Preparing your investment document

25 April 2017   |   Startup, Blogs
You need to create a sound business plan and pair this with an equally compelling investment documentation.

One of these important factors for businesses to thrive is the presence or abundance of money or, in business terms, investment capital. And too often, business ideas are not realized due to the lack of capital or investments. But if you are serious in either starting or revamping a business, you first need to create a sound business plan and pair this with an equally compelling investment proposal.

Most of the time we know our potential and need capital but just are unable to quantify the need, and there you need the investment document.The investment document gives you an estimate of the amount of capital you require for your business to thrive. Moreover, we need other documents in order to get investment. The investment document specifies all those documents in detail so that it is easy for you to focus on your investment and other important areas of your business.

What is an Investment Proposal and How to Write an Investment Proposal?

In the entrepreneurial world, a proposal is a document that details suggestions and a plan of action towards achieving a certain goal or task. And when a proposal is written to gain the attention of and the monetary support from investors, lenders, and financial institutions in order to fund and seed the beginnings or the continuing operations of a business identity, property, asset, or other legal money-making schemes, this proposal is called an investment proposal.

Now lets focus on how to write an Investment Proposal. The most compelling investment proposal is the document that succinctly and accurately informs a potential investor what is in it for him or her if he or she decides to bankroll the said project. And to make sure that your investment proposal embodies these characteristics, we have created a list of the most important parts or pieces of information that should be included in your written investment proposal. Find out what these are below…

1. Description of Proposed Investment Project - All investment proposals should start with a brief description of the proposed investment project or idea. It is in this part of your proposal where you get to share with the world what your business idea is all about. Or, if you want more funds for an already launched business, you need to write about the things that you want to do in order to re-energize your business. Remember that this portion of your proposal is the first thing that potential investors will see and read so make sure that its first few paragraphs are written well. Do not hesitate to reword and create multiple drafts of this proposal introduction just so you can make your proposal as compelling as possible.

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2. Company Performance and Financial Report- Another must-include section in any investment proposal is a section about your company’s performance and financial background. If you already have an established company, it can be very easy to include a snapshot of your business records (like the company financial report) and achievements in this section. On the other hand, if you have not yet launched your business, you can replace this section with information about you (the business owner), how you came up with the business idea or project, and what you intend to do with the business once you get all the funding you need.

3. Planned Marketing and Sales Method- Another important component of an investment proposal is a market research and what your action plans to dominate your market. To illustrate, a thorough market research study will allow you to know who your competitors are in your chosen field or industry. After reviewing the results of this study, you need to come up with different strategies that you can implement in order to maintain or gain a market lead. And you need to list all these planned action plans into your investment proposal. A good investment proposal will include information on your planned marketing and advertising strategies, pricing models, employee acquisition process, product sources, etc. Your proposal needs to include as much information as possible to help any potential investor make a better assessment of your business’ potential.

4. Business Technical Operations Management- Investors would want to know everything about your proposed business idea or project before they commit to being full-pledged investors. That is why you need to also include all the technical and operational aspect of your planned business. This means that your proposal needs to include information about the people you intend to hire for the business, the business location, the operating costs, the equipment suppliers, the sources of raw materials, manpower resources, and other expenditures.

5. Project Financing- Investment proposals are not complete without a section on project financing. This is especially important for potential investors since this will state what will any investor get out of funding your business idea or project. Information like the source of funds, the return of investment, projected gains and losses, the profitability of the business, possible loans, and other financing options should be clearly stated in the investment proposal. This will provide investors with a clear understanding of how much their money or resources can help your business and how much they will gain in return. Also, make sure that you do not falsely represent your business by making unverifiable claims on this section of your proposal. Investors can do background checks or redo the math of your financial projections. And when they find out that you have embellished some portions of your proposal, you may not only have just lost a potential investor but it may also affect your reputation as an entrepreneur.

Preparation of investment documentation and economic assessment of investments.

Investment project identification document which contains data required to define an investment intent and its targets.
Pre-investment concept which deals with all variants of the execution of investment and helps select the most optimal one.
Investment program which is the key document and represents a technical basis for the decision to invest.
Execution study contains a list of all required activities for the execution of the intended investment.
Report on the execution of the investment project.
Report on the effects of an investment showing a comparison of actual effects and effects envisaged in the investment program.

6. Project Timetable

A business or project timetable should also be included in your investment proposal because this will let potential investors know the length of their agreement with you (the business owner). This is also important for business owners since timetables allow them to keep on track with their own business goals.

7. Exit Plan

A sound investment exit plan is another important component of an investment proposal. As its name suggests, this section of your proposal should include information on how investors can divest of their investments with your business or company. Exit plans should also include information for how your business will deal with business failure.

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