Entrepreneurs looking for funding to launch or grow their startups are 16% more likely to succeed with a business plan, according to a recent study from the University of Edinburgh Business School and RWTH Aachen University.
The research findings, published mid-last year in the Strategic Entrepreneurship Journal, studied more than 1,000 entrepreneurs and their startups over a six-year period.
It discovered that entrepreneurs with high growth-focused startups were 7% more likely to plan ahead than other less growth-focused businesses.
Also, startup owners on the hunt for external finance investment were found to be 19% more likely to commit their vision to paper.
The study suggests that writing a business plan is vital for a startup development and fundraising, as it builds legitimacy and confidence among potential investors.
So, if you’re looking to quickly raise capital and scale up your business, we’ve gathered some CEO tips to help you write that winning business plan:
Gill Hayward and Kellie Forbes, Founders, YUU
YUU is a 2-in-1 activity backpacks for children age seven to 12. The founders secured backing from Deborah Meaden and Peter Jones from Dragons’ Den in 2012, after receiving offers of investment from all five dragons.
“Demonstrating a solid understanding of your target audience and how you will effectively reach them is paramount to attracting confident investment in any business plan.
Identifying the market opportunity and developing an innovative product solution will only go so far.
A winning business plan should include clear market segmentation, showing that you have a thorough understanding of exactly who your target audience is and how you will fulfill their needs, and equally identifying which segments within the market you will not be targeting.
This gives investors confidence that you have a credible strategy for how you will realise your business plan.
A business plan that fails to highlight this risks assuming a ‘one size fits all’ approach and will lack credibility from an investor standpoint.”
Tim Rylatt, Co-founder, Growth by Design
Serial entrepreneur Tim has over 10 years experience in business coaching and also the co-founder of Growth by Design, which is an outsourced online marketing support solution for small businesses.
“Make sure there is a need in the marketplace in the first place. Run some research to quantify the potential, and what the current marketplace already has to offer in your sector.
It isn’t just exactly what you are offering, but the alternate solutions people can find which you have to stand up against.
Know your numbers and have a high, medium and low projection for the forward budget estimates.
Have all the costs – fixed and variable clear, and prove that your calculations have been through by showing the workings of an annex (supplemental document) if needed.
Present your numbers confidently, and use graphics to show the key ratios, sectors or other relevant data cleanly and precisely.”
Kate Faragher, CEO, BeSpokeSkills
Kate is a Collaborative Communication Specialist and has over 14 years experience in coaching, consulting and training senior executives in national and international FTSE 100 companies
“What attracts investors is not magic. Who you have either worked for or has used your products or services matters. It shows your credibility.
If you’re a complete start-up it can be more challenging but you can use your past history and reputation to show you’re a safe bet.
Your cash flow has to show that you can cope in the first few months when the outgoings are greater than incomings. Money flow might sound mundane but it’s the make or break of a great idea.”
Image: Bonnie Kittle via Unsplash
Updated – 22nd June 2019