What investors need to know in your business plan

If you’re planning to start a new small business, you’ve probably spent a lot of time on developing your business plan.  If you’re looking to get assistance with finances from an investor, they’re going to need certain information from you before they decide to commit.  Depending on what area you’re in, how much money, you need, etc., there are certain bits of information that an investor will need to see.  However, Allbusiness.com has a quick checklist for five important items that prospective investors need out of your business plan before they decide to invest.

1. What is your industry background and experience?  How long have you been working in the field that you want to start a business in?  If you’re planning on selling your original crafts, for example, how long have you been making them?  Do you have a degree in art?  They’ll also want to know what other employees and managers that you’re going to hire have in terms of experience.  Are they neighborhood kids or is it someone you went to art school with, for example. 

2. You’ll need to show that your product or service is not only original, but that there is a need for it in the market.  You don’t want to go out competing against the same type of companies without a unique position or service.  The investor has to know that there’s a good chance he’ll be earning his investment back, and to do that you need to somehow stand out. 

3.  How will you reach your target market?  What does your advertising strategy look like?  What type of money are you looking to use to get your name out there?  How are you going to price your items or service?  All of these questions should be answered prior to meeting with an investor.  You’ll want to come up with many marketing avenues with the cost and budget for each.  It’s best to be prepared in order to handle any type of objection.

4. Investors want to know that you’ve thoroughly researched your competition.  They want to know what you’re going to do to set yourself apart from the competition, whether it be in your pricing, advertising strategies, or your customer service.  Figure out what your competition is doing, and what you’re going to do differently.

5. Obviously, someone is going to loan you money in the hopes that they make money on you.  They’ll want to know how long you think it’ll be before you start to turn a solid profit.  Try to work out figures ahead of time.  Bring with you your financial documents if you have them.  You’ll want to make sure your presentation is readable, organized, and professional looking.

Hopefully these tips will help you prepare for your presentation to any potential investor.  Do you have other tips our clients need to know?  Be sure to leave us a comment.  Do you need a quote on what it would be to advertise your business?  Visit us online for a free, no-obligation quote.

Relief offered for struggling small businesses

The Small Business Administration (SBA) is working with Washington to help those small businesses that are having trouble paying off their current debt.  Unfortunately, businesses that have current loans backed by the SBA won’t be able to use new loans to cover their current ones.  This new program is tentatively called “America’s Recovery Capital” and the stimulus bill from Obama’s administration helped to create it.  The bill requires the SBA to create a program to back loans of up to $35,000 for small businesses that are experiencing hardship.  The loans can be used to pay principal and interest on loans for up to six months.

Businesses with existing SBA loans can apply for the new ARC loans but they have to use it to help pay down debt other than a current SBA loan.  These loans will come directly from banks but the SBA will offer the banks a 100% guarantee.  If the business owner defaults, the SBA will pay the bank back the full value of teh loan.  The SBA will also subsidize all the interest on the loans.  Payments won’t be due for a full year and business owners will have up to five years to pay them back.

Only “viable” small businesses will be eligible.  “A ‘viable’ small business is a business that has a demonstrated earnings history and proven record for success that may just need a little extra help to get through a short-term downturn,” Eric Zarnikow, the SBA’s associate administrator for capital access said during a recent presentation.

Congress has allocated $255 million to start up this ARC program.  It will have a higher lending amount since this money will be used for the interest subsidization and the loan guarantees.

Does your small business need help?  Read this article for more details. For small business marketing assistance, be sure to visit us online.