Did you search business plan percentage ownership looking for details on how to establish the likely stake you'll need to relinquish to investors? Or are you curious about how to best state how you and your partners have divided the venture to date? The ownership section in a business plan tends to be a very simple affair – if you and your partner own the business 50/50 or 60/40, simply state that. If you're reserving a set share for your financial backers, mention that there will be a defined stake for those people as well – if you're not sure what the percentage will be, leave it open ended. If you want to assign a value, you'll need to know these numbers:
• Your projected net profit five years after start-up ends
• The exact amount of up-front capital you will take from the investor(s)
• The rate of return currently accepted in your industry or sought by your target investors
• The prevailing price to earnings ratio (P/E) for similar businesses
One thing to remember is that the business plan does not need to state the ownership percentage you're offering – in fact, the documents tend to include disclaimers stating that the plan is not an offering. Private placement memoranda (PPMs) are the proper documents to solicit private investment, so there's no harm in tabling the issue of ownership percentage until your business plan is complete. Additionally, it's common to settle on percentages only after extensive negotiations and a thorough due diligence review by the potential investors. That said, there is an equation – using the figures outlined in the bullets above – and you can include this in your plan's pro forma if you wish. Want help calculating it? What a second opinion on whether the percentage you have in mind is reasonable? Call MasterPlans today to learn more. Our team of expert modelers can help you today! 877-453-2011.
