I speak with small business owners, start-ups and people with great business ideas all the time. Most want to know how to get investors or loans for their businesses. I want to make it very clear that small businesses are very risky investments. The risk of loss is high, and the benefit of reward seems low.
You, as the leader must demonstrate or make the case that you’re going to win. You are a winner, and let investors or funders see not only your passion for what you do but also ready to tell them about the 5 pillars of your business and how you are working hard to reduce the inherent risks of the investment. And you are working hard to make an impact that is ten times greater than the investment they made.
Map out these 5 items with as much specific, yet concise detail as you can. Need words, pictures and justifiable financial projections.
- Idea (need to exist risk)
- Minimal Viable Product (reduce market risk)
- Management Team (reducing execution risk)
- Strategic partnerships (reducing pricing risk and competitive risk)
- Product Rollout or Sales (reducing financial or production risk)
Combine these 5 pillars and you have a business plan. Make these 5 pillars work together and you have a valuable business. I can’t emphasize enough that an idea alone isn’t a business. An idea is at best 20% of the business value. If you want to maximize the value of your business you will need all 5 of these pillars, strong and sound.
Map out to funders or investors the reward of how you’re going to make these 5 pillars strong and how your goal is to achieve a ten times increase in value over its life. Yes, there is risk and you should be upfront about the risk, but focus on the opportunity of the investment first.