What a Potential Investor Wants To See In Your Business Plan.
You’ve have been able to build your business to the point of expansion, You’ve demonstrated some competence in the marketplace, and now you’re seeking your first round of funding.
These are what you should consider first in your investor-ready business plan.
You should also know that the angel investors or venture capitalists that you pitch your business with may not ever read your whole plan, trust me on that, but anyone who is interested in investing thousands or even millions of dollars in your business will want to do due diligence before they invest in your business venture. They’ll be especially interested in your strategic roadmap to profit, your business model, and a solid and fantastic financial plan.
The best investor-ready business plan is a one page
Business plan or a pitch deck.
When writing a business plan for investors, focus on developing a one page business plan.
A one page business plan is shorter and it’s easier to write than a complete business plan, especially if it’s your first time. Think of it as a way of giving your angel investor all the valuable information he wants to get about your company, its potential for success, and the areas where you may want to improve on in your strategic road map, and your business model, not forgetting your financial plan. Without hiding anything.
Preparation and Homework.
What an angel investor wants to see in your business plan is your solid financials and an impressive executive summary that suits their interest. They will ask you for whatever additional information they’re interested in. but your solid financial and executive summary is the most important.
The key here is that by the time an investor says “yes” to the pitch meeting, you’ve already done all your homework on your one page Plan and you’re prepared for whatever investors want to know.
Executive summary
The executive summary you share the first time you reach out to an investor should be short one to two pages. It doesn’t include any unnecessary details, but it should support the financial forecast you’re also including.
Make sure it covers:
· Who you are — your name, your business name, your contact information
· What you offer and the problem your business solves
· Your target market
· How much startup funding you’re seeking
· The size or scale of your business
· Any remaining critical details that investors definitely need to know
A full financial forecast
Your full financial forecast should include a projected profit and loss statement, a projected cash flow statement, and a projected balance sheet.
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The easiest and most accurate way to do this is to build the financials from the bottom up, starting with identifying your share of the market. First, figure out your TAM, SAM and SOM. That is, your total addressable market (TAM), then what percent of that market you are going to go after, or your segmented addressable market (SAM), and your realistic share of the market (SOM).
Then ask:
· What’s the average lifetime value of your customers?
· How much is it going to cost you to get them (acquisition costs)?
If you’re seeking investment, you’ll have to prove that you’ve had some initial traction, so as you build out your forecasts, use your actual to help model what you expect to see for the next few years.
The elements of a one page, investor-ready business plan
Before you send over your executive summary and financials, make sure you’ve already completed your full one page Plan. It will share some common topics with your executive summary, but it should go into more detail — and it should still be fairly brief.
Your one page Plan and pitch deck should absolutely address each of these topics:
· The problem or need that you’re solving for your customers
· Your product or service — how you’re solving the problem
· The target market size and demographics
· Your sales channels
· A basic marketing plan (the results of your market research)
· Competitor analysis and your competitive advantage
· Real financial projections including a full cash flow forecast
· Key milestones in your business to date and a timeline of expected milestones to come
· Key team members, business owners, and advisers championing your success
For more on how to write your business Plan, check here.
The pitch presentation
When your one page Plan is finished and your executive summary and financials are ready to send, prepare your pitch deck and presentation. Research your investors so you have a sense of who they’ve funded before and what they really want to get out of your presentation.
Use storytelling to your advantage, but just like your one page Plan, your pitch should be brief. Your pitch will include many of the same elements as your one page Plan, but don’t just read your executive summary to investors when you have them in the room.
Here’s a guide to pitching to help you get started. Practice your pitch with your family and friends so you get comfortable with the delivery. Ask them to ask you questions about things they’re not clear on so you can start to anticipate and prepare for the hardest questions investors will ask.
When you’re ready to seek funding for your startup, resist the urge to send over a 100-page business plan to a potential investor. Keep in mind that investors get piles of pitches just like yours every day. Make it as easy as possible for them to digest who you are and the opportunity your business presents. Just make sure that when you get that call back, you have a strong financial plan, and a well-thought-out one page Plan in your back pocket, so you’re not scrambling.
For more information on how to write a complete business plan or a one page plan click here
