No matter what your start-up idea is, if you’re looking for a loan or investment, your business plan needs to help you sell your idea. However, if you are bringing a brand new idea to market that you haven’t seen anyone else do before, you will probably find this more challenging than copying an already successful business model. New ideas need to work harder to prove their credibility - you will need to convince investors that your idea is a good one and that they will see a return on their investment. So how do you convince an investor that your brand new idea is worth investing in? Here are a few things to think about.
Is There A Market?
If nobody is doing what you are doing, you need to prove that there is a market for your product or service. Consumers buy benefits or solutions to their problems, rather than the products themselves, so you need to show that the problem you are intending to solve really does exist. What is the problem, and is it a big enough problem for people to want to buy your product in order to solve it? And how much are people willing to pay to solve their problem? Have you conducted any market research to back up your claims? Your business plan should address these points so that investors can clearly see that you have found a demand for your product.
What’s the Risk?
When investors decide whether or not to invest in a business, they have to weigh up the costs and the risks. If your idea is brand new, for example if it uses new technology, or if they are unfamiliar with your business model, it may not be obvious what the risks are. It’s important for your business plan to show that you have considered the risks and that you are being realistic, honest and transparent about what these are. People will be investing in you as much as they are investing in your business, so show them that you have enough foresight, risk analysis skills and pragmatism for them to have faith in you.
How Will Investors Get A Return?
It can also be helpful to suggest an exit strategy for your investors, to show when and how they should expect to make their money back. In terms of business, an exit strategy is a way for shareholders to take money out of the business, rather than a person leaving the business. If investors are a little uncertain about whether your idea is profitable, some solid financial projections and realistic timescales in your business plan may help to convince them. Our blog post “Do You Need To Include An Exit Strategy In Your Business Plan?” provides some examples of exit strategies for both you and your investors.
If you have a business plan you are intending to present to investors and you need some help with selling your idea, look no further. The team at cbm have a wealth of experience in writing business plans to help our clients to secure the funding they need. Call 01604 420 420 or use the contact form on the right to get in touch.