6
2009
Top tips: Writing an effective business plan to secure investment
Peter Stone is the Managing Director of Peter Stone Consulting Limited, a management consultancy for the voluntary and community sector which specialises in governance and management, strategic planning, finances and tendering. Here he outlines his top tips for writing an effective business plan to secure investment.
For any organisation – whether they are trying to secure an investment or not – it would seem essential that they should have an up-to-date plan which guides the future direction of their work. Yet a significant proportion of organisations which contact us for support are seeking help with the preparation of a Business Plan (often their first) – and a lot of these organisations are doing so to attract funding of one kind or another. These are my 6 top tips for preparing a plan that will optimise your chances of securing the investment you are seeking.
1. Be strategic
If you are seeking funding from an investor – which will often mean loan, rather than grant, you need to ensure that you take a strategic view of your organisation and its plans for the future. In practical terms this means ensuring that your plan covers more than the forthcoming year and, more likely, reflects at least a three year period. If you are seeking loan funding over a much longer period than this then don’t be surprised if your funder is interested in a view of your organisation’s plans over a similar period since they may well want to ensure that your organisation is, and will continue to be, viable and sustainable.
2. Be realistic
Don’t decide how much you want to spend over the life of your plan (and therefore how much funding you need to attract) and then increase your expected levels of income to match. If your expenditure figures are unrealistic then an investor will spot this and this will call your credibility into question. Make sure your planning is based on experience rather than hope! If you need to spread your expenditure over a longer period then adjust your plans to match. It is better to secure a lower level of investment than to secure none at all through overly optimistic figures.
3. Include everything
Far too many plans have a range of fairly glaring omissions in them. In the past year we have seen plans which: omit the costs of some members of staff; the entire costs of renting a head office and; which assumed that inflation would run at 1% over the next ten years. If you are producing any plan – but especially one which is going to be sent to external organisations/potential investors – make sure that your figures are competently, and accurately produced.
4. Get buy-in
The preparation of any plan needs to involve as many people in the organisation as possible. Trustees, directors, staff and volunteers will need to carry out the work required in the plan and may also be involved in visits from potential investors so it is critical that the preparation of the plan involves them from the start. They need to play a role in writing the plan and monitoring the organisation’s performance against the plan’s targets. It is surprising the number of occasions we meet members of staff who do not know that their organisation has a strategic plan at all!
5. Check you can afford the investment
If you are seeking loan finance, when you have assessed the level of investment you are seeking – check that you can afford it! Use the online loan calculator to work out the required repayments and then incorporate these into your cashflow. Once you have carried this out, recheck the cashflow to make sure that it still looks positive and a worthwhile potential investment.
6. Keep it up-to-date
Potential investment is often the trigger for the preparation of a new plan. While this is no bad thing – since at least the organisation has a plan at the end of the process – don’t forget to then keep it up to date. Even if you are not seeking investment this is important so that everyone concerned with the organisation understands where it is seeking to go in future. In addition, if you approach a funder with a plan which no longer reflects the current situation – or even worse, one which carries information which has been superseded – then you will look as though you (and the organisation) are out of date. Keep your plan refreshed and revived each year.
Peter Stone can be contacted at [email protected] or on 07711 764994. His company’s website is: www.pstoneconsulting.co.uk
What next?
Want to read some examples of what your Futurebuilders investment
package might look like? Ready to begin the application process?
Flickr 
Twitter 
Vimeo
[...] This post was mentioned on Twitter by Rockstar Group, Rockstar Group. Rockstar Group said: Top Tips for writing an Effective Business Plan to Secure Investment http://bit.ly/1WZor8 [...]