Question for investors

[DenverDave]

I am currently writing up my business plan for a social media site i am creating. I know, another social media site but trust me this is an idea that has never been done before, directed at a certain profitable niche and also has a revenue stream I have never seen implemented before.

Anyway, im using Business Plan Pro to help me create my plan as I have never created one before. One thing ive noticed in their sample plans is an excess of information that doesnt relate to my business at all being that it is strictly online and all customers are online as well.

My question is, as an investor, what parts of a web business plan are most important to you and where should i focus most of my attention? I read somewhere that its good practice to get this information from your prospective investors before you write up a busines plan. I appreciate any advice.

Thanks,
David

[daveb1]

Hi David,

I would create the site/application before looking for investors. Most investors will not blindly invest in just an idea. Once you either have a live site or mock site then you can start building out a business plan off of the feedback you get. You may want to create a short 1 page business summary just in case someone is interested but I would really focus on putting the site together before worrying about the business plan.

[Parvaze]

The following came from a post by Marty Zwilling earlier this year:

1. Lack of a compelling story. That story has to begin with a painful problem shared by a large collection of viable customers, with your competitive solution. Additionally, you need to be able to communicate the essence that story and value to investors in a couple of sentences – your elevator pitch.

2. Lack of clear objectives/goals. Often, the number one question that entrepreneurs fail to address is: “How much money do you need, and what valuation do you place on your company?” Then you have to have evidence to support your request. I’ve asked this question many times of presenters in angel meetings, and often get a blank look.

3. Failure to prepare for due diligence. Any serious investor will perform a thorough review of your business and personal background before signing the check. They don’t like surprises, so you should explain any possible issues first, in the best possible light, before being asked.

4. Lack of understanding of the fund process/rules. The key here is to create a win-win situation for your investors. Discussion of risks and rewards in an open fashion, without sleight-of-hand or shortcuts, will convince investors that they can count on you, and will avoid shareholder lawsuits later.

5. Reliance on inappropriate business professionals. Using well-respected professionals to bolster your endeavor is key. If you can attract well-known advisors, attorneys, and accountants, it will give potential investors comfort that you have been able to get implied endorsement of your concept, as well as your integrity.

6. Poor choice of funding sources. It is not helpful to you for funders to love an idea that does not fit the criteria for their investing capability. Don’t waste time talking to VCs for requests less than $1M, or very early stage, and don’t expect professional investors to jump in if you have no “skin in the game.”

7. Not doing due diligence on the funding source. You need to complete due diligence on your prospective funders as they complete due diligence on you. Find out what they have invested in recently, what stage, and what is their track record of expectations and follow-through. You don’t need surprises or disappointments either.

8. Being unprepared for the next steps. After a good elevator pitch or initial presentation, investors will ask for your formal business plan and financial projections. Don’t derail their enthusiasm or risk your professional image by not having these materials immediately available. The same thing goes for incorporating your company, having key hires lined up, and facilities arranged as required.

Good luck!

Best

[DenverDave]

thanks so much for the information. I think its a great idea to create a mock of the site first and parvaze that was exactly what i was looking for in regards to what investors look for in a biz plan. thanks guys i love this site

[Tjordan]

Great information!

[Parvaze]

I've found that there really isn't a shortage of money or ideas, the shortage is in people who have the ability to make something happen. Trust me when I say that if any of you follow the advice above you will get the funding you are looking for. Good luck!