Sunday, July 8, 2012

Effective Business Plan for Angel Investors – GEC Business Review


by Kelvin Wong

Creating a business plan is a crucial and valuable exercise whether you're planning to raise funding or not, because the process will trigger useful questions, and help guiding your strategy and structure your business effectively. Let’s find out my tips for writing an effective business plan in order to attract angel investors.

First of all, your business plan is a living document, it’s not a document done once for all, so it doesn’t need to be a thick document. In fact, most investors will only look at the Executive Summary initially.

1. Executive Summary
This is a ‘window' of your business plan which sets out the fundamentals of your business. The headings in the executive summary will generally mirror those of your plan. Executive summary is often non-confidential, where as a full business plan may contain strict confidential information and would only be supplied once a non-disclosure agreement has been signed by the recipient.  

2. Business Overview
This section is all about your business definition, model and structure. Your explanation needed including your products or services, location, why it is intended or started, the purpose of the business and key business objectives.

3. Market Overview
An in-depth research is needed in this section as a detailed of market situations have changed or are changing in the market you supply is significant to explain such as relevant factors influencing political, economy, social, technology, environment and legal.

4. Key Personnel and Team
The team who runs the show is to be outlined including management structure, managers' relevant experience, skill sets as well as their roles and responsibilities.

5. Financial Projections
Funding is important, or your business plans will become flop. The detail funding requirement, structure and stage of funding is essential. A three-year projection will suffice, and should include projected revenue, gross profit, net profit before tax, cash inflow and outflow, maximum cash requirement over a specific period of time.

6. Exit Strategy
This is in fact one of the mostly asked questions, most angel investors will likely want to know where your business is heading, more importantly, what you intend to do in the near term and long term. For instance, if you plan to buy back the business, your suggested buy back option and offer is needed.

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