It is a safe bet to say that there is somebody in your year in school who is blessed with the "gift of the gab". You know the type: the guy or girl who can talk their way around anything, who can convince people that black is white, and who is not afraid to speak 100 words when 10 will probably do.

For many people, this is the stereotypical image of the young entrepreneur - brash, confident and full of energy.

Being able to encourage people to support your business idea can be crucial, particularly when the going gets tough. But the ability to talk your way into and out of any situation is not enough when it comes to winning over investors.

While the personal qualities of the promoter of any business plan are hugely important, these also need to be accompanied by an extremely well-worked-out business plan.

And this is something which can be achieved only through doing the necessary ground-work, including comprehensive market research, making financial projections and getting details of the people behind the business idea.

As a senior manager with AIB business banking, Mr John Kelly is only too aware of what it takes to build a good business plan.

He looks at every business proposal using what he calls the "3 Cs": character, cashflow and collateral. So what does this mean?

Well, with regard to character, he says, he wants to see evidence of the experience and expertise of the individual or team behind the business idea. This can include evidence of their reputation in the marketplace.

He also explains that banks are "cashflow lenders". "Banks lend on the ability to repay. And much of this depends on the type of business plan. A business plan should have projected cashflows on a month-by-month basis for year one, and a best 'guesstimate' for years two and three," he says. "Most businesses stop trading because they run out of cash. Cashflow is the life-blood of a business.

"With regard to collateral, I would look at how much of his/her own money the promoter is putting into the project. This shows evidence of commitment. A good rule of thumb here is one-third from the bank, one-third from the promoter, and one-third from investors, such as a grant authority."

In drawing up a business plan, Kelly says it is important to talk about the assumptions underlying your proposal. This includes your target market as well as details of your route to market. For example, will your product be sold to existing retailers, through brokers, or via a website?

Independent third-party research is also vital to any business plan, as it helps to convince potential investors that a market exists for your product.

For Dr Richard Fernandes of Luxel Biosciences, a Cork-based company providing technology to large pharmaceutical companies, such research also helped to explain how his company intended to utilise its technology to suit the market's need.

Indeed, Mr Fernandes says Luxel spent between six months and a year getting its business plan as "strong as possible". "The most important thing is a business plan," he explains. "It is giving you a road map about how you are going to build your company - and potential investors an idea of the opportunities before them. So it has to span the two." It can also be useful to attract knowledgeable investors who have invested in similar projects in the past, he points out.

"If you are good enough, you will have competing investors, as there is quite a small investment community in this country," he says. And the involvement of State organisations such as Enterprise Ireland and the IDA, can also help when you are looking to market your product overseas, he points out.

Business2000@irish-times.ie

Next week: Marketing yourself and your company