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A Business Plan, as all new entrepreneurs should know is the foundation, or springboard, towards the establishment and growth of a new business. A business plan is an essential tool for any company wishing to raise capital – and your business plan needs to be Investor Ready.
What exactly 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 preparing a comprehensive and detailed view of their business objectives and goals. Some important concerns of the investors are:
- 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 very important to let the investors know 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 that you offer should be outlined in detail.
A good 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 parts of your business plan is your overall marketing plan. This section will outline your sustainable competitive advantage to your investors, that is to assure them why you will succeed where others have failed.
This is the part of the business plan where you include a definitive description of your customers, market size, demographics, characteristics, growth prospects, trends and sales potential per product/service category.
This is where your pricing strategies are outlined and how they can directly influence the growth potential of each of your products/services. It is also important to include the future growth, market share and trend influences.
- Barriers to Entry - Along with providing details of what your product/service is and who your customers are, you must tell your investors how you will you prevent your competitors from taking away your customers.
The barriers to entry section of your business plan 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.
About the author:
Howard Schwartz is a Business Plan Consultant and a senior partner in the firm
investorbusinessplan.com.
He is based at Stanford, CT and has helped many young entrepreneurs start out on
their business careers by preparing a comprehensive business plan for them.
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