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How To Use Your Business Plan to Get Funding

How to build a business plan that inspires confidence in your potential backers.

Greg Fisher




One reason for developing a business plan is to get outside parties interested in providing capital for a new venture. A good business plan tells an interesting and comprehensive story that an outside party cause to evaluate the viability of a new business concept.

So much has been written about what should and should not go into a business plan that the person preparing the plan can easily become overwhelmed and confused.

To provide specific and practical guidelines about what to put in a business plan that will inspire confidence in investors, we asked five people who regularly evaluate new venture opportunities to tell us what they want to see in a business plan.

Graham Geldenhuys of Step Strategic Venturing, Christo Botes of Business Partners, Martin Feinstein of Enablis, Julia Fourie of HBD Venture Capital and ChrisNthite of Old Mutual Masisizane fund all told us what they expect to see in a good business plan. Here’s what they had to say.

Make a strong first impression

A business plan is a reflection of the people behind the business. Formatting, spelling and visual appeal contribute to the impression that investors form about the venture team.

Graham Geldenhuys of Step Strategic Venturing says: “If you can’t take the time to put together a worthy business plan, I wonder if you’ll take the time to get to grips with the million other less important details it takes to build a business case. I cannot begin to engage with content that has spelling and formatting errors.”

Martin Feinstein of Enablis suggests:  “Keep it simple. White A4 paper, a simple 12-point font like Arial and numbered pages. Make it as short as possible. I have seen fantastic business plans that are all of five pages in length and terrible plans that are 50 pages long. Include information in your business plan on a ‘need to know’ basis.”

Provide a succinct overview

Many investors rely heavily on an executive summary to make an initial evaluation of the business plan. For this reason, Christo Botes of Business Partners advises entrepreneurs to provide “a short, succinct and to the point business overview giving the investor a profile of the business as well as a description of the product service offering.”

Julia Fourie of HBD supports this idea, suggesting that entrepreneurs “write a good one-page executive summary. There is a good chance that the potential funder won’t even read any further if this is not compelling.”

Related: Tips for Writing an Effective Funding Proposal

Make it coherent and complete

The different pieces of the business plan must link together in a coherent way and all the relevant issues need to be addressed. The content of each section of the plan must correlate effectively to the information in the other sections.

Geldenhuys says that a good business plan needs to be “well thought out and coherent… there are a bunch of templates to help in this regard.”

The order in which each section is presented is not that critical but all the important sections must be addressed. Old Mutual’s Chris Nthite says: “Don’t cut corners. Do the research as it helps you think through all the issues necessary for your business to be successful.”

To make a business plan coherent and complete, Fourie advises entrepreneurs to write their business plans themselves. “No one knows your business better than you. Use consultants and experts where necessary but don’t outsource the whole process.”

Focus on financials

Investors are especially interested in the financial prospects of a business. One investor says: “It’s only about the money.” They pay a great deal of attention to the financial forecast in the business plan,suggesting that financial projections should be realistic and understandable.

The assumptions underlying the projections should be clearly outlined and justified. Botes makes the point that of all the financial projections, “cash flow is the most critical”.

Be specific about the business DNA

“Every business has a different DNA – a different business model,” Geldenhuys says. Different factors account for success across different kinds of businesses. “In the business plan the entrepreneur must demonstrate that they understand what is unique about their business and that they get the thing they need to nail.”

To demonstrate their deep understanding of the proposed business concept, Feinstein suggests that they be very specific when it comes to describing a typical customer, the product and exactly how it is going to be marketed. “Too many business plans glibly talk about ‘mass media advertising’ without having the faintest idea about the costs,” he notes.

Related: Steps for Pitching an Investor

Promote the People

All investors made the point loud and clear: “It’s all about the people. The business case must reflect a winning team.” Be specific about who is involved in the business, what role they will play and what skills and experience they have to make them effective in that role.

Match with mandate

Early stage venture investors operate under different mandates, meaning that they look to invest in opportunities that meet specific criteria.For example, HBD Venture Capital has a mandate for investing in high-growth, technology orientated businesses; Old Mutual’s Masisizane fund focuses on businesses that contribute to black economic empowerment and Business Partners has a broader mandate focusing on a wide range of industries and venture types.

Fourie suggests that entrepreneurs do a ‘due diligence’ on the funder and tailor-make specific elements of the business plan to their needs.“Go to their website; study their investment criteria; understand their investment process; look at their investment portfolio; read some press releases and articles; ask around if anyone you know has dealt with them before.”

She also suggests that entrepreneurs contact the potential funder before just sending off a business plan to someone’s inbox. A personal referral is even better.

Getting external people to invest in a new venture is never easy. There are many hoops that an entrepreneur needs to jump through to convince a financier that they have a worthy new venture.

If you know what investors are looking for before you start writing a business plan you will be in a much stronger position to produce a document that inspires confidence and even excitement.

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

1 Comment

1 Comment

  1. Charles Muhigirwa

    Jan 16, 2013 at 18:18

    Thanks for Greg for the wonderful article. You are very write it’s never easy to access external funding from investors no matter how stunning the business plan may be. However, we will always try to apply for such funding until it’s received. For instance I am in Uganda and the Entrepreneur Magazine only talks of Entrepreneurship opportunities in South Africa. How best can Uganda Entrepreneurs
    do to access such wonderful entrepreneurship, franchise, and business funding opportunities that are not availbale in Uganda?

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How to Guides

What Can A Business Loan Be Used For?

Read on below for what you can use these loans for.

Amy Galbraith




Sometimes in the business world, you might need a financial helping hand. This is especially true if you are starting out as a business owner or building your business from where it already is. This is where business finance can be highly useful because you can use it for any number of issues that your business might be facing.

When you apply for any business loans you should know what you want to use the money for. For example, asset financing is used to lease, hire or purchase new equipment or vehicles for your business.

Small business loans can be used to boost your business funds or for purchasing new premises. Interested in applying for business finance? Read on below for what you can use these loans for.

You can purchase inventory

If you sell products, the chances are that your cash flow can often be dictated by having to restock your shelves. But if you have a business loan, you can purchase more inventory to replenish your stock and stay in operation throughout the year.

Purchasing new inventory during seasonal dips, such as selling out of items during the festive season, can become expensive. This is where finance can come in handy. You can have the funds deposited into your company bank account and use it solely for restocking your shelves, allowing better management of accounts during these trying times. It is not a long term solution, however, to use a loan to purchase inventory can be helpful for small businesses just starting out.

You can upgrade equipment

Having outdated equipment will put you at a significant disadvantage to your competitors. This can be remedied by taking out business asset finance in order to upgrade your current equipment. You can lease, hire or even purchase everything you need to maintain your original business plan.

For example, a transport or logistics company can use this finance to improve their fleet, to upgrade their current trucks, or to provide new technology to drivers to help them navigate the South African roads. If you are a boutique design agency, you can use your loan to purchase new computers with the latest software so that your staff is always on the cutting edge of all trends. On your loan application, be sure to list what you plan on using the money for so that you have accurate estimations of your interest rates.

Keep your office operational

Keeping your office operational means that you need to pay for day-to-day expenses. This can include anything from replacing an old coffee machine so your staff stays caffeinated to paying the utility bills so that your office does not go dark when you need electricity the most.

This could be seen as starting capital for small business owners, which you can then supplement with more income or repay once your business starts to earn more and become successful. You could create a list of all of your needs, such as paying lights and water bills or fixing kitchen equipment and look for those that you need to focus on the most. For example, your staff could bring their own lunches into the office in case you need to replace the fridge or you could strike a deal with a nearby coffee shop to save yourself from spending unnecessarily on expensive coffee equipment.

You can boost your marketing budget

Marketing is not easy to understand for everyone. While you might have a brilliant business mind, your aptitude for selling and marketing your company might not be your strong suit. This can be helped by investing a business loan into a marketing company for your strategy, which can help build awareness about your business and make it a success.

You will have improved brand visibility and can reach customers in new and exciting ways. And you will also see a significant return on investment when reports and analytics come in showing your business’s performance. Marketing is an integral part of building a flourishing business, so using your loan for this purpose would not be a waste. Be sure to speak to your lender about whether this is an acceptable use of your business finance and what the interest rates would be.

Final thoughts

A business loan can be a sound investment, especially if you consider what it can be used for. You could look into purchasing new inventory for your shelves during a busy shopping period, or upgrade your machinery for your next big project. You can use the money to keep your day-to-day expenses from becoming overwhelming or boost your marketing budget so you can reach customers and build your business.

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How to Guides

Does Your Business Really Need Funding?

Strategy, risks, and opportunities.

Carl Wazen




Businesses need capital to grow, and most small enterprises rely on external funding to meet this requirement. While accessing funding can be challenging for entrepreneurs, taking on the financial commitments of a loan should never be taken lightly. Many small businesses fail because repayment conditions are so onerous they impact cash flow, and business owners end up blacklisted, which dampens their future prospects.

First, ask yourself some hard questions

Before you decide to apply for that loan, cash advance or capital injection, make sure that your business really needs funding. Critically evaluate your business. Consider that you’ll ultimately need to give something back for that funding – an equity stake, or interest payments.

Determine how much the extra funding is worth to you, and what would happen to your business if you couldn’t get it.

Define your goals

The type of funding you need (and how you validate it in the application) is dependent on your short- and long-term goals. If you’re not currently on track to achieving your business objectives, determine what stumbling blocks or pain points are holding you back. Ultimately, you should be certain that the capital will help you achieve your objectives.

Related: Government Funding And Grants For Small Businesses

Evaluate your financial pain points

Next, determine which of the identified obstacles can be overcome with extra money. While most could, a loan may not be the answer. Entrepreneurs often use financing to temporarily plug holes, instead of fixing them. Without addressing the root cause of the issue, the business will continue to struggle, while also dealing with the extra debt.

It is also important to consider the nature of your requirements, and the impact this will have on finances. For instance, using a loan to hire more staff requires upfront funds before additional revenue can be generated. The same applies to sales and marketing initiatives.

Expanding your footprint as part of a strategic plan to grow your business also requires funding, but these are usually long-term loans that take more time to pay back. A thorough evaluation is needed to determine the potential return on investment and compare it to other opportunities.

Evaluate if the strategic benefits will outweigh the mid-term cash flow risks.

Consider your options

Before making any financial commitment, first look for ways to optimise your operation to realise cost efficiencies within the business that can free up working capital to fund the fix.

If you determine that funding will address your pain points, by boosting inventory ahead of a seasonal spike, for example, consider vendor financing or supplier credit options before securing financing from a bank.

If you need to expand the business, look for ways to lower the associated costs. For example, franchising a new location to a competent partner can relieve you of some of the financial burden. A product-based business could perhaps generate extra income by selling via online channels, or through distributors or other retailers instead of a new store.

Related: The DTI Funding Guide You’ve Been Looking For: The What And How

Scenario planning

However, should you choose to proceed, before you sign any loan or credit agreement, make sure you consider all possible scenarios:

  • How long will it take before your investment starts covering the costs of your loan?
  • How will you manage repayments if your forecasted growth doesn’t materialise?
  • How can you pivot to reallocate resources if your plan is not working out as initially intended?

The bottom line

Before you start looking for funding for your business, critically evaluate if your business really needs it. If you decide capital is necessary to reach your goals, and you’re willing to take on the responsibility, carefully consider the type of funding that is best for your particular type of business and your specific needs.

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How to Guides

How Investors Choose Who To Invest In

Why entrepreneurs tend to focus on the wrong things when pitching to investors, and what investors are really evaluating instead.

Allon Raiz




The hypothesis of my book Lose the Business Plan was that great businesses are not determined by Excel spreadsheets and the all too predictable J-curve, but rather by the entrepreneur or entrepreneurial team and their ability to see opportunity, navigate obstacles and make things happen.

The truth is that entrepreneurs focus on the wrong side of the coin when meeting with an investor. They focus on the deep detail of the business plan and concentrate on justifying assumptions, predicting and overcoming objections, and emphasising market potential. Yet it’s my experience that the real decision on whether or not to invest in a company is more heavily weighted towards the entrepreneur or team rather than the business plan itself.

Once the ‘numbers’ stack (in other words, the business model makes sense) and the risks have been considered and appropriately mitigated, then the real decision-making can begin. The final decision comes down to four important characteristics of the entrepreneur himself or herself.

1. Is she honest?

You may have the best business plan in the world and you may have mitigated every possible risk but, if you are not someone the investor can trust, no deal will be made. I find that entrepreneurs often underestimate the importance of their reputations and, in today’s connected world, it’s so quick and easy to reference someone’s character.

Related: A Comprehensive List Of Angel Investors That Fund South African Start-Ups

Entrepreneurs who think about the short game and make morally questionable decisions for the prospect of quick profits generally find themselves in an ever-diminishing circle of people who will do deals with them. Your reputation is everything and you should guard it at all costs.

2. Does she work hard?

I am still not resolved around the cliché that you should work smart and not hard. (Perhaps I missed the memo or was asleep during the lecture that demonstrated how this is possible.)

In a world that is changing at an astonishing rate, in an economy that is becoming more and more competitive and in a business environment that is becoming ever more complex, it’s hard work to remain relevant and ahead of the curve for any extended period of time. Every quarter sees a new trajectory that needs to be investigated and navigated. In my opinion, this requires not just smart work but hard work, too.

It’s certainly true that investors like to invest in entrepreneurs who will take their investment seriously, who take their businesses seriously, and who are on top of their games.

3. Is she smart?

Smart does not always mean book smart but it definitely means street smart. It means having the ability to read a room, to see an opportunity, to learn new skills quickly and also being able to apply new learning’s to the business.

Investors look for investees who show agility when adapting to feedback from the market, from their competitors, from their staff and more.

4. Is she ambitious?

Investors do not like investing in ‘mom and pop’ operations. They seek the highest return on investment and that comes from businesses that can scale profitably. Scale is always relative to the investor’s perspective and not your own.

An investor with a couple of hundred thousand rand to invest will have very different expectations of the size of business he or she would like to invest in compared to another investor who has tens of millions of dollars. It’s important for the entrepreneur to authentically resonate with the level of ambition of their prospective investor, and be able to express that ambition through a coherent and cogent vision, as well as a plan to achieve that vision.

Remember, no one starts out as the ideal investee. It’s something that is built up over time and requires constant maintenance and curatorship. It’s essential to continually work on your reputation, to ensure that you are up to date with your industry, and to reassess your level of competence in your market. This is the only way to make sure you become and remain an ideal investee to a potential investor.

Read next: The Investor Sourcing Guide

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