Why a Business Plan is important for Entrepreneurs and Investors. A business plan may not get you the “sale” (investment), but it just may close it. A good business plan may be all the credibility your Deal has.
• You are stating a hypothesis about how an investor is going to make money by investing in your Deal. • It demonstrates discipline.
• It shows how you think, your reasoning process.
• It gives credibility points that the investor can verify.
• In many ways it will drive the terms of the investment, especially milestones, valuation and perhaps vesting schedules. (no self respecting VC will agree with this, but the truth is they verify what you give them)
• You have to worry about what an investor “knows that aint so”. A good plan can address myths, and misconceptions head on with FACTS, not opinion.
• Most importantly, the plan is your “contract” with the investor, it says what you’re going to do with his/her money and what to expect. Often times with no track record the plan is the only roadmap. If you do something outside of the plan, you’ll be held to task.
To help you, download our Expanded Executive Summary and Executive Summary guidelines from VentureCapital.Org and update your plan and .ppt. Old news is just that, old news. Investors invest in the future not the past.