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How Important is the Business Plan to Potential Investors?

Posted on the 14 July 2013 by Rashaunah @rashaunahasya
Jim Blasingame, founder of Small Business Network, Inc., is an expert in entrepreneurship and business development.  In fact, Google ranks him the number one small business expert in the world. His blog provides immense information on entrepreneurship, financing, and much more.  With several honors and awards from his small business journalism, chamber of commerce, radio show hosting and keynote speaking engagements, Blasingame “leverages his multi-year relationships with organizations and communities that support small businesses”, which in turn allows these businesses create their own relationships with gigantic entities.
How Important is the Business Plan to Potential Investors?

Jim Blasingame suggests that a business plan should help a business with three specific things:    ·   Document progress with a new or future plan.   ·   Evaluate with strengths, weaknesses, opportunities, and threats (SWOT analysis).   ·   Assist in gaining loans, financing, and investments from third parties. Bankers and investors want to see long-term cash flow projections and how the capital would be utilized. Investors want to see how much return they can exploit from the business concept. When it comes to angel investing, investors have combined heads in order to spread the risk involved with investing in new businesses. Mr. Blasingame claims that angel investors are considered the “mini venture capitalists”.  According to Mr. Blasingame, angel investors usually have a closer relationship and are geographically closer to the start-up business owner.  The one similarity, however, is that all investors want an “exit” plan, where they leave with a profit on the principle value invested. Blasingame states that this very similarity is the reason why many entrepreneurs are not eligible for capital investment. 

Richard Milton is considered the Business Plans Expert.  He writes the business section for The Daily Telegraph and has written several books on business development. Milton has written numerous business plans for various companies, services and product launches.  He has written for various publications like Electronics Today and New Data.  Lastly, Milton is the editor and publisher of Windows Phone News. 
How Important is the Business Plan to Potential Investors?
Richard Milton stresses the importance of writing a business plan from the outsider’s point of view. The “outsider” is considered the potential banking institutions and backers who are interested in providing capital for the business.  Backers range from venture capitalists to stockholders (for publicly traded businesses).  Milton claims that the number one reason businesses fail is because they run out of capital.  In addition, Milton believes that the marketing plan within the business plan is the most important section of the plan, because the marketing efforts will most likely be the only thing “directly affecting the generation of revenue”.
Regardless of the focus of a business plan, it should capture the differentiating factor of the business. That unique characteristic is the most attractive aspect of the business for investors.
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