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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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Company Posts

Are You Struggling To Find Financing For Your SME? Try Alternative Finance

If you don’t qualify for traditional funding or if it isn’t the right fit for your SME why not explore alternative funding? We specialise in alternative financing options by providing in-depth and custom plans for you and your business needs.






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Alternative Finance is finance beyond the traditional – it is defined by the financiers’ area of specialisation – by what they specialise in, whom they serve, and how they provide their funding. It does not replace traditional finance but rather functions as a complementary and additional form of funding.

Alternative financiers are specialists – they focus on a particular need and on a specific audience. As a result their ‘how’ is customised to deal with their chosen target market and for this targets unique needs. This applies to the funder’s processes and to their level of flexibility around things such as collateral.

An example of this is that a SME may have an existing R1 million overdraft (their traditional finance) secured by R 1.5 million collateral but suddenly they need R5 million for some kind of contract or bridging finance – they need it fast and don’t have that extent of collateral.

The traditional funder cannot provide what they need, their process is too long and their flexibility is too low. An alternative financier providing bridging finance and specialising in SMEs is ideally positioned to fill this gap.

One of the most significant differences between a traditional funder and an alternative financier is in their process. In the case of the alternative financier, they have often chosen to deal exclusively with a particular customer base, for example SMEs. As a result, this funder has both an affinity and contextually relevant empathy in working with SMEs.

Not only do they speak the same language the funder also has an appreciation for the time and material constraints of the SME and has developed their processes to cater to this market. This applies most notably to the turnaround time of the funding need and to the assessment aspect – where flexibility around things such as collateral is vital in making the finance happen for the SME.

A traditional funder is unable to meet the deadline of a bridging finance need, submitted on an urgent basis, where the finance is needed as soon as 2-3 days from time of application. A specialised or alternative funder is able to do exactly this. A traditional funder is also unable to find creative methods in solving the SMEs lack of high-value collateral in applying for finance.

This SME has generally already used their high-value collateral for traditional credit facilities but now needs funding for growth or resolution of a temporary cash flow challenge. An alternative financier is able to look at such an application in a different way, and has most likely already established alternative ways to make this happen for the SME.

Related: 5 Key Questions To Answer For Raising Funding

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How to Guides

Ways To Raise Capital To Expand Your SME

John Whall shares some of his insights about raising capital, despite tough economic conditions.

John Whall




Times are tough, we all know that. As revealed earlier this month by StatsSA, South Africa is in a recession. But as history tells us, recessions don’t last forever and as a business owner you need to stay focused and continue to look for ways to grow your business, because business growth means economic growth.

John Whall, CEO of Heartwood Properties has been in the business of commercial and industrial property development for many years. He has experienced more than one recession in his professional career. In order to expand, companies can raise capital in two main ways, through debt or equity. Debt involves borrowing money, while equity means to raise money by selling shares in the company.

Whall shares some of his insights about raising capital, despite tough economic conditions.

Debt Financing

Bank funded expansions are a very common option for many SMEs. The one thing you must consider is that it could limit you in terms of how much you can borrow based on your credit history and available assets. You will also be liable for repaying the full loan plus interest. Right now, interest rates remain the same, but it may increase in 2019. Debt if used correctly and not to aggressively is a great way for SMEs to grow and expand, however debt should always be used conservatively and the business owner must ensure that the cash generated by the business can easily repay both the interest and the capital to the bank.

Related: Seed Capital Funding For South African Start-Up Businesses

Government funding

The South African government supports a number of funding programmes to encourage the growth of small, medium and micro businesses in South Africa. You can contact Department of Trade and Industry (DTI), SEFA, NEF,  Khula Finance Enterprise.


Used in the startup phase mainly, this form of financing uses your network of friends, family or acquaintances. The Internet is used to spread the word about your campaign to reach larger amounts of people. Equity-based crowdfunding has become a popular alternative for startups who don’t want to be dependent on venture capital investors. This has proven to be very effective in developed markets.

Equity Financing

If you require more capital than you can raise or borrow yourself, and you want to avoid aggressive debt funding then you may want to consider equity funding. This can open up a number of avenues that will offer you capital to grow your business. Very popular amongst startups are angel investors and venture capitalists.

Angel investors are people (business owners) who contribute their time, expertise as well as their own personal finances and in return expect to own a share of your business and receive a share of any future profits.

The opposite are venture capitalists and private equity investors, who are investment companies or fund managers who provide very large sums of cash in return for part-ownership. These type of investors do usually have a say in the management of the business and also agree to a five to seven year exit plan for their investment. This type of funding suits a business who needs a once off equity investment, but does not continuously need to raise capital to grow the business. The election of the investment partner is critical for the business owner and their medium to long-term strategy for the business must be aligned.

Related: 3 Mistakes To Avoid When Running A Crowdfunding Campaign

Going public

Established businesses usually do a public listing to raise ongoing capital in hope of expanding. Not only does this help to strengthen their capital base but it makes acquisitions easier, ownership more liquid for shareholders and allows the business to continuously raise capital to grow. Up until two years ago, the only option for a company to list publicly was through the Johannesburg Stock Exchange (JSE), which required a minimum capital amount of R500 million for a primary listing.

In 2017, the Financial Sector Conduct Authority (FSCA) issued four new exchange licenses in South Africa, all of which are already operational, which is not only providing an alternative to the JSE but is also offering opportunities to smaller businesses and driving down the costs of listing and share trading.  One of these new exchanges is the 4 Africa Exchange (4AX) whom Heartwood Properties is listed with. They are the only exchange apart from the JSE which is licensed to trade across all asset classes, including both equity and debt as well as special-purpose vehicles and real estate investment trusts.

4AX is ideally suited for unlisted companies with a market capitalisation of up to R10 billion wishing to list. This, however, is not to say that this is a ceiling on the size of the company seeking a listing. The exchange has aimed to make the listing process more streamlined and timely while fully complying with its licence and the prevailing legal framework. Its listing requirements are less onerous and more cost effective than listing on the JSE, making it a viable alternative for smaller and medium sized companies. The other exchanges to consider include: ZAR X, A2X, and Equity Express Securities Exchange (ESSE).

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How to Guides

Why Your Start-up Should Skip The Seed Round

Don’t tell your frugal grandpa, but these days, you can’t do much with the typical $2 million seed round.

Matt Holleran




When enterprise cloud start-ups meet with us, one of the first questions we ask is: How much capital do you need?

The companies we meet with are typically pre-product with small teams, around two to 10 people. They almost invariably say they need a $2 million seed round, for the simple reason that, today, just about all seed rounds are $2 million.

Our next question is: What can you accomplish with $2 million? If they’re honest, they’ll say, “Not enough.”

We then tell them that we agree. In our experience, $2 million is a little light. At this point, more often than not, they’ll breathe a sigh of relief and say, “Yeah, by our calculations we really need $5 million to get to the next stage.”

So, this raises the question: Why even raise a seed round?

Don’t tell your frugal grandpa, but these days, you can’t do much with $2 million – not in the enterprise cloud realm, anyway. These companies are attempting to build very important products for the enterprise. They are trying to solve weighty problems for business, and getting to their first product offering requires the help of experienced, high-quality engineers who (news flash) do not work for free. There are also early sales and marketing challenges that these start-ups need to get right.

Related: Seed Capital Funding For South African Start-Up Businesses

And yet, so many start-ups are still stuck on the $2 million seed round. That’s what the market expects, so that’s what they’re conditioned to ask for – instead of the larger amount that they really need.

We need a rethink here. In fact, there is no longer a Classic Series A market. That’s because the capital requirements for today’s enterprise cloud companies are a lot different than they were 15 years ago, when cloud companies first burst onto the enterprise computing scene.

In theory, new cloud companies need a lot less capital to get off the ground due to lower upfront startup costs, cheaper technology and a wider range of distribution options. OK, fine. But it’s still hugely important to get the right pieces in place and build a solid foundation. And no matter what anyone says, that does not come cheap.

So, how much is the right amount? For early stage cloud business application companies, we believe the real capital requirement is about $5 million. That’s how much you need to hire seasoned executives, prove out an acceptable level of customer success and really start to refine your customer-acquisition model.

But here’s the other problem: The traditional Series A firms are now so large that they need to put much more money to work – a minimum of $10 million. So, that sweet spot between $2 million and $10 million is not really being addressed in the venture world.

And it needs to be addressed. Today you have that headless syndicate of $2 million to $3 million seed rounds composed of 12 different angels and a few seed funds that have already invested in 70 other startups. This is not a great situation for startups. After all, most of these investors aren’t signing up to provide hands-on advice or help with the hiring of key employees.

Plus, $2 million is just not enough capital to build out a product and team that’s ready for prime time. For enterprise cloud startups, the seed round is simply not that effective or efficient.

So, what’s the solution? My advice is to simply skip the seed round.

That’s not to say there isn’t a place for seed funds and angels. Of course there is! In fact, as a managing partner at a Classic Series A firm, I welcome these investors, because they can play a critical role and add extremely complementary value to the Classic Series A syndicate.

At the same time, they also understand that $2 million is not sufficient for today’s cloud startups. We want leading seed firms and value-added angels to join us as co-investors so they can avoid the headless syndicate syndrome and help provide cloud startups with the capital the really need.

Related: 10 Tips for Finding Seed Funding

The reality is that today’s venture capital market is not really optimised for early stage enterprise business companies. At one end of the spectrum, seed investors are not in a position to provide the long-term capital or board-level support that startups need.

At the other end, traditional venture firms have grown in size and have raised progressively larger funds. As a result, they are looking to write bigger checks of $10 million and above. That means they require startups to have a considerable level of traction and be further along in their development before making an investment.

This is why we need a return to Classic Series A investing.

What the market really needs are venture capital firms that are truly built for early stage investing, and that are led by seasoned operating partners who themselves have been entrepreneurs, who are connected to the top players in the cloud market, and who can provide that kind of insight and advice needed to build global, category-leading companies.

More than ever, enterprise cloud companies need honest-to-goodness Series A investors that can help them accelerate growth and maximise their true potential.

This article was originally posted here on

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