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Entice Investors through a Sound Financial Plan

When you want to seek investors for your business, you might want to write a sound financial plan which can show investors how much money you need, and what you need the money for.
Entice Investors through a Sound Financial Plan
Entice Investors through a Sound Financial Plan
In the narrative part of the business plan, talk about your financial plan. List and prioritize the things that require the investment funds. You don’t need the money all at once so you can assign a certain amount for the first month, and another on the second month, on the third, and fourth month. In a way, you say that you want to spend the money over the next 6 to 9 months to a year, and you can say exactly how much money you need to be in business in the next 6 to 9 months.

Revenue Model
In your revenue model, you show the different customer segments based on a certain demographic profile, and based on a certain ability to reach them somehow. These are people that may belong to a group or an association.

In those segments, you have a number of people which is a factual number, a number that you have taken from a credible source. You can list different market segments and how many people you can actually reach in each segment. That is a good foundation for your financial model to demonstrate that these can be the number of your customers.

You have to show how many of those in the list are going to become your customers, how many of them each year are you going to actually sell your products to.

Revenue model starts out with the number of available customers out there, how many of them can you realistically reach and sell to, multiply that with your product price to show your revenue by segment. Break the market into segments so you actually show how much money your business can generate in one place.

Capital Requirements
For your capital requirements, you have to list everything you need, what it costs, and when you need the money. For example, you might need a piece of equipment in 6 months and it costs a half a million dollars, so you put down on your list that you need $500,000 for a piece of equipment in 6 months. You are showing that you need this certain amount of money, and you are also indicating when you would be needing the amount.

Entice Investors through a Sound Financial Plan
Your investors may challenge your capital requirements like when you say you need $100,000 to buy a building. Check if you really need to buy a building. You don’t want to be stuck with something you can’t get rid of, and which you have spent so much money on. You also do not want to spend all your cash on things that you may not use in the future. These are the things to consider when it comes to your capital requirements.

You have to minimize the amount of cash you need to get your business off the ground.

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