HomeBusinessBusiness plans that win investors (Part1)

Business plans that win investors (Part1)

WRITE ON THE MONEY:WITH NATSAI MUSARURWA

Business funding has become rather elusive in Zimbabwe, but it’s not because of a lack of it. People are usually quick to blame the economy, the political situation and so on and while these factors do affect investment sometimes the reason why you are not getting funding has nothing to do with anyone else.

There are people who have access to the right contacts at the right time with the right idea, but still fail to get the money they need. Why is that? Well, it could be a number of reasons but often it comes down to this – they have a terrible business plan. You can have the most brilliant idea but if you don’t communicate it the right way on paper it will be hard for anyone to see the value in it.

As the founder of the writing consultancy Amras Communications I have written my fair share of successfully funded business plans. I don’t claim to know everything, but I want to share some tips and tricks on how we at Amras have managed to put together winning business plans. So over a series of articles I am going to walk with you through the process of writing a business plan that investors can willingly fund, and our first stop is going to be: understanding who your intended audience/reader is.

If you are trying to secure funding, then your primary audience is obvious, it’s people with money, but remember that not all financiers are the same. Funders include banks, venture capitalists (VCs), impact investors, angel investors, donors, and the list goes on. Anyone who puts money into something is almost always looking for a for return in one form or another, but where they look for indications of the business’ potential and what influences whether it’s worth their while, will differ from one funder to the next.

Let’s look at banks. They give loans so their main concern is whether you can pay them back, with interest. They will also look at whether you have assets that can be used as collateral in the event that you can’t meet your payments. So the key areas to emphasise in your business plan would be your balance sheet and cash flow. And when I say emphasise I mean really go deep into it with financial notes and the whole nine yards — leave nothing to the imagination.

Venture capitalists also care about financial statements but their focus is more on return on investment and exit strategy. Will they make their money through dividends, by selling the business or having their stake bought out, and how much do they stand to make? Beyond the numbers, business plans to VCs also need to be concise. Some institutions are still stuck in a time capsule where they believe a longer document means you must know what you’re doing (a notion we are very opposed to at Amras but we will touch more on that in another article) but in this day and age most investors simply don’t have time nor the desire to read a 90-page plan. They go through a lot of business plans everyday so chances are they won’t give your plan much more than a quick glance, and if your document is too long, you risk them missing a lot of vital information.

Now looking at impact investors and donors, these groups are more keen to know the social impact and scalability of a business. Some of them also like ideas that are different and that excite them so really double down on the unique aspects of your business (this is the same for VCs as well). This here is a great example of why it’s important to tailor you plan to your audience. If you’re submitting a plan to a bank, for example, they probably won’t get as excited about how unique your idea is, they just want to know if you can repay them. In fact, banks try to avoid business ideas that are “too innovative” because of the risk they come with.

There are many other factors that you would need to highlight depending on the funding source, such as the capabilities of your team for VCs, but we can’t cover them all here. The point is your business plan should always be customised for the intended funder. Understand what they usually invest in, what their investment approach is, what really floats their boat, and by knowing this you can also figure out whether they are a good fit for you and your vision (just because they have money doesn’t always mean they are the one). So do your research and put together a business plan that speaks to what matters most to your intended audience, and sometimes that may mean watering down (but not compromising) what’s important to you.

l The team at Amras Communications is always here to talk, so even if you don’t want us to do your business plan for you we’re happy to lend a helping hand where we can. Call or text us on +263787722016 or email us at info@amrascoms.com. We are committed to your success.

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