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Creating a convincing business plan to gain investment

How to light a dragon's fire.

Venture capital investors see hundreds of new business ideas every year: most of them are ignored. If your business is looking for investment, here are some tips on how you can make it through the Dragon's Den and come out smiling.

Look polished

Take time to prepare a convincing and polished business plan - it will help investors to take you and your idea seriously. Your plan needs to be concise, with separate headings and an executive summary at the beginning. It should be written in clear, accurate, jargon-free English. If you have to use technical language, explain the meanings clearly. Remember, you won't have their attention for long.

Demonstrate that your business can grow

At a minimum, investors will want to double their money over three years. Show them how your business will achieve this level of growth.

Know your market. Investors will expect you to know your market inside out. They will expect you to have carried out market research and to understand the competition. They will want convincing that your product or service has a potentially big market and a competitive advantage over what the opposition are offering.

Protect what is yours. If you have developed technology and other intellectual property that is key to your business, investors will want to know that you have protected it and kept it as secret as possible.

Demonstrate sound management

Your management team doesn't need to be the finished article, but investors will want to be convinced that your business has strong product development and sales skills. Some investors can (at a price) help to fill a skills gap, for example, by tightening up financial controls or helping to develop your marketing strategy.

Show your commitment

Investors will want to see that you are dedicated and that you have invested a lot of your own time and money in the business. They will expect your remuneration to be linked to results.
Consider your exit strategy. Your aim is to make money for yourself and your investors. Think about who would want to buy your business once it has grown? How long will it take you to get to that point? Investors will generally want to realise their investment within five years. Ask them how they can help you achieve this.

Keep control

How much of your business are you prepared to give up? Investors will want a lot for risking their capital and you will need to make an investment worth their while. But this doesn't necessarily mean giving up control of your business. Investors can be offered shares and further funding could be provided as loans or preference shares.

Keep it confidential

Most investors would be responsible and respect your confidential and commercially sensitive information. But they would expect any recipient of your business plan to sign a confidentiality and non-disclosure agreement - including themselves.

Take advice

If you manage to interest an investor, take some professional advice before you sign on the dotted line. Remember, those dragons are no angels.

Show me the money

If an investor likes your business plan, he'll want to take a cold hard look at your business and how it operates. Your business premises should appear well run and organised. Your financial information should be as up-to-date and comprehensive as possible. Your contracts, leases, licences and other legal documentation needs to be available for inspection.

Fast facts

Raising finance to start or grow a business is very different from the BBC's popular Dragons Den programme. Investors look for a solid written business plan, not a fluffy pitch.


This article first  by Richard Beavan appeared in the March/April 2012 edition of flybe's Business Uncovered inflight magazine. Learn about capital markets here. 

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Email: bh@boodlehatfield.com

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