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A little guidence??

Discussion in 'Business Models, Niches, Industries' started by A-GAME, Sep 25, 2007.

  1. A-GAME
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    A-GAME New Contributor

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    Hi everyone...Id like to find an angel investor to invest a small amount of money ($100,000AU) in the start up of my business...I've never written a business plan before and would like someone to give me some specifics as to what an investor would want outlined exactly in the plan...I would also like some help developing an exit strategy so that i can be debt free within 4-5 years...If any of you are experienced in this area and have time to correspond with me occassionaly,feel free to leave your email...Thanks
     
  2. ramy98
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    ramy98 New Contributor Read Millionaire Fastlane

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    A game; you can find websites that can help you with the creation of your business plan; I also found a couple of nice books at my local college library. The business plan will highlight:

    Company Description
    Product or Service - What will you sell ? What service will you offer your clients? How will you differentiate yourself ?
    Market Analysis - Who are your clients? Businesses? How are you going to reach them ?
    Strategy & Implementation - How are you going to accomplish your goals ? What are managemnets responsibilities? How can you track results?
    Financial Analysis - Projected Net Income/Loss figures & Cash Flow Projections

    This website should be helpful for you.
    http://www.bplans.com/dp/
     
  3. nomadjanet
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    nomadjanet Contributor

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    the website for Score has several sample business plans that you can adapt to your business.
     
  4. JScott
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    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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  5. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Admin Post
    Angels look first for ROI, the marketspace bandwidth, entry barriers, and managment team. Many a business idea is funded based on the management team vis-a-vie the actual business idea. The thought being: We invest in people, not ideas.
     
  6. kimberland
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    kimberland Bronze Contributor

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    I understand what you're saying MJ
    but a business plan helps management sound competent
    to future investors.

    For example:
    I'm working on a business plan for a restaurant type start up.
    If they hook up with bankers or investors with experience in the business (and that is, of course, preferable),
    Management will be asked about traffic, conversion rates (to guest counts), average check, food costs as a percent of sales, percent of lucrative liquor sales, etc.

    Challenging to know all that without going through all the work needed for a good business plan.

    I always say that its not about the business plan,
    its about the answers you get
    when you ask the questions for the business plan.
     
  7. Russ H
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    Russ H Gold Contributor Read Millionaire Fastlane Speedway Pass

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  8. A-GAME
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    A-GAME New Contributor

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    ok thanks for the responses everyone...much appreciated but i really need to know how to work these figures out...id like to know my business plan is going to make an angel happy,but at the same time i want to be sure im not ripping myself off...i have no experience in this type of finance at all,so how can i put all these facts and figures together without more information? sure,writing a business plan will be simple enough,but if i was an angel,the contents would be extremely important so i dont want to make the mistake of writing one that isnt gona cut it if you get my drift...i dont want to lose investors because my business planning is working in a trial and error type fashion...and i really dont want to waste time...i need to know what type of return do angels typically expect? as well as how to structure the exit strategy...its all good and well to say i want to be debt free in 4-5 years,but how do i work the figures out?....
     
  9. Peter2
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    Peter2 Fastane Legend. RIP.

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    1. Write a Presentation and a Business Plan
      I suggest starting with a presentation that contains 10 to 15 slides and runs for no more than 20 minutes. In the course of your presentation, you should outline your product, your market, your management team, and the reason you think your product will sell. You should make the presentation before a few people you trust, get feedback, revise it, and give it again, this time taping it. When you view your taped version, make sure you are making a compelling case for your company.
      Only after you are satisfied that your presentation does make your case are you ready to write your business plan. Crafting such a plan is a fairly standard exercise. You can find tips in books, Web sites, and software programs. I recommend making an outline, using simple prose, and keeping your document to a maximum of 20 pages. Don't submit an 80-page plan!
    2. Identify Potential Investors
      Having developed a presentation and a plan, it's time to identify potential investors. One rule of thumb: Approach only those individuals who are less than two degrees of separation from you. Get references from people you know, but should those new acquaintances refer you to their contacts, you're on thin ice. Referrals from referrals rarely invest.
      Another tip: Stay local. You won't need to go beyond your geographic area to find pockets of people eager to invest. It is, however, a good idea to approach people you don't know (and who may not be in your locale) if you believe they have a unique understanding of your product. Since you are only looking for $100K, you should also stay away from Angel investors with a lot of capital, as they would not be interested in a small deal like this.
    3. Create a Term Sheet and Specify a Valuation
      You're now ready to create a term sheet, a one-page outline of the investment opportunity your company affords. It should include a "valuation," your best estimate of what the company is worth. Determining valuation is tricky. I suggest that you not try to gouge your investors. Aim for a fair deal. If you think your company is worth, say, $300K, and your investors offer $100K to $200K, go with the $200K. From the beginning, you want investors always to feel as if they're making money. Even though they'll own more of your company with the lower valuation, during later financing rounds, your company's stock will be more likely to increase.
     
    JesseO likes this.
  10. JScott
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    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Don't psych yourself out...it really is pretty easy to come up with income/profit estimates...

    This might sound simple, but it works...

    To estimate your net income:

    Income = (Number of Customers) x (Cost of Product) x (Frequency of Payments)

    So, if you have a subscription service, how many customers will be paying multiplied by how much they pay multiplied by how often they pay (once? once a month? once a year?).

    If there are levels of service, figure out what percent of your customers will pay for each tier. If it's a product, assume a single payment.

    If you don't know how to price your product or how many customers you will have, the best idea is to look at your competition. How much do they charge (this will tell you how much people are willing to pay)? How many customers do they have?

    You can also estimate the total size of the market your playing in, and try to figure out what percentage of that market (in terms of customers or $$$) you believe you can capture.

    To estimate expenses, assume you get the number of customers you estimate in your income above, and figure out the cost of providing your product or service to that number of people.

    Your profit is your income - your expenses.

    As for what return an angel expects, it depends. Angel investors are generally just private investors who allocate a % of their net worth to trying to hit it big with a startup investment. Angels generally invest between $20-500K (any more than that usually comes from a venture fund), and in-my-experience generally expect between 100-500% return on their money in under 5 years.

    As for exit strategy, this is how the investors get their money back (plus more hopefully). Investors generally want to know what your goals are. For example, do you want to take a company public? Do you want to sell quickly and take a profit? Do you want to run the company for the next 20 years, not sell, and not go public?

    If you said the last thing, you're not going to make any investor friends. Investors want to hear that you plan to take your company public or sell to a competitor. Which one generally depends on the market your in. For example, if you run a blog, you likely won't go public, but you could certainly sell it to a media outlet.

    Just some thoughts...hope it helped...

    Btw, I do some angel investing and know some others who do as well...if you'd like to send me a BP, I'm happy to review it for you and give you feedback (and maybe even be able to suggest where to start for investment).
     

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