The main purpose of the business plan is to create a complete business strategy. When you write a business plan, you are forced to examine all areas of your business and build strong strategies in all areas, which will prepare you for successful execution when launching. It will show you how to manage your business: knowing your finances, make your marketing goals, analyze strengths, weaknesses, opportunities, and threats. It also helps you to understand the challenges of launching, the driving changes in your industry, and how to price your product correctly.
The secondary purpose of the business plan is to raise money. From family and friends, to banks, angel investors, or venture capitalists, your business plan is THE number one requested document from investor interested in your company. Your business plan will be an effective tool that will show investors all of the information they need and will demonstrate that you are a credible entrepreneur.
2. Investor Presentation (also called Pitch Deck)
An Investor Presentation is a clear and concise pitch given to potential investors that fully entails your business idea, strategies, and future plans. Typically lasting 30-60 minutes, it is your time to impress investors enough to have them want to fund your business efforts. These presentations are expected to be accompanied by a slideshow, roughly 20-30 slides that give a brief overview on the main components of your company. This includes: the problem your company will solve, your solution to the problem, business model, management organization and team, marketing and sales, competition, projections and timeline, and a call to action.
Compared to an elevator pitch, the Kitchen Table Pitch is an investment pitch that adapts to the pre-established relationships with potential investors. These pitches are geared towards informing family and friends of your business idea and opening the door to discussion on official deals and loans.
4. Promissory Note
A promissory note is a traditional signed legal document outlining a loan’s repayment schedule – its formal tone will set loan expectations, as well as encourage borrowers to successfully repay loans. It is the only legal document absolutely necessary to formalize a loan.
There are some key issues that should be considered when discussing the terms of your loan. The promissory note should include, in detail:
- The names of the borrower and lender
- Payment frequency and timeframe
- Amount per payment
- Interest Rate
- Consequences of missed or late payments
- Offered Collateral