Obtaining funds is by far one of the most important and challenging task for a small company and may fell more difficult that the R&D. It is important to understand that these funding is not a onetime thing but a long term process and so planning is very important as this is what entices potential investors to help fund your company (Rapson, 2005).
"The type of independent accountant’s report accompanying the financial statements remains at the discretion of entrepreneurs and thus is a chosen signal to investors based on cost versus benefit considerations. Owing to its nearly ubiquitous inclusion in business plans, financial information represents an important criterion for investor evaluation (Foster, Garrett Jr, & Shastri, 2016).” Business plan explains the problem statement it is trying to address, the value proposition, team members and financial projections including investment, among others that show if a business is feasible or not in the eyes of potential investors. Based on these they option to either invest or reject it. Therefore even though the business idea is feasible and good, business plan should be equally good.
The four anchors they try to validate are
Does the business plan provide added value proposition to the customers.
Does it fix a real problem in the market, something that is truly a pain felt by the market needs to be addressed.
The urgency with which the customers need it and are willing to pay for it.
Will the market absorb it, and give back a healthy profit margin. These needs to be proven by the entrepreneur.
Investing decision on new ventures are full of risk and uncertainty. Investors thus have certain aspects that need to be see or just minimum bench marks that needs to be checkout by business plan of new ventures to be considered as viable investment opportunity. They therefore look at the four anchors to validate the business plan.
References
Foster, B., Garrett Jr, R., & Shastri, T. (2016). Independent accountant’s reports: signaling and early-stage venture funding. Managerial Auditing Journal; Bradford , 362-382.
Rapson, M. E. (2005, December 2). Commentary: Funding for the small biotech company. The Daily Record; Baltimore, Md. , p. 1.
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Obtaining funds is by far one of the most important and challenging task for a small company and may fell more difficult that the R&D. It is important to understand that these funding is not a onetime thing but a long term process and so planning is very important as this is what entices potential investors to help fund your company (Rapson, 2005).
"The type of independent accountant’s report accompanying the financial statements remains at the discretion of entrepreneurs and thus is a chosen signal to investors based on cost versus benefit considerations. Owing to its nearly ubiquitous inclusion in business plans, financial information represents an important criterion for investor evaluation (Foster, Garrett Jr, & Shastri, 2016).” Business plan explains the problem statement it is trying to address, the value proposition, team members and financial projections including investment, among others that show if a business is feasible or not in the eyes of potential investors. Based on these they option to either invest or reject it. Therefore even though the business idea is feasible and good, business plan should be equally good.
The four anchors they try to validate are
Does the business plan provide added value proposition to the customers.
Does it fix a real problem in the market, something that is truly a pain felt by the market needs to be addressed.
The urgency with which the customers need it and are willing to pay for it.
Will the market absorb it, and give back a healthy profit margin. These needs to be proven by the entrepreneur.
Investing decision on new ventures are full of risk and uncertainty. Investors thus have certain aspects that need to be see or just minimum bench marks that needs to be checkout by business plan of new ventures to be considered as viable investment opportunity. They therefore look at the four anchors to validate the business plan.
References
Foster, B., Garrett Jr, R., & Shastri, T. (2016). Independent accountant’s reports: signaling and early-stage venture funding. Managerial Auditing Journal; Bradford , 362-382.
Rapson, M. E. (2005, December 2). Commentary: Funding for the small biotech company. The Daily Record; Baltimore, Md. , p. 1.