Why a Business Plan is Important When Getting Venture Capital Funding

A business plan that is created to seek funds must demonstrate the prospects for profit. Entrepreneurs must show that their ideas will be profitable. They also need to show the amount of profit and when they will make enough profit to make the business worthwhile.
Any business plan should have the same basic elements. It should include product description and unique benefits it offers. The plan should also contain a marketplace overview that discusses the need in the marketplace for the product you or service you intend to sell, information about the competition, a description of the target customers, factors that will influence your customers, and projected marketplace trends in sales. Also, include your expertise for running the company, a budget, your market strategies, and financial projections.
If the capital is for a new business, any VC will need to see the business start-up costs. These are the costs that an entrepreneur need before he/she start selling. These costs include business set-up costs, deposits or payments for rent, research and development cost, costs to buy and outfit a building, and professional services fees.
If your business has been running for several years, venture capitalists will need to see operating costs. If you want to get expansion money, it is important to include operating costs for the last three years. This will allow investors to assess your ability to generate profit.


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