Business Plans That Get Investment: Includes the Ultimate and Proven Template for Success

Legend Business, 175-185 Gray’s Inn Road, London, WC1X 8UE info@legend-paperbooks.co.uk | www.legendpress.co.uk

Contents © David Bateman 2016

The right of David Bateman to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988.

British Library Cataloguing in Publication Data available.

Print ISBN 978-1-7850793-2-0

Ebook ISBN 978-1-7850793-3-7

Set in Times. Printed in the United Kingdom by Clays Ltd.

Cover design by Robert Harries

All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Any person who commits any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

CONTENTS

Sponsor Information

Foreword

Part 1 – Laying the Foundations

Chapter 1.       Introduction

Chapter 2.       Format

Chapter 3.       Structure

Part 2 – Writing the Plan

Chapter 4.       Application

Chapter 5.       Executive Summary

Chapter 6.       Opportunity

Chapter 7.       Background

Chapter 8.       USP

Chapter 9.       Progress

Chapter 10.     Market

Chapter 11.     Route to Market

Chapter 12.     Competition

Chapter 13.     Management

Chapter 14.     Business Model

Chapter 15.     Financials

Chapter 16.     Investment

Chapter 17.     Exit

Chapter 18.     Executive Summary Revisited

Chapter 19.     Conclusion

Part 3 – Next Steps

Chapter 20.     Getting Your Investment

Chapter 21.     Conclusion

SPONSOR INFORMATION

Business Plans That Get Investment is sponsored by The Oxford Investment Opportunity Network (OION, www.oion.co.uk).

The Oxford Investment Opportunity Network was established in 1994 as one of the UK’s first business angel networks. OION has an interest in companies with a strong barrier to entry, often patented and a spin-out from research, but any company with a strong vision for growth will be considered to present to the Network. Today, OION is one of the UK’s most successful technology focused business angel networks, linking investors to companies with high growth potential seeking investment from less than £200k to £1.5 million.

OION has also formed two other successful investment networks; The Thames Valley Investment Network (TVIN, www.tvin.co.uk) for companies with a focus on media, including FMCG, lifestyle and green-technology; and Oxford Early Investments (OEI, www.oxei.co.uk) for earlier stage investment opportunities, often where more than just investment is being sought. OEI is suitable for companies seeking from £75k up to £250k and often where the new government Seed Enterprise Investment Scheme (SEIS) scheme is relevant.

FOREWORD

Oxford Investment Opportunity Network (OION) is one of the UK’s largest and most well-established angel networks. At OION we introduce entrepreneurs and business owners to a range of investors, with a view to investment.

As OION’s Investment Network Manager I have received and reviewed thousands of business plans over the years. A constant hurdle that I face is that all too often a potentially sound, or even great, business idea is presented in a confused and lengthy state. With key points and investment criteria missing, such plans could potentially lose an otherwise great opportunity for investment backing. Consequently, we spend many hours prior to an investment meeting helping entrepreneurs to get their business plans into a clear and direct format, ready for presentation and pitch to our network member investors.

Business Plans that Get Investment addresses the key criteria that an investor needs to be able to make an assessment of a business plan and the corresponding investment proposal. It does this with a very straightforward, yet comprehensive, methodology and tackles the essential points that are required for investment.

Based on my experience with OION, I firmly believe that if you are an entrepreneur or businessperson who is seriously considering raising investment, you should read this book and take on board the structure and advice within; it will significantly improve your chances of attracting initial interest that could lead to investment success and enable you to take your business to the next stage of growth.

—Eileen Modral, Investment Network Manager,

Oxford Investment Opportunity Network

PART 1

LAYING THE FOUNDATIONS

CHAPTER 1. INTRODUCTION

Ask any entrepreneur why they need a business plan, and they will say: to attract new investment to my business, so that it can grow.

But business plans are often a cause of great stress and concern for those who write them. Justifiably so: get it right and you can secure your investment and grow your business; get it wrong and you may blow your chances of success.

So what is a business plan?

Your business plan is the medium that you use to communicate to potential investors what your business does and how they will be able to make money from it. You should think of it as an ‘investment pitch’. It should give potential investors a clear understanding of how they can benefit from the future growth of your business. A business plan is all about putting yourself in an investor’s shoes, and focussing on their agenda, rather than your own.

Investors’ needs

What makes writing a business plan so difficult is that no standard formula exists, which leaves you second-guessing what a potential investor wants to see. This book shows you how to put a plan together that has precisely the information an investor needs. This will enable them to take that essential first step towards an informed investment decision.

Dragons’ Den is a popular TV series in which aspiring entrepreneurs present their business ideas to a panel of successful, multi-millionaire investors. If the panellists like the idea, they invest in the business. Most of the people who present to the Dragons seem to fail. Even if they have a credible idea, it is often clear that the business itself has not been properly thought through. Those who do succeed are invariably well prepared, giving clear and concise answers to the probing questions of the Dragons. Crucially, their questions are often the same for each new presentation:

‘What’s your background?’

‘How does this product work?’

‘How much does it cost to produce?’

‘How many have you sold?’

‘How much money have you put into it?’

‘Do you own the intellectual property?’

‘How much investment do you need?’

‘How will you spend my investment?’

… and so on.

Clearly, Dragons’ Den is produced largely for entertainment purposes, but it is striking how relevant the business questions it throws up are to the business plan that you will need in order to successfully pitch for investment. If you want to know what an investor needs, and therefore what you must say in your own business plan, you could do worse than simply watching a few episodes. The questions that you hear on the show are likely to be the same as those that your business plan must address – and your aim must be to answer them before they are asked.

The fundamental point is this: if you don’t know what you should be saying in the first place, or what investors want to hear, it’s effectively impossible to get it down on paper. I learned this indispensable lesson the hard way. But it doesn’t have to be that way for you.

Keep it simple

Contrary to popular opinion, a business plan should always be concise and simple. It does not require excessive detail or reams of numbers. Likewise, the process of creating a plan need not be difficult or complicated.

In this book I will show you how to write an effective, professional business plan of no more than fourteen pages, with as few as ten sentences per page! By working to the structure revealed in this book your plan will take no more than a few days to write, at the very most.

When writing business plans, many people feel compelled to overburden them with words and information, believing that will make them seem weightier and more impressive. This is absolutely the wrong approach. In fact, the opposite is true: the fewer words the better. This is an area in which less is definitely more. You need to think of writing your plan as something similar to writing a song: you don’t have endless space to fill, because of the constraints on the length and structure of the song. You are forced to express yourself in a compressed space, often using very few words. An ideal business plan will follow the same principles, stating only what is absolutely necessary.

One size fits all

The business plan structure that is outlined in this book applies to almost any kind of business, irrespective of its size, what it does or how much money it makes. It is a universal, ‘one-size-fits-all’ methodology.

Your business might be anything from a raw, entrepreneurial start-up to a well-established, multi-million-pound firm that employs hundreds of people. In either case, the challenge is the same: you will need to raise investment money, typically with the aim of growing your business and taking it to the next level. The only real variation is in the size of the investment you need, and who you would approach for the money.

The same principles apply to a business plan whatever the type and size of the business it is for. Specific content and other details will of course vary from one type of business to another, but the fundamental structure and objectives will be remarkably consistent across all businesses.

I recently saw a business plan for a manufacturer of a hair-removal laser. The company was looking to raise a seven-figure investment. It struck me how similar the layout and key points of this plan were to one I had co-written many years earlier, for an asset-management business that was aiming to raise more than a billion dollars. You might think that such a business could hardly be more different from a laser hair-removal company, and that there is a big difference between a million pounds and a billion dollars. Yet the plans were uncannily similar, with the titles of each page and the overall structure being broadly consistent.

Based on experience

The approach in this book is borne out of many years’ direct experience. I have actually written plans and secured investment on numerous occasions.

Moreover, I have seen it from both sides of the fence: I have been both entrepreneur and investor. The amounts involved ranged from just tens of thousands of pounds for my first business, through to hundreds of millions of dollars of investors’ capital, later in my career. By this stage I had become an investor myself, and received hundreds of plans every year asking for financial backing. During that time I was able to observe at first-hand what worked and what didn’t. Experience taught me what caught an investor’s eye and what got sent to the bottom of the pile.

My first attempt at writing a business plan was, quite naturally, a disaster. The business I had started was a software company, and was being carried along by the frenzy of the dotcom boom of the late nineties. I knew what I wanted to do and where I wanted to take my business. ‘So put it down in a business plan and go and raise