Strategic Planning Information

What Every Service Provider Ought To Know About Writing A Business Plan

It's easy to lose sight of what needs to be communicated to prospective investors when writing the various sections of a business plan. Successful business owners/entrepreneurs use each section of their business plan to work up interest, to present arguments and, most important, to build trust and confidence.

How To Earn The Trust Of Skeptical Investors?

Usually some sort of upfront investment precedes starting or expanding a business, whether it be time, energy or cash. If you plan to raise cash from investors, you must get prospective investors comfortable with putting their money into your hands.

To start you must understand that investors simply want to select the best investments, period. This means choosing businesses that earn a high enough rate of return on investment to offset the risk of the investment. That said, deciding what is a good opportunity is an investor's number one challenge.

That's why investors thrive on information. Good information - good decisions, bad information - bad decisions. But, investors are often asked to invest funds with little reliable information. This, combined with the difficulty of deciphering the information they do get about various investment alternatives, leaves them fearful of getting into an awful deal and skeptical of the deals being presented.

To get comfortable with an investment, prospective investors want to see results and evidence. They want to be educated about the investment opportunity and the investment options available to them. But, they won't accept this education at face value; they want to see the evidence that supports it. Even for niche businesses.

Investors use this education to expand their research and use the evidence they gather to develop their expectations. In the end, investors merely want the opportunity that they select to match the expectations they have developed.

When investors object to an investment the objection is usually of the "Educate me?" type. Tell me your story, show me your numbers, and then prove it. Prospective investors want information that they can validate, options and risks that they can see, and to be educated about your specific business. They want to hear why you and your team are the ones that can produce the projected results.

If your business plan "educates" prospective investors on these issues, you'll win their trust. When that happens, its time to?

Build Investor Confidence - Show Why Customers Will Award Their Business To You Rather Than Other Service Providers?

Investors invest money in businesses based on expected cash flows. To create cash flow, you must first win business. That's why it is important for your business plan to show investors why customers will award their business to you at a price that allows investors to earn an acceptable return on their investment.

When potential investors begin evaluating a service business plan, they are likely to be skeptical of your ability to consistently win business. In their minds your prospects need someone to do something for them. Something that your customers either don't know how to do, don't want to do, or don't have to do.

Service provider business plans must convince potential investors of two things. First, that the customer's pain of not having this "something" done or the pleasure of having this "something" done is so great that it compels the prospect to act. Second, that the customer is willing to pay to have this "something" done.

Potential investors in service type businesses expect that your customers are feeling confused about which service provider is the best at providing the solution you offer. They may also perceive your market as saturated with so much information?some of it true and some of it not so true?that customers are finding it difficult to decipher the information they have about each solution.

As a result, investors in service type businesses often picture skeptical customers with fresh memories of negative service experiences. Moreover, they suspect that your potential customer's biggest fear is getting awful service.

To overcome this, your business plan must show investors how you plan to successfully educate prospects about your solution and convince them that you can deliver the expected results. It must present the evidence you'll use to convince customers that you will do the job right, do it right the first time, and won't fix what doesn't need to be fixed. It has to explain how you will educate the prospect about the service and the options available to them in a way that they will understand and trust.

Your plan must convince investors that you can win over prospective customers who are likely recovering from a negative experience in your market space?customers who have been promised the ultimate solution only to be disappointed. It must provide details about how the principles and techniques chosen to market your service enable customers to view you as honest. It has to help investors see how the chosen delivery method for your service ensures customer satisfaction.

The business plan must also convince investors that customers can verify the service results you promise and that prospects can easily compare the results to other alternatives. This proves to investors that prospects can determine the superiority of your service and it shows them how you differentiate your services from other service providers.

Points For Service Providers To Address In A Business Plan

In summary, if you're a service provider trying to attract investors, these are the points you must address in your business plan:

How and why prospects will pay you to do something for them rather than your competitors.

How and why they will have less hassles and it will be easier for them to do business with you rather than your competitors.

How and why customers will trust doing business with you rather than your competition.

When you address these points in a business plan with verifiable evidence to back them, potential investors will have to conclude that they would be foolish to invest in any other service provider but you.

Mike Elia is a chief financial officer and an advisor to venture capitalists and leverage buyout specialists. His business plan ebook "Business Plan Secrets Revealed" shows how to make your business the most appealing investment choice to venture capitalists, bankers, and other business investors. For his free business plan guide click here.

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Strategic Planning Information:

10 Ways To Make Your Business Unique

1. Largest Selection -One way that you can make your product or service stand out is to offer the largest selection of products, services or programs.

Seasonality: Whats the Big Deal?

Do you work in or own a business that's affected by seasonal cycles? Do you live in a community whose population changes significantly during the year (e.g.

Sample Business Plan Outline

If you are looking for a partner, funding, angle investor or venture capital you will be asked for a business plan. Even if you are not in need of capital in the formation of your new business endeavor you will still be glad you prepared a business plan to help you prove to yourself that you have the right stuff and that the business is economically viable.

Advice To Manufacturers Creating A Business Plan

If you are a manufacturer wanting to use your business plan to attract investors, then your plan must do two things. It must:Comfort prospective investors with putting their money into your hands, andShow why potential customers will award business to you rather than your competitors.

Changing Strategy Without Losing Your Customers - Three Vital Steps to Refining Your Strategy

American Eagle Outfitters and Wet Seal Stores have issued statements about company turnarounds needed to cut sales loses. This kind of story occurs far too often: a business disconnects from their customers because the company either wants to sell to a larger customer base or they want to upgrade to a more prestigious look.

Thinking Like A Farmer

One of the difficulties we face in our industrialized age is the fact we've lost our sense of seasons. Unlike the farmer whose priorities change with the seasons, we have become impervious to the natural rhythm of life.

Vendor Relations Strategies Sample Outline

One of the quintessential parts to any business is your supply chain. To insure that the supplies are there when you need them; in this new day and age of "just in time" distribution where very little sits on warehouse shelves until you order it you will need excellent vendor relations.

The 7 Critical Steps to Formulating Your Annual Strategic Business Plan

Businesses tend to avoid doing their annual business plan thinking that it is an arduous task that does not accomplish much. Formulating your annual plan is, however, critical to your business success and if done correctly should be quick, easy and generate bottom line results.

Cost-cutting Essential to Maintaining Profits

Why cut costs now? Efforts are multiplying to cut costs wherever possible in order to achieve or preserve high profits. The resulting benefits for all of a company's employees should be obvious.

The Impact of Price Popularity on Profits

The goal of almost every business owner is to generate a profit either for themselves or their shareholders. This can be challenging at best.

The Six Sigma Method and Design of Experiments

Six Sigma is becoming a proven approach for businesses and organizations to improve their performance. The spectrum of companies actively engaging in Six Sigma today is wide from industrials like Celanese, Caterpillar, GE, Honeywell, and 3M to service/retail organizations like Starwood Hotels, Sears, and Home Depot.

2 Simple Steps Before Starting Your Business

There is so much small business information available today that it's easy to be bogged down by the sheer volume of it all. Where does one start? Well, it's safe to say not all the information you'll receive will be of equal value.

Microsoft Great Plains Implementation: Healthcare/Hospital example - overview for consultant

Microsoft Great Plains fits multiple services market niche and healthcare is not exemption. In the case of Healthcare/Hospital there is usually healthcare patient history tracking system in place and backoffice or accounting application should be integrated on the ongoing basis with the above mentioned system plus often Hospital or association is non-profit organization and non-for-profit accounting specifics should be taken into consideration.

Why Do a Business Plan?

To Grow (Catapult) Your Business That's Why.When it's in your head it's not as likely to happen--too much missed.

Is Your Company Growing Fast Enough for You?

Are you frustrated by the lack of growth in your firm, or the effort required to squeeze any up-tick in performance? Are inadequate policies and procedures a root cause? To find out, take this simple self assessment to see if this may be inhibiting real growth at your company.Q.

Don't Allow Yourself to Get Burned

I am not a big fisherman, but I do enjoy it whenever the opportunity comes my way. I have some friends who are fanatics and occasionally I will go out with one of them.

The Power of Strategic Thinking: Creating Meaningful Success

Too much goal setting and strategic planning can leave you feeling like you're working against the forces of nature; too little and you end up where you never intended to be-with a life or business that is bigger, smaller, or different than what you genuinely desire. Though getting you and your organization where you most want them to be at any given time can be hard work it can also be exhilarating.