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?
An investor ready business plan is 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.
The investors, both VCs and angels, are risking their hard earned
capital by investing in your venture 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 prepareing a comprehensive
and detailed view of their business objectives and goals. Some
important sections that address different concerns of the investors
are below:
Management
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.
Customers
It is important to communicate to the investors that you understand
the needs and requirements of your customers and to articulate
your marketing strategy within your business plan.
Product/Service Description
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 / service is catering
to.
Marketing Plan
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 assure them why you will
succeed where others have failed. This section is where you include
a definitive description of your customers, market size, demographics,
characteristics, growth prospects, trends and sales potential
per product / service category.
Here is where the pricing strategies are outlined and how they
can directly influence the growth potential of each product /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 / service is
and who your customers are, you also have to inform your investors
how you will you 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.
Howard Schwartz is a Business Plan Consultant and a partner in
investorbusinessplan.com. He is based at Stanford, Connecticut,
and has helped many young entrepreneurs start out on their business
careers by preparing a comprehensive business plan for them.
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