Evaluating a Business Plan
If you are planning to invest on a business and you want to pick the best opportunity, you have to know the steps in evaluating the plan. Make sure that you examine the different sections of the plan.
An exciting and unique executive summary can encourage you to go on but you also must look into the corporate team and the financial projections.
You can find many business plans in the market. It doesn’t matter if you’re a teacher, entrepreneur, or investor, you should have the ability to evaluate a business plan to find the best deals. The sections of the plan should be analyzed while keeping attention to the plan’s detail. If you’re an investor or a lender, you must evaluate the plan before you decide to provide funding. The executive summary is the first thing that you must examine because it shows the highlights of the proposed business. This section is considered as the elevator pitch, so it needs to be concise.
What to Evaluate?
In the executive summary, the plan should already offer the compelling and unique features. Ideally, it should be exciting. When you say exciting, it should make you anticipate turning the page. A poorly written executive summary is one that lacks writing skills and marketing. The next thing that you have to do to evaluating a business plan is to look into the market opportunity. The business should grow by 10% each year but this will usually depend on the size of the business. A very good example is a $50,000 investment. In this situation, you have to expect to earn around $5 million from your target market in the next few years.
After this, you can now evaluate the strategy of the business in terms of attracting potential customers. The plan must be able to identify the problem. The business is actually the solution to the problem. These things should be presented clearly to ensure that the marketing efforts are in line. The executive team should have passion, integrity, and experience. Look for info on the brief highlights and bios. Aside from that, the company must also have advisers, be it formal or informal.
The financial section should reveal a great deal about a certain endeavor. It should be realistic and must show the company’s earning potential. Stick with plans with realistic projections. You also have to look into the ROI or return on investment. The shares must have realistic valuations. You must evaluate the whole document. It should be a reflection of the real-world and not just on mere paper. There are hundreds of business plans out there waiting for evaluation. You must exercise discretion and don’t invest blindly. The business plan is the key to finding the best businesses in the market. Take your time and be sure to pick one that you have evaluated without bias.
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