No plan, no chance: why entrepreneurs without a proper business plan fail

18th November 2020
You may be surprised to learn that plenty of entrepreneurs seeking investment right now don’t have a proper business plan. It’s not as if they’re arriving at meetings empty-handed, they’ve likely come up with all sorts of things to prove their concept and persuade investors. But they haven’t got the one thing that demonstrates how truly investable they are – a believable business plan.

For investors, the absence of a business plan is a big red flag that tells them that this entrepreneur has failed to clear an early hurdle. Persuading them to overlook this and go on to invest is a massive undertaking. That’s why it’s far easier to do the hard work now and create this foundational piece of collateral that’ll serve you well throughout your Fundraising Journey.

One of the most common mistakes we hear when talking to founders is that people think the business plan and pitch deck are one and the same. They believe they’ve enough information to patch together a decent 15-20 slide investor pitch, believing that this alone is what their investors are expecting. This is both wrong and potentially disastrous.

A good business plan gives investors the chance to take a deep dive into your strategy for commercial success. It’s where you take the exciting vision you have and drill down into the substance beneath it. Investors get to see how your business model will work, the plans you have for growth and your approach to mitigating risk. In your business plan, you provide a comprehensive explanation of how you will achieve commercial success and deliver a return on investment. Without it, you are going to fall far short of what investors have every right to expect from you.

You’re doing yourself a disservice too. The work of creating a robust business plan will be enormously beneficial to your company and chances of success. Assembling all this critical information allows you to examine how each part of your business interlinks and find opportunities you might not have noticed. You may also identify things that don’t work and get the chance to change them before the company has progressed too far. You can interrogate your thinking, test it and then provide evidence that backs your approach.

While creating the perfect business plan, you can also run through the questions you may expect from investors and come up with articulate and detailed answers to include. The beauty of that planning is that when a tricky question comes up while meeting with an investor, you can refer them to the business plan.

Getting your business plan right is so vital that it’s the first stage in our methodology – The Six Principles of the Perfect Pitch.

A proper business plan shows investors that you are a serious, diligent professional who has taken the time and care to think through each aspect of your business and how it will work. You haven’t just hung around in the exciting area of vision and purpose, you’ve also rolled your sleeves up and done the hard work of compiling evidence, exploring risk and considering the opportunity from an investor perspective too.

Remember, pitch meetings can fly by, and you may not be able to say everything you’d like to say to your potential investors. You may also get caught up on one particular area and be forced to gloss over something you think is much more critical. So, being able to share your business plan afterwards can be incredibly useful. Also, Investors may ask for more information on one thing or another, so you need something substantial to give them. That’s why it such an advantage to have your plan ready to go.

Investors are likely to be impressed when they receive a believable business plan that gives them answers to their questions and more. You’ll position yourself as credible, knowledgeable and prepared – traits shared by other investable entrepreneurs. A great business plan is an integral part of a winning pitch, so make sure yours is something special.

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    2020-11-18T11:20:25+00:00November 18th, 2020|Categories: Advice, Investment|