions as well as historical means. The main reason why financials often lead to death of the project is that the suppositions are based on hopes and dreams and castles in the air. A regular rule for getting over the financials hurdle is that investors are required to practically make sure that they get around thirty five percent return on their investment starting from two years to three years from the time the investment was made. This speed and rate of return should be able to withstand hard-line inspection. If you aren’t already aware of it, investors are crazy about examining, prodding, poking and pulling apart the suppositions on which your financials have been built.
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