In order to raise capital from outs

In order to raise capital from outside investors, the business plan must be the "right" plan—that is, it must speak the investors' language. You must know what is important and what is not important to investors and how to present your idea or concept in a way that is meaningful to them. Otherwise, you will immediately lose credibility—and a potential source of financing.


Based on their experience with the MIT Enterprise Forum, Stanley R. Rich and
David E. Gumpert identified characteristics of a business plan that enhance the
probability of receiving funding from an investor. (The MIT Enterprise Forum sponsors sessions across the United States in which prospective entrepreneurs present
business plans to panels of venture capitalists, bankers, marketing specialists, and
other experts.) Figure 8-2 lists some of those features. For instance, to be effective,
the plan cannot be extremely long or encyclopedic in detail. It should seldom exceed
40 pages in length, as investors generally will look at brief reports and avoid those
that take too long to read. Also, the overall appearance of the report should be attractive, and the report should be well organized, with numbered pages and a table
of contents.
Investors are also more market-oriented than product-oriented, realizing that
most patented inventions never earn a dime for the inventors. The essence of the entrepreneurial process is to identify new products, but only if they meet an identifiable customer need. Thus, it is essential for the entrepreneur to appreciate investors'
market orientation and, more importantly, to join investors in their concern about
market prospects.