GREAT 25 IDEA: Write a Killer Business Plan

If two down-on-their-luck beggars approach you on the street asking for money, are you more likely to give money to the dirty, scruffy guy or the sincere, clean guy who asks politely for spare change?

Too many entrepreneurs circulate scruffy business plans and wonder why they never get funding. Remember this: your business plan has less than a minute to catch the eye of a serious investor. Messy, typo-filled, poorly written plans end up in the trash, according to the private, so-called angel investors and busy venture capitalists I've interviewed. Thousands of business plans hit their desk or inbox every year. They don't waste time reviewing second-rate pitches.

A veteran venture capitalist (VC) agreed to share some insights, but asked not to be identified. She said, first of all, she looks for succinctly written plans printed in an easy-to-read font. “The less the plan weighs, the better,” she said. “I always read the two-pound business plans last.”

She and other professional investors interviewed said the most important element is the executive summary. If it's not concise, yet comprehensive, the potential investor will go no further. If you aren't a great writer, hire one to help.

“The content is critical, especially in a technical area like biotechnology,” she said. “Always include the most compelling research results and data. Your plan must explain why someone should invest in your firm and not the competition.”

Remember to write your plan with the investor's perspective in mind, not yours. Be sure to include all the perks beyond making money. For instance, some investors like to be invited to glitzy parties and industry trade shows when they have money in a high-profile deal. Others want to be quoted in the press when the deal closes.

Good products and great writing aside, luck and personal contacts play a significant role in raising capital. Despite the soft economy, U.S.VCs invested $18.2 billion in 2,469 companies in 2009, and $16.9 billion through the third quarter of 2010, according to the National Venture Capital Association.

Like anything else in life, timing is essential. Your company has to have a great scalable product or service and the right team in order to appeal to venture capitalists (also known as vulture capitalists).

But, because people lend money to people, not companies, savvy investors always consider where the deal came from. “The source of the deal is very important to a venture capitalist,” said the VC. “If we like the source, we'll definitely pay attention to the deal.”

So, if you want your business plan to land on the right desk, take advantage of every possible contact you have. Attorneys, accountants, and successful businesspeople can often help you get your business plan to the appropriate investor. Then it's up to your plan to be a magnet for money.