Angel Investors and Appropriate Business Planning

One of the most important things to focus on before you start to seek angel investment is to have a properly developed business plan. In many instances, if you are working with a single investor, then you will most likely not need to have additional specialized documents drafted in order to receive a capital investment for your small business. As such, it is important for you to focus on having a well put together plan that not only showcases how you intend to use the money that you are seeking, but also how much money you intend to make once you have your business up and running. If you have a business that is already operational then you are going to need to present the current tax returns and financial statements for your business. However, it should be noted that these financial statements need to be provided separate from your business plan and they should be prepared by a certified public accountant.

If you do not know how to properly draft a business plan then it you may want to work with a consultant that specializes in producing these documents specifically for investors. There are many different types of business plans, and a well qualified consultant can assist you in putting together a presentation that is appropriate for a private funding source. Additionally, they will be able to provide you with the necessary risk disclosures that are required by some states as it relates to investment related documents.

One of the most important aspects of your angel investor focused business plan is to have well developed forward looking financial statements that will effectively provide an overview of the anticipated profits and cash flow of the business. A well written plan also has a number of exit strategies outlined coupled with a forward looking valuation of the business in each of its first five years of operation. A formal valuation of your business is especially important if your business is already in operation, generating profits, and producing a positive cash flow. Your CPA or an expert within your field will be able to assist you in developing a business valuation model for your existing business if need be.

In closing, it is very difficult to find outside investment for your business. However, you can increase you chances significantly if you are able to provide a concise, coherent, and well developed business plan to a potential angel investor, venture capital firm, or private investment group.