how to attract investors

How to Write A Killer Business Proposal and Attract Investors

September 16, 2015

Whether you are new to the world of business or a seasoned veteran, in order to raise investment capital for your new business, you must develop a business proposal for investors. Entrepreneur Magazine says, “Knowing how to write a funding proposal properly can make or break your business idea before it even gets off the ground.”

If you want your business to get off the ground, you will need a killer business proposal to impress investors. ClientPoint was specifically created to help you do just that.

 Entrepreneur Magazine stresses that you set goals for your proposal: “Be structured; be persuasive; be technically correct; be brief and to the point.”

What is a Business Proposal?

A business proposal is a written document that is sent or presented to investors to propose the outline for your business concept and how it will make money. If differs from a business plan in that it is used to, “offer a product or service to a buyer or client,” as opposed to a plan which is, “a formal statement of a set of business goals.” A business proposal will delineate the “problem statement, proposed solution, and pricing information” relative to your business and industry.

When tailoring a business proposal to investors, the return on their investment will always be the first and foremost concern. “Wow” them with your pitch of how your proposed company will make money for you and for them. Experts from VentureGiant.com recommend, “[making your] proposal sound like it can actually make money by creating a convincing proposition.”

How to Plan Your Business Proposal

Just as your business needs a plan, you must plan prior to crafting your actual business proposal. Sketch an outline, make spreadsheets, and study other business proposals. As stated by Forbes, “You must spend a significant amount of time drafting a coherent and persuasive executive summary or business plan.” The thought continues with, “You should plan to spend week, if not months, perfecting [it].”

Copying other proposals will not afford you any opportunities with investors. Entrepreneurship professor, Hakan Ener, who writes for Forbes states, “Remember that resource providers are evaluating your specific action plan, not a general business idea.” This also means that the investors you choose to present to should be relevant for your business. Below are a few tips to get started as told by Andrea Comastri of SimCom Global Trading Solutions.

Tips for Writing Your Business Proposal

Have a detailed understanding of your own business, as well as your competitors and the market as a whole. Conduct research on the industry you are trying to enter. Plan each detail of your proposal carefully.

Your research is the foundation for trust between you and potential investors. Rick Frasch, a writer for Forbes, warns, “At the end of the day, the key to raising money is to have a carefully thought-out summary of the investment proposal.” BPlans – a successful business planning website – advises first-timers, “Investors will want you to be able to back-up your claims. [If you are presenting verbally], have a business plan on-hand to share.”

Lastly, develop an expectation based on your business of what kind of investments you will be looking to acquire. Knowing how to ask for what you want begins with knowing what you want and why. BPlan suggests, “Clearly spell-out how much money has already been in invested in your company… and how much more you need to go to the next level.”

Develop a flawless plan that will represent your business adequately and extraordinarily. Experts Investors at VentureGiant.com claim to have seen weak business ideas receive more interest than they expected to because the investment proposal was, “well written and well thought out.”

Learn how ClientPoint can help you master the art and science of business proposals by scheduling a FREE 15 minute consultation with one of our proposal experts.

What to Include in a Business Proposal

Let your writing be led by the focus and intention of returning investors’ money back to them through your business. Use this concept as a perspective to answering the investors’ questions before they can ask: How will I make my money back? How much more will I make? BPlan experts say, “Investors tend to care about [your revenue model] the most. How will you make money?”

Executive Summary of Your Business

Begin with a brief – 2 to 5 page – profile of your business. This will be a summary of the entire proposal that covers all of the pressing questions – according to SimCom Global trading Solutions – such as:

What is it? How will it make money? Where will it be located? What investment is required? What will the investments be used directly for? Who is running the business and why are they the best person for the job? What are the short and long term business objectives?

Overview of the Company

This section is particularly relevant if your business is already in operation. If it isn’t, you may give a brief snapshot of the company structure, financial tree, various products or services offered, and any important company history that may concern or interest investors (e.g.: acquisitions, mergers, etc.), according to SimCom.

Products and Services – Time to Woo

This facet of your business plan can gain attention from investors and impress the business’ purpose. Once you have expressed what your products and services are, delineate the following critical information, which is also recommended by SimCom:

What is your current inventory / future proposed inventory? What are your production costs per item? Is there potential to lower these costs and what are the consequences of doing so? What is the retail price of your product or service and how did you come to this price? Is it relative to comparable products? Is it one of a kind? Provide a sales forecast that is realistically derived from past sales or market research for the next 3 to 5 years based on your current business plan. Who are your suppliers and what are their credit terms? Where are your suppliers located? Have you worked with different suppliers in the past? Use of Funds?

As previously stated, describe how investors’ money will be used to jumpstart your business. It is wise to seek investors for your next course of action only. Not your 5-year action plan, according to Professor Ener of the IESE Business School. “If you’re asking for cash, provide some details on how you will spend it,” he writes. Investors will want to know and possibly weigh in on your plan for their money.

Other Elements

We have elaborated the most important aspects of your business plan. According to Forbes, “Professional investors, such as venture capitalists and serious angel investors, do not have long attention spans.” Therefore, be sure to begin with the most important information and keep your proposal and presentation brief when including these factors suggested by investors and business people alike.

Detailed marketing plan tailored to your business based on research of competitors and industry

The company’s management and staff; why they are in the position they are in; what qualifies them for this position? Owners and shares of the proposed business equipment, facilities, and technology currently being used, as well as future additions that may need to be made.

Financial forecast, Financial references, Investment Exit Strategy

Forbes contributors strongly emphasize the importance of your exit strategy. This is the bottom line of “how the investor will make money (aka “the exit”) from investing in your business proposal.” It comes on high recommendation that you prepare to answer the obvious questions investors will have at the end of your pitch including how their investment will be monetized, which may include licensing agreements and strategizing a sale of your company to another, larger company.


Sources for this article include:

https://www.entrepreneurmag.co.za/advice/funding/attracting-investors/how-to-write-a-funding-proposal/

https://www.venturegiant.com/news-channel-365-how-to-write-the-perfect-investment-proposal---investment-proposal-template.aspx

https://www.forbes.com/sites/allbusiness/2013/07/09/8-mistakes-entrepreneurs-make-when-pitching-to-investors/

https://www.forbes.com/sites/iese/2013/09/18/presenting-your-proposal-5-ways-to-convince-investors-to-back-your-idea/

https://articles.bplans.com/how-to-pitch-to-investors-in-10-minutes-and-get-funded/

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If you want your business proposals, quotes, and contracts to stand out and give you the best chance at winning new clients, use ClientPoint Software. It makes creating and formatting professional business proposals, quotes, and contracts fast and easy.

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