If you are one of those who have a business plan ready and are looking for an investor, here are a few pointers that may equip you better for the task.

It is important to remember that investors are human beings and not demigods. Unfortunately, many entrepreneurs put investors on a pedestal without realising that most investors are also part of venture funding firms and thus answerable to their partners and stakeholders for the investments they decide to make.

The best way to ascertain whether your venture would draw an investor's interest, is to have an objective and analytical view of your business plan by putting yourself in the investor's shoes. This simple exercise has actually made several entrepreneurs go back to their drawing boards.

The challenge is to put away your passion and belief in the business plan and actually evaluate it from a different viewpoint!

Here are a few pointers on doing some basic groundwork before approaching investors.

Know thy investor

Adequate research about potential investors not only saves you a lot of time and effort but also ensures greater chances of success. There are a number of factors that need investigation. For instance, do they invest in your space?

If you are in the retail space and you pitch to a VC (venture capital) firm that only invests in technology, your business plan may not drum up enough interest. However, if you are building a technology platform for the retail industry, it may turn out to be a different story.

It is also important to probe if the VC firm has a record of investing in firms that are at the same stage of growth your organisation is at, currently. I have seen many entrepreneurs approaching growth stage VC firms for seed level /angel funding, only to be told to come back after they have seen some traction!

Another crucial factor is the management team of the VC firm. It makes sense to approach friendly and known VCs that have a clean reputation in the market. Just because some people have money, does not necessarily mean they are the right partners. One needs to be careful as to whom you approach and when. A word of advice: do not unnecessarily circulate your business plan.

Doing adequate research on which investors to target, and sharing your plan with a select audience is extremely important not only for a higher chance of success but also to protect your IP.

Getting the timing right

One of the most critical aspects in the venture funding game is actually the issue of timing, the decision to narrow down on a moment in time, or a stage, during which to approach an investor. The ideal time to raise venture funding is when you have a business where the model has been somewhat established, and the product has been validated by customers. Boot strapping your venture has a lot of intangible and tangible benefits that would not only ensure higher valuation, i.e., you get to keep a larger share of the company for the same amount of money, but also help you keep all those in the company on their toes by constantly innovating and being absolutely focused.

The need for a good business plan

Business plans need to be flexible and adaptable. The most successful entrepreneurs are those who, to ensure business success, make amends in their original plan to suit the market dynamics. While volumes of text can be written on what goes into formulating a good business plan, market size and the differential value proposition of your product or service are two factors that need to be highlighted.