Investments are the mightiest staple in every business. No corporate venture has ever survived without the continuous pooled support of the different financial entities. In the process of trying to secure this funding, business owners furnish a formal document known as a business investment proposal.
A business investment proposal is written to gain monetary support from interested stakeholders. Investors typically populate this clientele, but from time to time, lenders, financial institutions, and wealthy, regular businessmen also join in this roster, as long as they are willing to shell out their money to seed a starting company or help a young company to grow.
Elements of a Good Business Investment Proposal
Writing a business investment proposal is a structured approach. It always has sections or parts that you can never do away with, and these are the following:
1. Investment Summary: The introduction of your business proposal, the investment summary is a concisely written introduction that provides an overview of the business, the investment terms, and the investment benefits. A good investment summary is one which can make an investor instantly take in a good deal of information about the proposal despite its brevity. In some cases, it is known as a pitch deck.
2. Investment Description: Also known as business overview, it basically provides the merits of investing to your business. If the purpose of the investment summary is to hook in the investor to read your whole proposal, then the purpose of your investment description is to make them actually invest to your company. The investment description also contains the details about your business model such as the target market, the problem, the solution, and competition.
3. Funding Requirements: It is a financial statement that indicates how much funding is needed to start or continue your business. Funding requirements are based on a realistic forecast of your financial situation, albeit it only being an estimate. This section of your proposal also contains how much the investors will be reaping from their investment and the time frame for it to happen.
4. Exit Strategy: This is the business contingency plan that you must legally execute when you need to dispose of an expiring business asset or close down a non-performing business. It is important to come up with an effective exit plan regardless of the viability of the business to survive as it is seen as a risk-mitigating part of your proposal.
11+ Business Investment Proposal Templates
Business Investment Proposal Template
Size: 8.5 inches x 11 inches with Bleed
New Business Proposal Template
Size: 8.5 inches by 11 inches with Bleed
Small Business Proposal Template
Size: 8.5 inches by 11 inches
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Steps to Make a Great Business Investment Proposal
1. Hook your investors in with a good investment summary: The introduction of your business investment proposal goes two ways. One, it should be able to concisely describe your business idea to your prospective investors. Two, it should be able to compel these investors to read the entirety of your proposal by making it catchy and interesting. For a good investment summary, you can:
- Emphasize why your idea is a good investment opportunity for your investors.
- Indicate how their investment will be used.
- Mention how much is their return on investment and when will they get it.
2. Write down an investment description: In writing the investment description, one can easily fall to only writing about their business and product catalogs and so on. However, keep in mind that you need to keep this part interesting to your investors, and some investors are not that interested with your business processes and just want to know the viability of your idea to yield growth in their investment. Strike a balance between talking about your businesses and how you will make them money. Also, keep in mind the sub-components of this part, which are:
- Problem: The faulty status quo that your business idea is trying to change or solve.
- Solution: A short description of your product or service and how it will benefit your potential customers.
- Market: The demographic that you expect to avail of your product or service as well as its size or population.
- Competitive Landscape: The current state of your competitors in terms of their strengths and weakness.
- Current State: The current state of your own business in terms of revenue and stages of development.
3. Provide your details for funding: This is the part where you tell the investors the amount you need to fund your business. It is important that you share your valuation, too, or the estimated worth of your company, as it will let them know how much you of your company’s value you are willing to put at stake to get hold of the capital. However, this part is not just figures and numbers. You must also re-write in this section that part you mentioned in the introduction about how you will use their investment and what is their return on investment, but this time, in greater detail.
4. Devise an attractive exit plan: In this section, you will have to mention you’re a viable contingency plan for your business in case it will not be able to attract good sales or it has fulfilled its tangible objective. Discuss how your investors can get their money back as well as how you want your company to exit the market. Common exit strategies that business owners implore are through acquisition, financial buy-out, and opening the shares to the public.
Tips for a Great Business Investment Proposal
A good business investment proposal can exist if much effort is put into writing the four main sections that are mentioned in the preceding section. But if you don’t want to settle with just some basic parts, then you can add the following sections to make a great investment proposal:
- An attractive marketing plan: Including a marketing plan ensures your investors that you are committed to yielding big sales from your business. State the details of your sales plan and interject some market data that will reinforce the success of your marketing efforts.
- A profile of your stellar management and staff: Describe the people that helped you establish your company. Mention their achievements and reasons why you hired them in the first place. This is also the part where you state their projected salaries to give your investors an idea of how much you will be spending for your human resources.
- Your state-of-the-art technology and facilities: Briefly describe your company’s physical facilities and technological development. This can also be your opportunity to justify your funding by stating the importance of technology in your business. Most investors are attracted to businesses that go along with the industry’s modernization.
Types of Business Investment Proposals
The type of your business investment proposal depends on the kind of investment you are trying to pull three. Out of the many, the following are three of the most common types of business investment proposals:
- Equity Investment Proposals: These are proposals that are made in the pursuit to get an equity funding, meaning, if the investor chose to shell in their money today, they will be able to hold a major share in your company in the future, particularly at its matured stage. It is the most common kind of investing as it offers a very attractive benefit to the investor.
- Loan-Based Investment Proposals: These are proposals that seek to gain funding through business loans. In this proposal, the business owner specifies the fundraising terms, the rate of interest, and the expected time frame of the loan. Although not popularly mentioned, loan-based funding is actually the most common form to raise money, especially for new business. Falling to a debt trap can be easily possible too, but it can be avoided if the business owner keeps in mind the loan terms and maintain valuable collateral.
- Convertible Debt Investment Proposals: This type of proposal is for business owners who want to gain investment via convertible debt. Convertible debt is basically a combination of equity and loan-based funding. You can borrow an amount from a certain investor and you have the choice to pay it with interest or convert the debt into a share or percent ownership in the company.
Business Investment Proposal Template Sizes
Business investment proposal templates available on this site are on standard sizes of US legal (8.5 inches by 14 inches), US letter (8.5 inches by 11 inches), and A4 (8.27 inches by 11.69 inches).
Business Investment Proposal FAQs
Convertible debt fundraising seems to be attractive for my business. But when do I seek for it?
If you are still starting your business and are not ready to set a valuation for your company yet, then convertible debt investment is the way to go. Convertible debt funding works its magic if you believe that your company’s valuation will gain a significant increase in the future, offering you the advantage of protecting your company share while getting the fund you need.
What is a return on investment?
The return on investment, or commonly abbreviated as ROI, is a success indicator of your business that determines the efficiency of your business to yield growth to an investment. It is calculated by dividing the profit statement of the investment with the original amount invested. Basically, it is a measurement of the profit that an investor gains from supporting your business.
Finishing your proposal is still one of the many steps on the steep path you need to take. By the time you submit your proposal, investors do not readily reply with a quick yes or no. Most of the time, the responses you will receive will be on the middle ground—a maybe, a gray area. But don’t let this take away your shine. Ride along with the virtue of patience, and you will soon find yourself securing the sweet funding you needed.