Business Plan vs Offering Docs

What’s the difference between
A BUSINESS PLAN and an INVESTOR-CENTRIC EQUITY OFFERING Document?

Your Business Plan should be a disciplined presentation of how expect to use its capital to create a profitable operation and grow it from there. Your Business Plan should include important information on:

    1. The full range of goods and services you are looking to offer, and what may differentiate them from the competition;
    2. A phased timeline for the implementation of your venture;
    3. What you believe to be your market opportunities, both current and future;
    4. The identity, size, strengths and weaknesses of your current and projected competition;
    5. Your proposed:
        1. Pricing, and likely pricing trends;
        2. Marketing & promotional program;
        3. Methods of distribution;
    6. Your regulatory environment challenges and opportunities;
    7. The experience, education and expertise of your management team (keeping in mind that sophisticated investors put more money on jockeys than on the horses they ride);
    8. The capital you will require to commence and support your venture until it becomes cash flow positive; and
    9. And a set of economic projections for your venture, within a range of possible market and operating conditions, together with detailed assumptions underlying those projections.

Our process, as the graphic shows below, integrates the important parts of your business plan into your equity offering presented to prospective investors

It’s only after Your Business Plan has been created that Your INVESTOR-CENTRIC EQUITY OFFERING DOCUMENT can be crafted, which should include your refined Business Plan and answer prospective Investors’ essential questions of:

1. What, specifically, am I being offered, should I choose to invest in this venture?

  • Will I participate in the success of the venture?
  • Will I receive any preferential yield before the venture principals receive distributions?
  • Will I receive a preferential return of my invested capital?
  • Will I receive a profits participation after receiving a return of my capital?

2. What are the risks that accompany my investment in the venture?

3. What Conflicts of Interest might there be between the principals and the investors?

4. How experienced and qualified is your management team?

5. What are the key assumptions underlying your financial projections?

6. What is your current or proposed business structure?

So, it should be clear that the preparation of your comprehensive Business Plan is essential to creating an Investor-Centric investment Offering Document, a Private Placement Memorandum, a PPM.

 

Our consulting work ordinarily includes an examination, evaluation of our client’s Business Plan; a statement of the refinements needed; and the creation of a venture-specific Economic Model before commencing any work on preparing the SEC-compliant Investor-Centric private placement offering document that our clients can then be used to solicit the capital required.