If you are working with an angel investor or any other type of outside funding source, you must have your business duly incorporated in the state in which you are doing business. Before seeking outside capital, you should always consult with a certified public accountant regarding the development of a business prospectus that is appropriate for an angel investor. This is an essential part of the capital raising process, as your private investor will want to see the anticipated financial results of your business along with other important financial metrics. The ROI of your business must be greater than 20% per year.

Most angel investors have an investment time frame of about three years to seven years, and again, this should be shown in the milestones portion of your business plan. Every business document should have a risk page showing potential problems you may have in connection with running your business. A demographic analysis is extremely important when developing a business prospectus that is specific to a private funding source. If you’re a first-time business owner or someone new to business ownership, you may want to investigate working with an investor if you don’t qualify for an SBA loan. There is a significant amount of risk when working with angel investors.

If your business has a large amount of inventory, you may want to secure credit for those assets to receive the financing you need, and this can be shown in a business plan for a private investor or bank. . A side note, some investors aggregate their operations to mimic a small private equity firm operating locally and you may want to investigate this option when you are writing your business plan for private investment by one or several individuals. different sources of financing.

If during the course of writing your business plan you discover that capital investment is too expensive for your business, then you may want to look at the programs that are available from the Small Business Administration. You should always consider the risks involved when it comes to seeking equity investors, as there will be a lot of covenants involved when you purchase this type of financing. It should also be noted that within your business plan, many angel investors will want to serve on your board of directors.