As a long-time advisor to entrepreneurs and occasional angel investor, I often see and hear innovative product pitches that sound exciting, but are missing one or more of the key business elements that investors deem critical for funding consideration. We all hate to see your proposal rejected, when a bit more effort and homework could expedite your startup funding and rollout.

Of course, you can find these elements embodied in many of the business plan templates and tools out there, such as the Business Model Canvas. But in addition I’ve always found it helpful to provide a simple checklist for new venture founders and new business owners to make sure they have covered all the key bases correctly, including the following:

1. Define and focus on a single customer segment. The business proposals I see often target multiple unrelated segments, such as consumers, enterprises, and government. No new venture can muster the resources and expertise to attack all these opportunities concurrently, so I recommend a clear and quantified focus on one to maintain credibility.

2. Quantify your value proposition for customers. “Nice to have” and “improved usability” are not value propositions that people spend money or endure change for. Quantification of value in terms of dollars or time saved is much more attractive. Social value, such as providing the latest fashion trend, are secondary but also important.

3. Provide initial and long-term sources of revenue. “Free” is not an exciting business model for investor interest. Every business, including non-profits, need a viable source of revenue to cover the costs of operation and sustainability. The most attractive revenue model today for services is subscriptions, and for products it is sales and support.

4. Show a cost margin of at least fifty percent. Projecting a low cost margin, with a commitment to low overhead and hard work, is not convincing. Investors know that operational and employee expenses are always higher than anticipated, not to mention customer acquisition costs, capital expenses, and ongoing competitive initiatives.

5. Identify your intellectual property or “secret sauce.” Unfortunately, startups with an innovative product but no protection are quickly overrun by larger competitors with more resources. Competitor resources include larger cash assets, trained staffs, an existing customers, and a known brand in the market. Patents are a good place for you to start.

6. Specify a primary customer channel for sales. Today the most common and successful channel for new ventures is online e-commerce. Trying to distribute initially through wholesale and retail, as well as online, is very risky from an investor perspective. Other viable channels would include licensing, contracting, white labeling, and services.

7. Actions for a memorable customer experience. Modern customers are sensitive to the total customer relationship, including shopping, transaction, service, and support. You need to convince investors that you will excel in this area, as well as attract more new customers, maintain existing customer loyalty, drive repeat business, and grow sales.

8. Convince me that you understand your competition. I recommend that you pick your three major competitors, and highlight your advantages over each, without degrading any of them. No investor will believe that you have no competition, or that you can succeed in a market already populated with dozens of competitors. Outline your key activities to win.

9. Highlight the strengths of the entire team and partners. Most investors admit that they invest in the people, as much as the solution. Make sure they understand why you and your team are the right people to make this business a success. The same applies to your advisors, your partner relationships, and your leadership activities in the industry.

After highlighting all these elements, don’t forget to ask for the order. You need to specify what investment amount you need, how you intend to use it, and what percent of your equity you are willing to give up to get it. Everyone needs to feel you are proposing a win-win opportunity. Use your passion and conviction, as well as these specifics, to make my day as well as yours.

Marty Zwilling

*** First published on Inc.com on 04/13/2021 ***