Every business needs funds to survive, and to get funds, you need investors. An investor is an individual that puts money into an entity, such as a business, for a financial return. However, before investors put money in your business, you must have convinced them beyond doubt that such a business is feasible and viable. To do this, you need an investor-ready business plan. 

A business plan is like a roadmap that tells you what to expect when to expect them, and alternative routes you can take to arrive at your destination. Whether you own a startup or a SME, a business plan is your ticket to finding investors. So, let’s find out what an investor-ready business plan entails and how to write one. 

What Investors Look For in a Business Plan

When scrutinising business plans, investors have just one purpose: to identify room for financial returns. According to Kuratko and Hodgetts (1998), the business plan describes to investors and financial sources all of the events that are likely to affect the proposed venture. This means that for your business plan to secure funding, it must demonstrate the viability of your business. 

A scalable business model is one of the foremost qualities investors look out for in a business plan. They want to see potential for expansion to ensure that their investment will yield substantial returns. A unique selling proposition (USP) is also crucial, as investors prefer to put money in a business with a competitive edge. 

In addition, investors look out for effective marketing and sales strategies so that there is a recurrent income flow. Risk management strategies and business exit techniques are equally important, as investors want to see your preparation for pitfalls. 

Now that we know what investors look out for in a business plan, let’s write a plan that ticks the investor’s checklist.
If it’s an e-commerce business, check out this ultimate guide.

Guide To Writing An Investor-ready Business Plan

An ideal business plan should be about 15-20 pages. In those pages, here are 13 key things you will need to have an investor-ready business plan.

1. Executive Summary

This is the first section of your business plan, but it is advisable to write it last when you’re done writing everything else. It is the overview of the whole business plan and your first opportunity to strike the interest of investors. It is short in length, usually no more than 1 or 2 pages. The executive summary needs to be clear and persuasive. The executive summary should include your mission statement, description of the business, business model, and statement of intent. 

2. Opportunity

The opportunity section outlines a problem that your business solves, together with your unique solution. This has to do with showing investors why your product or service is in demand and why this is the best time for your enterprise to bloom. This section is very important for assured investors because it shows that your idea is viable at the right time and capable of capturing the largest market share.

This section must include the following: 

Problem Statement: Determine the market gap that the product or service will fill. If possible, quantify this statement by data.

Present solution: Describe the work of your products or services and how they will directly solve the identified problem. Provide your unique selling proposition, i.e., what sets your business apart from the competition.

Market Demand: Evidence that there is a high demand for the product or service. Provide data to prove the need for your solution and that customers are willing to pay for your solution.

3. Market and Industry analysis 

This is where you want to show the investor that you really understand the industry and the market your business resides in. Investors love to know that you have done your homework and can intelligently discuss your market. Also, identify several trends in your industry that exemplify some of the important opportunities and threats facing your business.

Your marketing plan should include:

Industry Overview: The high view on the size of the industry, growth rate, trends, and future outlook and also highlight key factors that drive or challenge growth.

Target Market: Identify who your ideal customer is, including demographics, purchase behaviours, and motivations. This is where building a customer persona helps paint the picture of your target audience.

Market Size and Potential: Estimate with data the addressable market, the segment of the market you can realistically target, and the portion you expect to capture. 

4. Analyze the Competitive Landscape

Investors want to understand what they are setting themselves up against and also how they will differ. In this section, elaborate on the competition and include a comparative analysis. This is an important section that establishes your acquaintance with the marketplace, proving that your business can indeed compete. 

Your competitive analysis should include:

Direct competitors: those firms offering very similar products or services targeted at the same customers.

SWOT Analysis: Provide a SWOT analysis for each major competitor, whereby respective strengths, weaknesses, opportunities, and threats can be identified.

Competitive Advantage: Highlight your venture’s unique competitive advantage—that is, how will it differ or be better positioned for success compared to any others?

5. Business model and revenue streams

This answers a very important question: How does your business make money? An investor would want to understand how you will make revenues and keep operations profitable. Clearly explaining how you’ll generate consistent revenue is key to proving your business’s sustainability and profitability to investors.

Here you will explain:

Revenue Model: Define how your business will make most of its money. This might be direct sales of a product, subscription models, licensing, or even advertising, depending on the nature of your business.

Pricing Strategy: Give the prices of your products and services, and indicate how your pricing stands against your immediate competitors. Justify your pricing strategy.

Diversified Streams of Income: Mention the other probable streams of income that might accompany the progress of time, like diversified products or services.

6. Proof of Traction and business Roadmap

You will find that investors will be interested in investing in businesses that can demonstrate some sort of traction-proof that your business model works and gain momentum in the marketplace. This proves that your business is not just an idea, but it is actionable and viable.

Here’s what to include:

Product Development: If you have developed any product, indicate if you are at a commercialising stage or still developing.

Early Customers: Is there a paying customer base, or are there users? How many? Describe growth rates, customer acquisition, and retention. 

Partnerships: Highlight any key partnerships you’ve established that give your business a strategic advantage, such as distribution deals or collaborations with larger brands.

7. Introduce the Team 

People, not ideas, are invested in by investors. Introduce your team in this section and elaborate on why they are the right people to grow your business. Showing a good and active team is your credibility factor, which reassures investors that the business will fall into good hands. Describe the management structure of your team; list the major positions; if a position is not filled within your team, describe how you would bridge the gap.

8. Marketing and Sales Strategy

Investors are interested in knowing how you intend to get and retain your customers. Here, you have to elaborate on the marketing and sales strategies like your marketing channels, customer acquisition strategy, sales process, and retention strategy. An effective marketing and sales plan shows investors that you’ve thought through how to scale your business and create consistent growth.

9. Describe your business operation

Describe how your business will operate as a day-to-day operation. This is where you show you have given some thought to the mechanics of running your business. Your operations plan should cover the place of operations, supply chain, staffing, and operational process. A good operations plan inspires confidence with the investors that you can implement your idea and scale well.

10. Do a Financial Plan

Your financial plan is one of the most important sections to investors; it gives a detailed breakdown of your company’s financial health and projections, including key financial statements, financial projections of at least 3 to 5 years of revenues, expenses, profitability, and break-even analysis. Actually, a well-planned and presented financial strategy convinces investors that their money put into your venture would really pay off in long-term prosperity. 

11. Funding Requirements 

In this section, explain how much capital you need to raise and for what purpose. Any investor would want to know what they are getting themselves into, how much you need, and how that will help in growing your company. Describe where the finances are supposed to go among the different areas of the business, whether it’s for marketing, product development, hiring, and operations. 

12. Terms of Investment

In this section, state what is given to the investor in return for his investment in the form of equity, debt convertible, or any other form of return?. Also, in case of an exit, state how the investor will be repaid, depending on whether your business gets sold, goes public, or declares a dividend payout. A clear funding request provides evidence to investors that you know what you want precisely and how you’re going to use their investment to scale. 

13. Appendix 

Adding an appendix is not a necessity, but the appendix can come in handy when placing any supportive documents that an investor may need. You can include IP documentation, patents, trademarks, copyrights, licenses, and permits.

For an easy start, we have a list of different business templates that you can use in ten different businesses. Check them out here.