What Is an Investor-Ready Business Plan?

By Howard Schwartz

Not all business plans are created equal. A plan for internal use will look drastically different from one you plan to submit to lenders. And one you will use to generate investor interest will be different still. If you will be sending your plan to potential investors, you need to tailor it to them. This is what is known as an "investor-ready" business plan.

An investor-ready business plan will tell venture capitalists and angel investors what they need to know to decide whether or not to invest in your company. To make your plan investor-ready, you will need to look at your plan through the eyes of the investors and address their concerns. Read more about Writing a Winning Business Plan.

The investors, both VCs and angels, are risking their hard-earned capital by investing in your venture in the hope of long-term returns worth many times their original investment. They will want to see a well-executed, investor-ready plan that demonstrates that you have a clear mission. Here are some of the things your plan should address.

Management. Investors invest in management — not ideas. 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 factors that investors look into before making their investment decisions.

Your product or service. Describe in detail the product or the services you will offer.

Customers. Communicate to your potential investors that you understand the market for your product or service, know the needs and requirements of your customers, and can meet these needs.

Marketing plan. This section will outline your sustainable competitive advantage to your investors. You need to assure them that you will succeed where others have failed. Include a definitive description of your customers, market size, demographics, characteristics, growth prospects, trends, and sales potential per product or service category.

You will also define your pricing strategies and describe how pricing will influence the growth potential of each product or service. Include the future growth, market share, and trend influences.

Barriers to entry. 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. Read more about Entering an Uncharted Market.

Investors may receive 100 business plans for each one company they actually invest in. But following these tips to craft an investor-ready plan will give you a leg up on much of your competition.

Howard Schwartz is a business plan consultant and a partner in investorbusinessplan.com. He is based in Stamford, Connecticut and has helped many young entrepreneurs start out on their business careers by preparing comprehensive business plans for them. He can be contacted at info@investorbusinessplan.com.