Top 10 Business Plan Questions Investors Ask
While you may be the genius behind your business, no doubt about it, that does not mean you are equipped to discuss the details of how you created your project and how you plan to keep it running smoothly for years to come. Knowing your product and how it works is a lot different than talking about your product and how it works. Not all geniuses are meant to be great teachers – while they surely have knowledge far superior to that of the average teacher, they do not necessarily know how to put that knowledge into practical language for everyday use.
The First Steps towards Success
This is where you are, you have the plan, you know the plan inside and out, but you don’t know how to verbalize those ideas. In reality, you are not prepared for what an investor meeting or a bank interview consists of and how to master the skills required for the seriousness of such face-to-face discussions. That, in and of itself, is another skill set beyond business plan writing. However, the two are connected. When you evaluate each step of your business for the business plan writing stage, you begin to further understand all the mechanics that make your business stick.
However, just knowing that information still isn’t sufficient, you have to learn how to articulate those thoughts to a room full of people who hold the key to your capital desires. Within a matter of seconds, with one wrong answer or comment, you could potentially ruin an opportunity. This is what you want to avoid at all costs.
That’s why meeting and consulting with a team of professional business plan writers is paramount for your success. Business plan writing companies and other specialized advisers will first sit with you to ask the questions that could be asked at an interview. It’s all about building your own knowledge and confidence for the interview while at the same time teaching you how to verbally express your ideas for clarity and client curiosity.
Even if you choose not to work with a business plan writer, you still need to be aware of the kind of questions that potential investors are going to throw your way during an interview. After speaking with many investors and business owners seeking funds, we’ve paired down a list of the most popular questions that applicants receive during their investor interview:
#1: Who believes in you and how can I get in touch with them?
It might seem strange, but what the investor wants to know is that you have people who believe in you and your project. Having friends, family members, or advisors in our corner reveals that our potential is perceived as positive and on the road to success. Also, having supportive energy nearby can make a huge difference between companies and entrepreneurs who make it or break it. Feel free to name college professors, bosses, colleagues, mentors –anyone you think would share your passion for the business you are selling.
#2: What entrepreneurs do you admire and why?
By naming a few entrepreneurs, you are showing two major things about you and your business. One, you show that you are invested enough in your business or business like it to study the market and those working in the market.
You are saying, ”I care about business a lot and know who’s who”. Two, you inadvertently demonstrate your business personality which can help investors and bankers learn more about your approach to the business world and your business in particular.
If you don’t have at least two names on your list, you have some homework to do.
#3: What milestones have you reached?
Have you reached the first-year marker? Did you supersede profit expectations? Have you launched into a bigger market? These are just a few milestones you might have set up for yourself. Of course, your answer will depend on the stage of your business, but you must be prepared to answer even if you are in the preliminary stages or you have had previous failures.
Milestones don’t have to come with notable accolades or great profit. A milestone can simply be completing a clear, informative business plan, studying the market, or taking an online course to increase your skills. If you have a failed business, you can talk about the strides you took to accomplish your goals and how it helped you understand the market better and yourself as an entrepreneur. Even something outside of the business world counts. So name a milestone that feels authentic and personal, one that boils with passion –after all, the heat with which you speak can often be more captivating than the fire itself.
#4: What’s going to stop big monster company within your industry from copying you?
Here you’re being asked to consider your competition and hopefully, you have. In order to be successful, we must not only study our success or strategies but those of others, i.e. our competitors. Don’t act like you don’t have competition because that shows you are overly confident and that you haven’t prepared for a possible attack. Stay on topic.
Address who your competitors are, but stay focused on why your business stands apart and is unique. It can be anything from better, faster customer service to a personalized shopping experience or organic ingredients to innovative technology. Anything that proves that your company is filling in a gap or doing things outside of the box is what you want to let shine.
#5: What’s your marketing strategy?
Marketing strategies cannot be overlooked, even early on in the business planning game. While most entrepreneurs have lofty ideas about big launches, the best approach is to be realistic and have a timeline of events.
The investors want to see that you’ve at least pondered this idea because marketing is a major key to long-term success. Mention strategies you admire or other company launches that have inspired you, but don’t say you don’t know or haven’t thought about it.
#6: How strong is your management team?
The management team are the people who will be supporting you in your dreams, so yes –they are of great importance because your business will not thrive without them, period. Investors want to see that you have considered the team as a whole; from the executive group, sales team, marketing strategists, financial department, and more. Talk about your group with passion, talk about each member as though they are not just another employee, but an extension of you and your passion for the business. Sell them because without them your business is just you talking about an idea you have to make money.
#7: Can you tell me a story about a customer using your product?
Almost all investors or bankers ask this question. First, they want to see that your product is tangible or already concrete. Second, they want to see that it’s somewhere in the market. And third, they want to hear about reactions to your product.
Feel free to be casual and personal here. Give details about the customer, a name, and a storyline to really help make the anecdote feel realistic. Whatever your product is, be specific about how it helped or serviced your customer in a way that was not possible prior to use your product. This story is a little piece of gold. It’s these stories that will remain in the listener’s memory more than any other part of your presentation –make your story strong and at the same time earn some likability points for charisma.
#8: How do you track trends in your market?
Again, you cannot be in the business world without studying trends. This means you have to do some investigation. Investors are looking for an entrepreneur who is already neck-deep in the market, even if it’s only via reading and research. “Where do you go to get your data”, and “how often do you check the market” could be attached to the overall questioning here. Be prepared to talk about how you live, eat, sleep, and breathe your business.
#9: What mistakes have you made thus far in this business and what have you learned?
Making mistakes is nothing to be ashamed of –on the contrary, they are a part of the business experience. Experts, entrepreneurs, and leaders have all had failures, but that is not what defines them, especially for those who found success. Failing is part of the growth process, it teaches us what to do and what not to do. Real, honest learning comes from making mistakes. So share a story that taught you a lesson, even if it was the toughest lesson you were ever taught in this life. Be brave, show you’re human and let investors decide for themselves whether you are ready to face another challenge.
#10: Why are you the right person to lead this company?
The truth is another person could fill your shoes, but that’s not what investors want to hear. They want you to show your commitment to this business and its future success. Talk about things you’ve done that have led you to where you are today, talk about how your specific skill set and personality are what drive the business, and talk about how you were made for this.
Of course, you want to use concrete material for this answer, after all just talking about your feeling isn’t enough; You need proof. Be prepared to back up your claims with accomplishments, prizes, and awards. Show off a bit, but not too much –be sure that you focus on how you have been preparing for this your whole life and the real-life examples that solidify such claims.
As you can see, the investor meeting or bank interview is no easy task. But when you take on a task with the help of a team of professional business plan writing company, you will get the assistance and guidance you require to make you a stronger entrepreneur. Business writing teams will advocate your business and highlight the key points required for success; they will give you the confidence to discuss any topic with a great appetite for business success.
Keep in mind the future of your business, too. Ask yourself this question. What will your market look like in five years as a result of using your product or service? If you can envision your business in the future, you are doing some manifestation work that can really drive your interview or meeting to a whole other level. If you need help from professional business plan writers, Joorney’s team is always here for you.