How to Prepare an Investor-Ready Business Plan

As business plans were the first step in starting any traditional businesses, the format stuck. However, in this day and age, your business plan needs to deliver and scope on a ton of content.

November 25, 2020

How to Prepare an Investor-Ready Business Plan

Traditional business plans don’t cut the ice anymore. Your investors are not ready to go over pages and pages of boring stuff. They are short on time and get hundreds of plans to review. So, your business plan is more likely to end up in the dustbin.

Additionally, business plans are not permanent. You will need to adjust your strategies based on real-time market conditions. Spending so much time to create a business plan for your angel start-up is not worth the effort.

You need something to catch investor attention quickly. Traditional business plans are not suited for the purpose. As a result, entrepreneurs are coming up with innovative ways to woo investors.

In this post, we will see how you can create an investor-ready, new-age business plan. We will go over all the considerations to reach out to more investors for your start-up.

Include the following in your business plan:

You need to understand the investor’s perspective and communicate accordingly. They are concerned more about the products and services and demand for the product. Creating a solid financial plan and a strategic roadmap can be beneficial.

Understanding your business purpose is equally important. Knowing your business goals and objectives, competition in the market, and competitors will help convey your ideas to the investors clearly and gain their trust.

Overview of your Company

The first thing to include in your business plan is your company’s overview. Your company, whether it is a sole proprietorship, partnership, or corporation, headquarters, and other location of your business, your company history, mission statement, and management team, should be included too.

What pain point or problem are you solving?

A business succeeds when the products offer unique solutions to problems. Here are the things investors are looking for.

  • What principal problem does your business solve? What is the need to solve?
  • What issues are your target customers facing right now?
  • What are the current industry trends?
  • How do you plan to negate the problems?
  • Are you using cutting-edge technology in your products to find solutions?
  • How do you differentiate your products from your competitors?

Including these in your business plan will help investors understand your business better and get a precise picture of your product and services.

Description of how your product or service solves the problem

Understanding what your competitor is lacking and Implementing new solutions to gain investor confidence is essential. You will need to explain how your product serves customers? What are the uses of buying your product? Adding this to your business plan, you will help investors understand that your product is valuable to those in the market.

Details on your customer

To do this, you need to research your target market, understand the customers, talk to them, and get feedback on the current product. You need to explain the present market scenario, your target market, who your target audiences are, identify pain points from the buyer’s journey, and the customer demographic.

Along with that, the customers’ age range, what they look for while buying the product, and why you target that particular audience? What are their concerns?

Most products fail to deliver the right solution due to the lack of thorough market research. Knowing your product, helping investors understand the differentiating factor, and how you intend to resolve the customers’ current problems will help them make the right decision and invest.

Market opportunity

Even if your plan is concise, you need to spell out the market opportunities for attracting investors. Finding investors for small businesses becomes easy when you can show your business will bring profits.

You have to show how or why your business makes sense for the current market among various elements. Look for the presence of customers who are ready to buy your product or face the problem you plan to solve.

However, you don’t need to spend days on the streets assessing your opportunities. You can also do your research online and save your time and effort. The internet is a great place to find information about trends, customer behavior, demographics, laws and regulations affecting your business, and more. You can also do a good study of your competitors.

Your market research will help you uncover opportunities your business can exploit. You will also provide numbers and figures for assumptions or deductions you make in your plan.

Most products fail to deliver the right solution due to the lack of thorough market research. Knowing your work, helping investors understand the differentiating factor, and how it plans to resolve the customers’ current problems will help them make the right decision to invest.

Competitor Analysis

Do a detailed competitor analysis and explain the new services you are bringing to the table than your competitors. Explaining to investors the below subjects can help in gaining funds for your business.

  • Who are your adversaries?
  • What are their products and services?
  • What are their strategies and share in the market - How does that benefit you?
  • What are your competitor’s strengths and weaknesses?
  • How would you build a stronger foundation than your competitors?
  • What is that one factor that differentiates your products from the rest in the market?

Knowing your competitors and letting your investors understand the same will build trust, making them invest in your business to get good returns.

Include Financial Projections

Financial projections are an integral part of any business plan. This section stays important for even modern, concise, and visual business plans.

Financial projections help investors gauge the plausibility and profitability of your business. Even if your actual numbers may change, the economic forecast gives a good indication of what you can expect.

Additionally, financial projections help you determine how much capital you need to launch your business. You can also test your assumptions on various verticals like employee salaries, advertising expenses, overheads, rent, and more.

Moreover, you can provide your financial projections readily when your investor requests. This builds credibility and shows you have thought out your plans.

Financial projections cover 3 - 5 years and include:

  • Cash flow projections
  • Profit and loss statement
  • Balance sheet
  • A thorough income and expense list
  • Balance sheet

You may need to take the help of an accountant to prepare your financial projections.

Details of your Management Team

A strong team is essential to growing the business. So, your team members and management’s details need to be included in your business plan to assure investors that your business’s growth will be way up.

Risk Factors Involved

Investors think in every angle before funding start-ups as it might collapse anytime if not executed right. Therefore, including the probability and risk factors in your business plan can help investors understand and convince them better.

While investing, investors are concerned about how well you will be doing even during adversities. They look into factors that affect your company, in the long run, to make a wrong decision while investing. Therefore, including a financial overview will give a precise picture to the investors.

  • How much funding is needed to make headway?
  • How do you plan to use the funds?
  • What will you achieve through that investment?
  • What will the investors get in return?
  • Why should they care about your company?

Since investors are investing their capital in your business, it’s essential to build confidence among them and present the complete details about how you plan to utilize the funds.

How to Present Your Ideas to Investors

Now that you know what to include in your business plan, it’s time to present your ideas to investors. Gone are the days when the business plan was endlessly extended. Include all the above pointers and present them precisely in front of the investors.

You can create a short PowerPoint presentation with all the facts and figures and a 15-page business plan for better understanding. Keep the slides simple and straightforward.

Keep It Brief

Don’t make a 100-page extended business plan for your start-up. No one is ever going to read that. So, why bother? The business plan needs to be well-executed with a clear vision.

Most entrepreneurs have moved to use concise and appealing resources to impress investors.

Many now use a pitch deck of business model canvas to present their business. It’s essential to understand the investor’s perspective and communicate accordingly.

The main idea is to limit your business plan to 10-15 pages. Or, maybe even just slides. Include only crucial information that interests investors. So, how you plan to protect the environment as part of your CSR may not be valuable to investors.

It would be best if you highlighted USPs and factors that make your business unique. Along with that, your plan should be able to prove your business’s profitability. Some sections are pretty essential, irrespective of whether you’re making a business plan or pitch deck.

Go Visual While Pitching

Visualization has become an excellent tool for convincing and influencing people. From resumes to reports generated by software, things are getting highly visual. It’s not just a trend but a scientific way to attract attention and provide better explanations.

Your business plans can also be visual if you want. Instead of writing in numbers, you can use graphs, pie charts, and similar graphical resources to present your data. Along with that, you can use appealing backgrounds, images, and icons to catch and hold attention.

There are endless pieces of evidence to show why going visual may work to attract investors:

  • 50% of our brain is dedicated to processing visuals
  • Information backed up my images increase retention by 65%
  • People who follow illustrated instructions outperform those following text instructions by 323%

You can easily integrate visuals into your business plan using various free tools. Microsoft PowerPoint is also a good option if you want to create a visual business plan.

Final Thoughts

While preparing an investor-ready business plan to get your business funded may seem challenging, it can be managed using the right state of mind. Understand your goals and the current market scenario before pitching to an investor for your start-up venture. Knowing how your products and services benefit customers is key to success. Package it all in a way that the investor can digest it and think about both content and delivery medium.

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