Business Plan Proposal Development: How to Improve Your Chances of Getting Funded

Business Plan Proposal Development: How to Improve Your Chances of Getting Funded
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While an internal business plan tends to focus on potential profits, a proposal should instead assure executives, potential lenders or venture capitalists that the project has the potential to make enough money to repay a loan or to be worth the capital investment. Project managers should also include data to prove that they have enough collateral behind them to pay off the loan or investment in the event the project profits occur slower than anticipated.

Proposal Structure

Project managers typically download a business plan template from a free website or create their own format. The proposal should include the same topics as a business plan, but focus on the assets the manager or team currently has to back the effort. Constructing a business plan proposal, including an executive summary, market analysis, company and product description, sales strategy and financial information, allows the team to get approval and procure funding to go ahead with the project.

Conducting Research

The project manager should research facts about the executive sponsor, lender or venture capitalist. For example, if possible, she should arrange an introduction or interview. By preparing a short presentation, using presentation software, she can summarize the proposal, which should emphasize points of interest to the particular lender, sponsor or investor. It helps to understand the business practices of the lending institution or sponsoring organization, including rules (such as minimum collateral requirements) in advance. Project managers should avoid submitting a loan application or proposals that will certainly be rejected. Other lenders may discover the rejection when they run a credit report, limiting new approval chances.

Documenting Financial Assets

Including a comprehensive listing of current financial assets helps to secure a loan. For example, the project manager may need to provide an attractive picture of real estate that acts as the collateral or include pictures of equipment. Accentuating details that help tell a compelling success story encourages lenders or venture capitalists to invest in the effort.Sponsors or lenders tend to reject loan requests if the risk of failure exceeds the value of the collateral. A proposal should include an executive summary, a description of the team’s skills and experience, a brief market analysis and financial projections. The project manager should disclose all information in writing because failing to do so can allow a venture capitalist to demand money back later on.

Usage Details

The project managers should provide details about how the team plans to use loan funds or capital investments. For example,creating a table helps the approvers visualize the expenditures. Listing the cash from other sources and the proposed funding in the first column and listing the proposed purchases in the second column (such as office equipment, business licenses, insurance, production equipment and advertising) help make the case. The project manager should also list the working capital required to keep the effort going until it breaks even. By include information about how the proposal details, such account numbers, can be verified, the project manager saves the investors effort and streamlines the approval process.

Operating Statements

Including past operating statements shows that the team has cash flow available to pay back the debt. The project manager should justify the projected operating numbers, known as proforma, by using data from industry trade associations or websites, such as the Dun and Bradstree or Risk Management Association websites. She should include tax returns, if specifically asked to do so. She should describe the competition as well as explain how the project output will attract more customers. She can use industry outlook information from the website to sway sponsors (such as venture capitalists) who chiefly want to know if the project results will make money.

Cover Letters

The project manager should create a cover letter to accompany the business plan proposal. By personalizing the letter to refer to any specific conversations, meetings attended or other correspondence, the letter can address specific concerns about how the money will be used to finance the project. Then, the rest of the letter can describe how the team intends to show a return on investment for any venture capital or allocated resources. By listing potential risks and the return on investment for taking risks, the project manager can provide sufficient details to persuade venture capitalists that the results are achievable.

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