Business Plan Design
Investing in businesses can be exceptionally financially rewarding however, it can also be exceptionally risky. An investor is always attracted by opportunities that maximise rewards and minimise risk. A comprehensive business plan can greatly assist in lifting the comfort zone for potential investors when it addresses the key issues that are pertinent to them as prospective investors. Since investors are usually investing their own money, they can be expected to be diligent with their investments and preparatory research.
A business plan is a selling document that conveys the excitement and promise of a business to any potential investor, as well as providing a sense of what management expects to achieve with the business within a given time frame. It clearly articulates the product and/or service the business provides and is supported by financial statements, managerial analysis and marketing strategies. A professionally developed business plan is imperative, as all prospective investments undergo some form of due diligence, which will vary in its degree of scrutiny. Credere will construct a plan specific to the business, piece by piece – a dynamic roadmap demonstrating it’s success.
Due diligence is essentially the investigation of the facts of the business through a process of auditing accounts, industry analysis, interviews and other investigative techniques. Attempts to ignore or gloss over weaknesses in the business plan, not only hinder performance in the long term but will also reflect poorly on the integrity, experience, talent and competence of the management team, thereby affecting the goodwill of prospective negotiations. It is essential that all criteria is sufficiently met. Credere will perform a thorough Pre-Due Diligence assuring the company so it is completely prepared for the Due Diligence process.
Usually there are only two forms of capital available – equity or debt.
Debt is money invested in a business in exchange for the legal requirement to repay an agreed sum on a regular basis until the initial sum and interest is returned; banks and other financial institutions are the usual examples of money lenders, however offer little or no support.
Equity capital is money invested in a business, in exchange for a share in that business. The equity investor is committed to the business in both the good and bad times, sharing in both the risk and reward of the venture. Friends, Family, Business Angels and Venture capitalists are common examples of equity investors.
Before seeking venture capital from an investor or fund manager, a business must demonstrate a positive response to the following questions.
- Does the business have the potential to achieve significant growth over the next 3-5 years?
- Can it be demonstrated to potential investors that the business has a unique selling proposition that distinguishes its product and/or service from that of its competitors?
- Is the entrepreneur or management prepared to raise finance to turn this growth potential into reality, by reducing their share of the equity in the business?
- Is the entrepreneur or management prepared to accept additional input, and possibly share control of the business
- Is your business, its operations and its strategies accurately reflected in a professionally developed business plan?
There are basics that must be in place before a company sits down with potential investors. If any of these items is not fully ready, it does not matter that the others are 100 percent in place. Investors will not give credit for having a portion of these items in proper shape. Rather, they will notice the one area that needs a lot of work. A company’s portfolio of disclosure and readiness must be complete, with nothing missing across the board.
To prepare a company for financing, Credere will conduct a thorough assessment of a business, focusing on the business model, management team and partners, market opportunity, target markets, competitive challenges, and operational requirements. Following our assessment, they will receive a written report with recommendations for improvements to enhance their potential for attracting investment capital and prepare them for the capital raising process.
Every business needs effective financial analyses to succeed. Credere’s financial analysis solutions include a comprehensive financial forecasting model, reflecting over five years of continuous improvement, complete P&L, cash flow, and balance sheet statements. It also incorporates sensitivity analyses, multiple funding scenarios, budget-vs-actual statements, and much more. We can customize our forecast model to fit any type of business.