Guest Post by Derek Whitney
Remember that many people are now prepared to invest in a venture they feel is worthwhile. Since they are looking for a reasonable return on that investments and the rates on Treasury notes and CDs are quite low, they are definitely prepared to opt for certain alternatives.
What you need to do
This means that if you are looking for someone to invest in your small business, you will have to reassure him or her that this is a solid opportunity with virtually no risk of failure. To accomplish that, you will need a detailed business plan containing relevant examples and statistics. What follows are the steps you should take to get that very important start-up capital.
1. Show that the business has profit potential.
To do this, you will need to test your product or service in the marketplace on a small scale. This will enable you to estimate your future revenue and expenses. If you find that this cannot be done in your case, do some research to prove that businesses similar to yours have succeeded in the market you want to enter.
2. Demonstrate that there is considerable and growing demand for your product or service.
You can accomplish this by providing statistics from relevant business articles, economic reports, census data and the Internet.
3. Explain your marketing plan.
If you managed to test your product or service as mentioned above, remember to include those test results in this section of your marketing plan, along with your plans for expanding your business later on.
4. Focus on your strengths.
Provide information regarding your experience in the industry you have chosen, and highlight the qualities you have for running a business. Remember that your personal accomplishments and educational backgrounds will help to show that you possess the knowledge, determination and inspiration to make your business a success.
5. Explain how the business will be run.
Assure prospective investors that you have given this issue the time and attention it deserves. For example, if you plan on selling a particular product, explain the way in which it will be purchased, stored and delivered. If you are going to provide a service, describe what you will do for your clients.
6. Create a budget for your business.
Use the various statistics you have compiled and create a monthly budget to cover your first year of operation, along with yearly budgets for the following two years. Remember to explain the way in which investors will receive payment.
Obviously, the type of business plan you need in order to attract private investors is not exactly the same as the formal plan a venture capitalist or financial institution may require. Because you may already know your prospective private investors, your plan can have a more personal tone, and you can use some creativity to make it more persuasive.
Derek is currently blogging for Startup Valley, an crowdsourced investing platform that helps connect technology startups with investors. Derek enjoys blogging about marketing tips, finance, and other business related topics.