What does an investor expect from an entrepreneur?

Are you an entrepreneur looking to present your project to a financial backer? How can you be as well-equipped as possible? What are the most requested elements? While your business plan is essential, there are other elements that will weigh in the balance. Alexia Fray, financial analyst and trainer, answers the question: what does an investor expect from an entrepreneur?

How do I prepare my business plan?

The business plan is a tool for presenting important information about your project. To begin with, you’ll need to present a summary: this is the executive summary. This text should answer the following question: what is
your value proposition? In other words, what need do you meet? What is the added value of your offer? What meaning do you give
to your project?

Market research

Next comesmarket research. It goes without saying that this is a major pillar of your business plan! The aim of this study is toanalyze supply and demand in a given market, to check whether your project meets consumer expectations and to situate you in relation
to the competition. It enables you to set up your sales strategy, as well as your marketing and communication action plan.

The project team

Another very important component is the presentation of the project team. People are at the heart of the process. Explain the complementary nature of the profiles that make up your team, submit your CV, present your career path and explain the
steps that led you to the creation of this project. The more coherent these elements are with the project, the better! Finally, zoom in on the legal structure envisaged for your project (incorporation? One or
several partners? Who is the manager? What are the roles of each?)

Financial assumptions

Don’t forget to include in your business plan the financial assumptions you’ve made (price, volume, opening hours, etc.) and a coherent projected income statement, as realistic as possible, taking these assumptions into account and presenting the expected financial results over at least three years.”

What else is important?

Let’s take a look at the additional information that your banking partner will consider. He or she will be sensitive to the consistency of your project with your personal situation. You’re launching a project, you want to develop it and make a living from it: the expected income must correspond to your private needs. Have you assessed this? A professional entrepreneurial project is often a great adventure: have you measured the impact of your choices regarding the launch and development of your project?

Your real estate and financial assets

Another private component your banker will be interested in is your real estate and financial assets. The latter provides security and can be used as a guarantee for the financing you’re applying for. Real estate is made up of your fixed assets (buildings, land, etc.), while your movable assets are mainly represented by your financial assets.

Your commitment and motivation must shine through! Show your potential backer that you’ve got the “it”, that you’re absolutely convinced and that you’ll do anything to make it happen! If you don’t believe it yourself, why should your financial partner?

Finally, your ability to solicit all possible resources (personal, financial, third-party investors, participative financing, grants and subsidies…) will be closely observed, as will your ability to ‘pitch’ your project.

Practice!

You have your project well in mind, it’s very clear to you, but not to everyone. Practice presenting your project simply, quickly and effectively. Your ability to simplify your speech so that it’s easily understood by everyone, or to accept being heckled and questioning yourself are all keys to success. You’ll find good training for pitching online or in specialized
books.

And where does CSR fit in?

We live in a rapidly changing society. It has become essential to integrate not only economic factors, but also environmental and societal ones. The younger generation, but not only, are now sensitive to the elements that make up corporate social responsibility. And just as well, it’s also a topic for financial partners.

How do you manage your teams? How do you interact with your project’s stakeholders? Companies have every interest in taking societal and environmental impacts into account in their activities.

Where to start? You can appoint a CSR manager, or assign CSR responsibilities to employees, carry out a strategic analysis of your company’s CSR needs, launch a dialogue on the subject with your stakeholders, run CSR training courses with your team… There are many possible actions. Showing your values is what gives meaning to your project.

How about zooming in on the presentation of expected financial results?

Forecast results must be based on the most realistic assumptions possible: price assumptions based on the market study and the proposed offer, volume assumptions taking into account the resources deployed and constraints (working hours, team size, seasonality of activity, etc.).

This will enable us to estimate sales as accurately as possible. Expenses must also be as exhaustive as possible, to avoid unpleasant surprises! Some of these, such as communication costs, business premises and employee remuneration, need to be explained. Profit forecasts should be drawn up for a three-year period.

A first financial year is often not very significant, as it is affected by the gradual launch of the business and exceptional expenses. It takes an estimated three years for a business to get off the ground. Some innovative companies, on the other hand, project profitability over the longer term, and produce five-year profit and loss forecasts. It’s essential to look at the expected financial results to see if you can achieve break-even sales, i.e. the minimum sales required to cover expenses. This can be expressed in euros or in days of sales.

Finally, a cash flow budget is also necessary to conclude the financial approach of the business
plan. It highlights monthly cash receipts and disbursements, and thus any
seasonality in the business, justifying possible cash-flow support.

This article is taken from our first issue of Audace Magazine.

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