What Investors and Lenders Need In A Business Plan

Posted by Tony

June 13, 2008

It is essential to have a business plan. However we have seen that it is essential for an effective business plan to consider the both the lender and or investor.Most Internet business owners do not consider themselves as investors and most run short of funds during important periods. I have had my own web sites suspended due to lack of payment for hosting during critical times. A good business plan that would have attracted small investors or lenders would probably have avoided this problem.

We have seen the need to include in your business plan the following aspects

Your Credit History
Your Collateral
Demand for Your Product or Service

You should also include in your business plan the following :

4. Proprietary Position

What position in the Internet market have you established ? Are you well known, if you are selling products, do you have copyrights, patents or even a trademark that allows you to have a stake in your niche? It is essential that you are able to show that you have something unique in your business plan and that you are also able to protect this uniqueness.

For bloggers that is where the issue of a unique niche is important.For those with rights to a particular product, it is important to include such rights in the supporting documents section of your business plan. It lends credibility to your projections and also shows how professional you are in your business.

5. Realistic Projections

We all want to make a million dollars online. We all want to own the next facebook. However, life does not flow according to our wants and wishes. Being realistic in a business plan is essential for your credibility. Having a business plan that says that you will make $200 a day using google ads within a month is unrealistic. It is possible, but not realistic.

Lenders and investors will base their decisions according to industry standards. If your projections are off the industry standards, you had better have very good supporting documentation otherwise your business plan will be considered ineffective.Do your research using other industry competitors so you can have an idea of what is expected of your particular business.

You should then be able to have a realistic timetable for your business. Keep in mind that your business plan credibility greatly relies on your realistic projections.

6. Marketing Plan

A business plan without a strong marketing plan is a dead business plan.It is essential that your marketing plan has a target market. Lenders will be looking to see that your marketing plan allows for the business to be able sell in the volumes that allow you to repay the principal as well as the interest on your loan. The investor will be looking more long term to figure out if your marketing plan will allow you to have a big enough market share and thus more profitability in their investment.

All in all it is essential to take care of your equity shareholders and lenders. Your business plan should be geared to either of these groups as well as being the blueprint for your business.

Good Luck!

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