Business plans that are successful require careful pre-planning and due diligence in order to avoid continued rejection. More than 4 out of 5 companies seeking capital financing routinely fail to obtain it. Bankable business plans all have one thing in common – they have the credibility that demonstrates the business funding proposal meets the initial underwriting test for having strong odds of closing. So what makes a bankable business plan credible?
As you may note from the example business plan (click here or click on the image at left), the INVIZEN approach to creating the bankable business plan focuses on third-party credibility that also incorporates third-party credibility resources as the basis for the assessment. This is quite a departure from the conventional approach where the sponsor typically makes factual representations that are either not supported at all by third-party evidence (thus killing credibility right out of the gate) or the third-party evidence is sketchy at best.
To be considered a serious proposal that is worth the expense of the underwriting review the proposal has to address the two core issues: (1) is there a real market opportunity here that justifies deploying capital? and (2) if capital is produced will the business be able to manage the execution risks and pull off the deal as advertised?
In the first instance, either the independently surveyed market evidence demonstrates the potential opportunity exists or it doesn’t. Realistically speaking, less than half of capital funding proposals adequately address this issue with any credibility, so 50% of business plans are rejected end up in the trash can right away due to this issue.
It’s the second issue that seems to really be the deal-killer. If you are going to seek capital financing you have to demonstrate you are serious about properly managing that deployed capital. If you think your experience, credit score, reputation or education is going to carry the deal you are going to find it difficult to stand above the crowd and get serious funding consideration in today’s capital markets. The rules have changed. If you are seeking equity financing in the capital markets, broker-dealers (i.e.: investment bankers) have been placed under an extraordinary level of regulatory oversight from the SEC and FINRA is ruthlessly enforcing the new regulatory framework. Our firm works with broker-dealers to manage this potential nightmare and many broker-dealers will routinely reject proposals for funding out-of-hand because the risks today are just too great for them to want to go through the brain damage securities private placement offerings entail. If the sponsor fails to manage execution risk and demonstrate a proactive approach to execution loss events they can be left holding the bag of investment fraud complaints from investors. This makes their E&O liability insurance prohibitively expensive.
With these thoughts in mind, credibility is the core issue and most business plan writers have no interest in dealing with the issue because they have no understanding of the complexities involved in creating the supporting due diligence documentation required to demonstrate credibility regarding this issue. Templates and software programs have no room for engaging this issue on a routine basis at all. The INVIZEN system is built around this core issue and providing the sponsor with third-party credibility in the form of an independent assessment of the entirety of the funding proposal of the sponsor. If you are serious about obtaining capital and managing your own capital risk associated with the costs of acquiring capital, you should at least consider this option. Going it alone is probably not going to be enough.
Contact INVIZEN today and learn more about what our unique approach can do for you in terms of maximizing the odds of a successful funding outcome. Our telephone number is 832.663.9634 if you want to discuss the matter and have your questions answered. If you want to order your own plan, please click here.