Connector ltd (business plan)
Risk, Return and Exit
Sooner rather than later the prospective investor will ask himself: What is the risk, what sort of return can I expect for bearing this risk and how can I realise my investment, i.e. exit? There are two ways of tackling the first issue, that of risk. Either, address the risks associated with the proposal at each stage at which these occur, e.g. productions, sales, staffing etc… or, alternatively, conclude your plan with a separate section devoted specifically to risk and the related issues of return and exit.
Whichever option you choose it is important that you are: realistic in appraising risks; neither selective nor over pessimistic about the difficulties; clear about how you intend minimising the risks; aware of potential objections to your proposals.
Bear in mind that the investor’s objective is to maximise the investment gain, not exercise control over the business. What he needs to know is how valuable your company might become (and therefore what is the expected future value of the initial investment), and what routes are open to realising a capital gain.
Summary Your business plan is, first and foremost, a sales tool. It is essential that it looks good and reads well. Professional presentation is critical. Beyond this you should observe the following guidelines:
1. The text should be cogent, concise and clearly laid out.
2. Focus on key issues, avoid extraneous details. Knowing what to leave out is just as important as knowing what to include.
3. State clearly what makes your product different or better and exactly where you intend focussing. Trying to do too much is indicative of a poor understanding of what you could do best.
4. Formulate objectives that are unambiguous, consistent, credible and compatible with industry experience.
5. Show that you really understand how your target market operates, what your customers want, how you will distinctively meet these needs and on what basis you will compete successfully.
6. Display a clear understanding of your investor’s needs and interests.
7. Avoid complete infatuation with your product and how it will be produced.
8. Demonstrate that the team you have assembled has the balance and the track record to exploit the market opportunity as well as the determination to stick with the venture.
9. Openly address risks and problems, explaining how you intend dealing with them.
10. Ensure that the plan is intelligible and complete in itself, having no need of additional data or explanation. Think also about how you could most compellingly sell your plan in a ten minute oral presentation
