Prepare an Investor Ready Business Plan
Attract investors with the right kind of business plan
A business plan, as all good entrepreneurs starting out in life should know, is the foundation, or rather a springboard, towards the establishment and growth of a new business. A business plan is an essential tool for companies raising capital – and your business plan needs to be Investor Ready.
What is an Investor Ready business plan?
A document that has been professionally prepared to meet the needs of both venture capitalists and angel investors. In your business plan, you should be able to see your own project through the investor’s eye. Your plan must be able to answer the concerns of an investor.
Both venture capitalists and angel investors are risking their hard-earned capital by investing in your enterprise in the hope of long-term returns that are worth many times their original investment. An Investor Ready Business Plan demonstrates to investors that you are an expert in your industry and that you have a clear mission. An entrepreneur addresses these needs by preparing a comprehensive and detailed view of their business objectives and goals. Some important business plan sections that address different concerns of the investors are below:
Investors invest in management - not just ideas. It is very important that you express your knowledge, passion, and dedication to your business as best as you can. The competence of your team along with their experience levels and their commitment levels are also factors that investors look into before making their investment decisions.
A complete description of the product or the services offered by you should be outlined in detail. A description of the overall market for your product or service, along with the details of your customer base is essential. The investors need to know the reach and the kind of customers your product or service is catering to. You should be able to describe the need for your product or service in the marketplace, and how you will fulfill that need. For example:
Our market research in the local area indicates that there is a high demand for transportation services for seniors who are no longer able to drive but need a low-cost service to take them to shopping, medical appointments, and social activities. Of the 300 seniors canvassed in our survey, over 60% of the respondents indicated a demand for this type of service.
Our solution is to provide a low-cost transportation service for the elderly within the city limits. Our drivers will be professionally certified, first-aid trained, and familiar with senior's needs and disabilities. We plan to introduce the service with two vehicles initially and expand through partnerships with senior's clubs and extended care facilities.
One of the most important sections of your business plan is your marketing plan. This section will outline your sustainable competitive advantage to your investors. In a way, it assures them why you will succeed where others have failed. Comprehensive market research is required in order to do this - it is vital to have accurate information about the marketplace, the customers, and the competition. This section is where you include a definitive description of the:
- Customers (your target market)
- Market size - estimate the size of the potential market in terms of the number of people or businesses that may be interested in your product or service.
- Demographics - your relevant target market demographics, including age range, race, sex, religion, income levels, employment status, education, etc.
- Growth prospects - is the market already saturated? What is the growth potential of your product or service?
- Trends and sales potential per product or service category.
The marketing plan is where the pricing, promotion, and distribution strategies are outlined and how they can directly influence the growth potential of each product or service. It is also important to include the future growth, market share and trend influences.
Barriers to Entry
Along with giving the details of what your product or service is and who your customers are, you also have to inform your investors how you will prevent your competitors from taking away your customers. The barriers to entry section outlines your business strategy to keep your competitors at bay and grow in the market. Investors need to feel comfortable about the soundness of your strategy before they invest in your venture.