investors interest in a business plan

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7 Things Investors Are Looking for in a Business Plan

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A business plan is a comprehensive document that outlines a company’s mission, goals, finances, revenue, and market data.

The primary purpose of a business plan is to convince banks and/or investors to loan you money, but there are several other benefits.

Business plans help create accountability within an organization, offer a holistic view of the company, and can repeatedly be used as a frame of reference.

Ultimately, a business plan mitigates risk. It summarizes all business areas and details how those areas ( marketing , operations) impact growth.

And there’s no way around it; if you want to fund from an investor, especially if you’re just starting your business , you need a business plan.

Any entrepreneur would be lucky to meet with an angel investor or venture capitalist. But the initial pitch, meeting, and presentation are all the tip of the iceberg.

What comes next is most important.

The potential investor will want a detailed business plan and will conduct due diligence to ensure you’re a worthy investment. With that in mind, here’s what investors are looking for in a business plan:

Strong Executive Summary

The executive summary is the first portion of your business plan and should be captivating enough to give a solid first impression.

Think of your executive summary as your website landing page. If visitors come to your website and can’t find what they’re looking for, they’ll move on to the next best thing.

Your executive summary should introduce the company and explain what you do and what makes you unique. It gives investors a complete overview of your business and should summarize key details in other business plan sections. This section is typically one page long and should be written last.

Start your executive summary by introducing yourself; follow up with an explanation of why your business matters and how it fills a gap in the market or solves a particular problem. Take a business plan example for inspiration for writing a practical executive summary.

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Complete Financial Forecast

Whether you have no sales or are generating revenue in the hundreds of thousands, every investor will scrutinize your financial plan to determine financial feasibility accurately. This section of your plan needs to be fully fleshed out and leave no grey area or room for further questions.

It’s essential to put yourself in the shoes of an investor. Based on your financial outlook, do you see yourself as a risky or promising investment? Your financial forecast should include the following:

Projected profit and loss statement Projects how much revenue you’ll generate and the profit you’ll make on those sales

Break-even analysis A detailed look at how many products you need to sell to cover fixed and variable production costs

Projected balance sheet Estimate of total assets and liabilities

Cash flow statement Details all cash inflows and outflows

Business ratios Calculations that illustrate the relationship between items (i.e., total sales and the number of employees).

To accurately build out your financial forecast, you must assess your market share (your market research section is also crucial to investors). Start from the bottom by highlighting your total addressable market and the percentage you’ll be targeting. Then you can dive a little deeper by outlining your segmented addressable market and share of the market. Investing sites can also help you better perceive the state of the market and other data for a more accurate forecast.

Want free financial templates for your business plan?

You will find a terrific collection of important templates, including a SWOT analysis, sales forecast template, profit and loss template, cash flow template, and balance sheet template, in this comprehensive guide on how to write a business plan.

Customer Acquisition Costs

Investors want to know how much it will cost to acquire new customers.

Understanding your customer acquisition costs (CAC) helps you grow healthy and scalable and shows investors that you know exactly what it takes to get a customer on board.

Knowing your CAC is more important than ever; the cost of acquiring new customers has increased by 60% over the past five years .

Customer acquisition costs are determined by examining the total cost of sales and marketing necessary to acquire new customers. You can calculate your CAC by dividing the total cost of marketing and sales by the number of customers acquired.

Your CAC can also help simplify your decision-making process, optimize your marketing strategies to focus on customer lifetime value, and paint a complete picture of your payback period (the amount of time it takes to recover the cost of an investment).

Strong Execution

A business plan is like an image. And as the age-old saying goes, “An image is worth a thousand words.”

Similarly, your business plan reveals much about who you are as a business owner. Let’s say that you have strong sales and an optimistic financial forecast. Is your business plan missing the necessary documentation and data points that support this? Is it rife with grammatical errors and improper formatting?

Execution is telling. How you communicate your business and your mission is just as important as the details within the plan. A hastily written or ambiguous business plan will result in more questions and hesitance.

If you can’t take the time to write a solid business plan, what else will you take shortcuts on?

The Financial Ask & Answer

The financial ask and answer addresses two crucial questions: How much money are you asking for, and what will you do with it?

The investment you’re seeking should be clear in your business plan (typically mentioned in the executive summary and expounded upon in the financial plan). How you intend to use the money should also be clear and logical.

Investors need to know that you’ll spend their money responsibly and that there’s proof that how you spend the money will result in revenue growth. Every dollar should be allocated to a specific destination for a good reason.

For instance, you cannot ask for a $500,000 investment without explaining how and why you arrived at this number. The business plan in the below example of a functional company called Culina states how much they’re asking for and why. In this case, Culina is raising $15 million to ramp up hardware manufacturing, improve UX and UI, expand marketing efforts, and fulfill pre-orders before the holiday season.

Strong Management

Your business plan should prove that you have a strong management team.

Many investors run their portfolios with a people-first mentality. This means that who you are is just as important as what you offer. Your business plan’s “Management” or “Team” section is great for humanizing your company and highlighting your strengths.

What makes your team especially capable of running and guiding this business toward profitability? What’s your background? Have you won any awards or participated in any incubator programs? Do you have relevant experience (either in running a business or working in the industry)?

Answer these questions to show investors that you’re uniquely qualified to lead.

Thorough Understanding of Your Market

Is there a market for your product or service, how can you reach your market, and what share of the market do you have a stronghold on?

Demonstrating a thorough understanding of your market and target demographic is crucial. Many businesses have failed because they didn’t conduct market research or speak to their customers and clients. Product validation should precede fundraising efforts.

“Market size” is a basic number that every investor looks for. Your competitive analysis , market research, metrics, and customer surveys should all be factored into the equation.

If you’re struggling to understand your market and position, you can start by gathering primary data from the Census and Labor Bureau. Many industries also have formal associations and publish their research online. You can purchase these studies or commission a market research firm to spearhead your research.

An interested investor can make or break your business and should be taken seriously. You wouldn’t rush through an Ivy League college application and shouldn’t submit a hastily written business plan.

Take the time to detail every aspect of your business and consider working with a business plan writer to ensure you communicate your message effectively. If an investor is impressed with your business plan, chances are you’ll score pivotal funding.

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Convince Investors To Invest In Your Business: The Ultimate Checklist

• November 2, 2023

Securing funding for your startup or small business is vital in materializing your entrepreneurial vision. According to CB Insights, 47% of startup failures in 2022 were due to a lack of financing or investors. Navigating the funding landscape, however, can be challenging and competitive if not appropriately planned. This article will explore the top strategies and tips for convince investors to invest In your business.

In This Blog:

1. Develop a Solid Business Plan

2. cultivate a strong network, 3. craft an impressive pitch deck, 4. demonstrate traction and proof of concept.

5. Build a Strong Team

6. Choose The Right Investor

7. plan for risk management.

-How to Talk to an Investor – Dos and Don’ts

Dos – What You Should Say

Don’ts – what you shouldn’t say.

-Startup Funding Checklist To Raise Money For Your Business

-Take The Next Step

Strategies for Convince Investors To Invest In Your Business

• Craft a compelling business plan articulating your startup’s vision, business model, target market, competitive advantage (unique value proposition), financial model, and revenue (growth) projections. 
• Present your plan to potential investors concisely and convincingly, highlighting the problem your product or service can solve and how it can bridge a gap in the market.
• Grab every opportunity to connect with potential investors by attending industry events, joining startup communities or accelerator programs, or seeking mentorships or guidance from established entrepreneurs.
• Build relationships with experienced entrepreneurs and industry experts to gain valuable insights and introductions to potential investors.
• Enhance your credibility and garner investor interest in your startup by cultivating a strong network.
• Develop a visually appealing and concise pitch deck that highlights the unique advantages of your product/service, the problem you’re solving, and how funding will accelerate your growth and uncover new market opportunities.
• Provide financial projections such as the potential return on investment or expected growth over the years (months/ quarter).
• Research potential investors and tailor your startup pitch to match investor interests and priorities.
• Include a compelling narrative communicating the problem, unique solution, and market opportunity to boost investor interest and confidence.
• Practice your pitch to convey your vision and confidently generate excitement among potential investors.  
• Demonstrate your startup’s potential for success, scalability, and expansion to gain investor confidence and traction.
• Highlight critical milestones such as early customer acquisition and engagement, partnerships and collaborations, revenue growth, and other vital indicators that validate your startup’s credibility and business model.
• Outline future milestones and growth potential along with current accomplishments.
• Share tangible proof of the value of your product or service through prototypes, pilot programs, product-market fit demos/case studies, or early customer feedback.

5. Build a Strong Team to Convince Investors To Invest In Your Business

• Build a solid and organized team with the experience, skills, and ability to execute your business plan. Ensure you have solid operational and financial leadership when seeking funds from investors.
• Highlight your team’s relevant skills, experience, and accomplishments, such as customer service or sales success, to emphasize their ability to execute the business plan.
• Ensure your team is diverse and inclusive, with a strong background in successful ventures.
• Research potential investors and analyze their portfolios to identify investors with industry experience.
• Consider the current stage of your business and the amount of funding you will need.
• Conduct comprehensive due diligence on potential investors to understand their investment criteria, previous investments, and focus areas to ensure alignment with your business goals, values, and long-term vision.
• Talk to potential investors and find the right one(s) who share your vision and values.
• Provide investors with all relevant financial and legal documents.
• Be transparent about your business and finances to build trust and credibility with investors.
• Anticipate and address potential concerns or challenges affecting your startup’s journey or operations.
• Communicate the risk management strategies you’ve adopted so investors are convinced.
• Clearly outline the funding required for each stage and detail its allocation towards driving growth.

How to Talk to an Investor – Dos and Don’ts

• Communicate the problem your startup solves and how your product adds value.
• Be ready with your data points, business plan, and financial projections.
• Highlight the milestones you’ve achieved, what your team looks like, and how you plan on using their funds.
• Describe what your startup’s vision and success would mean for your customers, partners, and investors.
• Ask investors what kind of experience they have in investing in similar companies and why they are interested in yours specifically.
• Find out what kind of support they can offer beyond funding.
• Ask them about their investments, successes, failures, and thoughts on investing in startups.
• Ensure both parties leave the conversation clearly, understanding the following steps and timelines.
• Be sure to thank investors for their time and interest in your startup.
• Follow up with an email summarizing the key points from the conversation and any next steps both parties have agreed upon.
• Avoid discussing how you plan to profit from the venture, as it can make you look unprepared and inexperienced.
• Don’t keep bragging about the potential market or how much money it could make. Provide realistic estimates without trying to oversell the potential of your startup.
• Talk about your business plan. Be specific about how you plan to use the investor’s money to build up the business and make it successful.
• Only talk a little about your potential competitors. Your investors aren’t interested to know much about them.
• Focus on what makes your business unique and why it will stand out.
• Never show you’re desperate for the investment. Be confident in your plans and convince them you won’t accept anything less than an appropriate investment for your business.

Startup Funding Checklist To Raise Money For Your Business

Follow the startup funding checklist below to ensure everything is in place to make your funding journey successful.

• Create a detailed business plan that outlines your startup’s goals, strategies, and financial projections.
• Research and evaluate potential investors to ensure they align with your startup’s goals, values, and industry.
• Develop a compelling pitch deck that gives potential investors an overview of your business, including your business idea, market opportunity, competitive advantage, financial projections, milestones, key metrics, and team composition.
• Reach out to potential investors interested in investing in your startup. Send emails, make phone calls, take care of networking events, or utilize digital platforms like Start3r to connect with investors and pitch your startup’s business idea and value proposition.
• Review and negotiate the terms of funding to ensure the investor aligns with your startup’s goals and objectives. Negotiating funding for a project may require discussing details such as equity, interest rates, repayment terms, and other relevant conditions.
• Complete all the necessary paperwork and close the funding deal by reviewing and finalizing investment agreements, shareholder agreements, term sheets, and other relevant legal documents.

Take The Next Step

Securing funding for your startup can be a challenging process. Still, with the right strategies and carefully considering investor preferences and market dynamics, you can enhance your chances of attracting investors. By having a solid business plan, strong network, compelling story, proof of concept, experienced team, and risk management process, you can attract investors and secure funding to grow your business.

Start3r is a digital platform that helps entrepreneurs, investors, startups, and vendors from around the globe to connect, collaborate, and innovate seamlessly. Take your startup to new heights and realize your entrepreneurial dreams with us.

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

What Do Investors Really Want From a Business?

Candice Landau

9 min. read

Updated April 19, 2024

Question: Should I send out market research surveys prior to approaching an investor? Also, how safe is it to pitch my business idea to an investor?

Underlying these two questions is another question and the crux of what this person is asking, “what do investors want?” Are they looking for new ideas so that they can create businesses of their own or are they looking for you to prove your idea will work? What do I have to show them to get funding?

Once we’ve answered the first question we will move onto the second two.

• Getting into the mind of an investor

Hundreds of episodes of Shark Tank and Dragon’s Den have taught us that if you do not know your business inside-out and if you don’t come across as capable of running your business without the ongoing guidance of your backers, you’re not going to stand much of a chance.

Investors are just as the title suggests – investors. They’re the deep-pockets with the connections that we turn to when we want helping launching and growing our business. They’re the PR and the security. They’re the step ladder. They are not there to run your business unless that’s part of the agreement.

That’s what you’re supposed to be doing and what your partners and employees are supposed to help with.

While every investor will have their own requirements and be looking for something that aligns with their personal interests and pursuits, there are a number of things you should consider if you want to stand a chance at getting funded.

1. The right industry

“What’s comfortable to me is familiarity.” – Marc Jacobs

According to business development consultant, Wyn Lydecker, both investors and venture capitalists are looking to invest in businesses and industries that they can understand. For this reason it’s best to target your pitch and to build relationships with those people that are interested in your industry.

Often, investors will advise or sit on a number of boards. As such, they have little time to learn a new industry and to make contacts within that industry. A simple online search should reveal your investors interests as well as the portfolio of companies that he/she has invested in.

2. You and your team

“It really takes likable superstars to get the attention of the masses.” – Jennifer Wyatt

If your investor is a match with your industry, believe it or not, the next most important thing is  you and your team . To illustrate this point, there’s no better story than that of Reddit. In 2004, Alexis Ohanian and Steve Huffman launched Reddit. They were funded by Y Combinator and originally approached by Paul Graham. When Alexis and Steve first pitched their idea—MyMobileMenu, a restaurant takeout app—to the Y Combinator team, they were rejected.

Heading home a day after the pitch, Alexis got a call from Paul. He said, “We made a mistake. We don’t like your idea, but we like you guys.” He told Alexis that they needed to build the front page of the internet. Three weeks later Reddit was born and a year later, sold for millions to Condé Naste.

If you’re the type of person they can see themselves working with, you’ve won half the battle.

For venture capitalist  Paul Suster , it’s not just the individual; the “management team” is essential.

“I’m personally 70 percent management, 30 percent product […] If I feel a priori that the CEO can’t cut it I’m highly unlikely to invest. Because management is so important, I always tell people to make the bio slide the first in your deck. If you have good experience then the VC will be leaning forward for the rest of the presentation.”

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3. Market share and a competitive advantage

“We don’t have a monopoly. We have market share. There’s a difference.” – Steve Ballmer

Now, what’s the next thing on the table? Your idea. Or rather, whether or not your idea is has a large market share and is competitive within that market . Starups.co, a company founded with the intention of connecting entrepreneurs and investors, advises business owners on what will attract an investors attention. Market size is one of those things. If your idea is only worth a million dollars to them, they won’t feel bad about turning it down. However, if you have the potential to make tens or hundreds of millions (even billions), passing on your idea would be foolish.

However, a large market is not enough. You’ve also got to have a competitive advantage within that market. What will make it hard for others to rise above you? What is your “unfair advantage” or the thing that no one can compete with? What makes you a game-changer? Make no mistake, you will need to have a business model or a business plan that shows just where you sit in relation to your competitors. Understanding them is a good starting point.

4. Traction

“No way of thinking or doing, however ancient, can be trusted without proof.” – Henry David Thoreau

Another great way to pique an investor’s interest is to have a bit of traction as it demonstrates your ability to see your ideas through and it gives investors a glimpse of where you may be headed. If investors see that with just a little bit of money you can do what you’ve done, they might start wondering what you’re capable of with a whole lot more at your disposal.

For investors, traction minimizes risk. It’s a chance to see how you perform and what you’re capable of. To demonstrate traction you might recruit a good management team, start making sales, build an advisory board or secure strategic partnerships.

Without at least a little traction, you’re unlikely to get very far with an investor.

5. Cash flow and a financial plan

“Never spend your money before you have it.” – Thomas Jefferson

Money . It’s not hard to see why this one’s important because really, this is at the heart of every investment. If your business is without the potential to make money, it is not a business. Ideally, you’ll be approaching an investor with a business plan that has your financials worked through.

The most important part of the business plan is arguably the cash flow plan—how much money is coming into your business and how much money is going out. You will need to show that you can cover your own expenses without having to turn to the investor for a check.

Seeing a good return on their investment is key and your financial projections on the business plan are there to give them an idea of how long it will take for you to make a profit and for them to recoup their investment. This is where the “exit strategy” comes in. An exit strategy is not your plan for when the business fails, but rather, your strategy for returning money to investors. This may include planning for an IPO, a strategic acquisition or for management buyout.

This is one area that you can expect investors to seriously evaluate, so be thorough when planning.

• In summary, investors are looking for these five things:
• An industry they are familiar with
• A management team they believe in
• An idea with a large market and a competitive advantage
• A company with momentum or traction
• An idea that will generate cash flow
• Should I do market research before pitching?

In order to run a successful business, you will need to have a good understanding of your customers, your industry and your competitors. Investigating the data behind the products or services that are on the market will help you reduce business risks; identify new opportunities and trends, as well as spot any areas where you might have problems.

Prior to approaching an investor, you will need to ensure you’ve got an excellent understanding of your business. If you haven’t performed any market research, how will you know whether you’ve got a good share of the market and a competitive advantage within that market? These are two things that investors will be looking for when they review your pitch or your business plan.

• Will investors steal my idea?

Based on what you’ve read above, you should now have an accurate picture of what a typical investor is looking for. As you can see, ‘ideas’ are not high on the list. In fact, if you are planning on pitching an investor or handing over your business plan, you’re not actually going to be able to hide your idea. If you do manage to skirt around the issue of exactly what you’re offering, you’re unlikely to get funding.

Naturally, if you’ve got an idea with patent potential, you don’t have to give the exact details, but you do have to make clear what the product or offering does. Investors are busy people and don’t have time to play games. If you’re going to require them to sign a confidentiality agreement before they can even get your plan, they’ll probably move on to someone else.

Additional Reading: 10 reasons not to get investor funding

If you’re still worried about theft, there are a few things you can do to minimize your risk:

• If possible get to know the investor you’re interested in. Do you trust them? It may be best to opt to work with someone you know if you are really worried about theft.
• Send only a portion of your business plan. Exclude any patents that you have filed for and let the emphasis be on your executive summary .
• Investigate your investor’s portfolio. Are they involved in similar projects that share the same market/technologies as you? If this is the case, you may want to think about approaching another investor.
• Include a confidentiality notice on the cover of your business plan (don’t require they sign an agreement before getting the plan)

And remember:

“Good ideas are common—what’s uncommon are people who’ll work hard enough to bring them about.” – Ashleigh Brilliant

Candice Landau is a marketing consultant with a background in web design and copywriting. She specializes in content strategy, copywriting, website design, and digital marketing for a wide-range of clients including digital marketing agencies and nonprofits.

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Written by Jesse Sumrak | May 14, 2023

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Business plans might seem like an old-school stiff-collared practice, but they deserve a place in the startup realm, too. It’s probably not going to be the frame-worthy document you hang in the office—yet, it may one day be deserving of the privilege.

Whether you’re looking to win the heart of an angel investor or convince a bank to lend you money, you’ll need a business plan. And not just any ol’ notes and scribble on the back of a pizza box or napkin—you’ll need a professional, standardized report.

Bah. Sounds like homework, right?

Yes. Yes, it does.

However, just like bookkeeping, loan applications, and 404 redirects, business plans are an essential step in cementing your business foundation.

Don’t worry. We’ll show you how to write a business plan without boring you to tears. We’ve jam-packed this article with all the business plan examples, templates, and tips you need to take your non-existent proposal from concept to completion.

Table of Contents

What Is a Business Plan?

Tips to Make Your Small Business Plan Ironclad

How to Write a Business Plan in 6 Steps

Startup Business Plan Template

Business Plan Examples

Work on Making Your Business Plan

How to Write a Business Plan FAQs

What is a business plan why do you desperately need one.

A business plan is a roadmap that outlines:

• Who your business is, what it does, and who it serves
• Where your business is now
• Where you want it to go
• How you’re going to make it happen
• What might stop you from taking your business from Point A to Point B
• How you’ll overcome the predicted obstacles

While it’s not required when starting a business, having a business plan is helpful for a few reasons:

• Secure a Bank Loan: Before approving you for a business loan, banks will want to see that your business is legitimate and can repay the loan. They want to know how you’re going to use the loan and how you’ll make monthly payments on your debt. Lenders want to see a sound business strategy that doesn’t end in loan default.
• Win Over Investors: Like lenders, investors want to know they’re going to make a return on their investment. They need to see your business plan to have the confidence to hand you money.
• Stay Focused: It’s easy to get lost chasing the next big thing. Your business plan keeps you on track and focused on the big picture. Your business plan can prevent you from wasting time and resources on something that isn’t aligned with your business goals.

Beyond the reasoning, let’s look at what the data says:

• Simply writing a business plan can boost your average annual growth by 30%
• Entrepreneurs who create a formal business plan are 16% more likely to succeed than those who don’t
• A study looking at 65 fast-growth companies found that 71% had small business plans
• The process and output of creating a business plan have shown to improve business performance

Convinced yet? If those numbers and reasons don’t have you scrambling for pen and paper, who knows what will.

Don’t Skip: Business Startup Costs Checklist

Before we get into the nitty-gritty steps of how to write a business plan, let’s look at some high-level tips to get you started in the right direction:

Be Professional and Legit

You might be tempted to get cutesy or revolutionary with your business plan—resist the urge. While you should let your brand and creativity shine with everything you produce, business plans fall more into the realm of professional documents.

Think of your business plan the same way as your terms and conditions, employee contracts, or financial statements. You want your plan to be as uniform as possible so investors, lenders, partners, and prospective employees can find the information they need to make important decisions.

If you want to create a fun summary business plan for internal consumption, then, by all means, go right ahead. However, for the purpose of writing this external-facing document, keep it legit.

Know Your Audience

Your official business plan document is for lenders, investors, partners, and big-time prospective employees. Keep these names and faces in your mind as you draft your plan.

Think about what they might be interested in seeing, what questions they’ll ask, and what might convince (or scare) them. Cut the jargon and tailor your language so these individuals can understand.

Remember, these are busy people. They’re likely looking at hundreds of applicants and startup investments every month. Keep your business plan succinct and to the point. Include the most pertinent information and omit the sections that won’t impact their decision-making.

Invest Time Researching

You might not have answers to all the sections you should include in your business plan. Don’t skip over these!

Your audience will want:

• Detailed information about your customers
• Numbers and solid math to back up your financial claims and estimates
• Deep insights about your competitors and potential threats
• Data to support market opportunities and strategy

Your answers can’t be hypothetical or opinionated. You need research to back up your claims. If you don’t have that data yet, then invest time and money in collecting it. That information isn’t just critical for your business plan—it’s essential for owning, operating, and growing your company.

Stay Realistic

Your business may be ambitious, but reign in the enthusiasm just a teeny-tiny bit. The last thing you want to do is have an angel investor call BS and say “I’m out” before even giving you a chance.

The folks looking at your business and evaluating your plan have been around the block—they know a thing or two about fact and fiction. Your plan should be a blueprint for success. It should be the step-by-step roadmap for how you’re going from Point A to Point B.

How to Write a Business Plan—6 Essential Elements

Not every business plan looks the same, but most share a few common elements. Here’s what they typically include:

• Executive Summary
• Business Overview
• Products and Services
• Market Analysis
• Competitive Analysis
• Financial Strategy

Below, we’ll break down each of these sections in more detail.

1. Executive Summary

While your executive summary is the first page of your business plan, it’s the section you’ll write last. That’s because it summarizes your entire business plan into a succinct one-pager.

Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.

Your executive summary highlights key points of your plan. Consider this your elevator pitch. You want to put all your juiciest strengths and opportunities strategically in this section.

2. Business Overview

In this section, you can dive deeper into the elements of your business, including answering:

• What’s your business structure? Sole proprietorship, LLC, corporation, etc.
• Where is it located?
• Who owns the business? Does it have employees?
• What problem does it solve, and how?
• What’s your mission statement? Your mission statement briefly describes why you are in business. To write a proper mission statement, brainstorm your business’s core values and who you serve.

Don’t overlook your mission statement. This powerful sentence or paragraph could be the inspiration that drives an investor to take an interest in your business. Here are a few examples of powerful mission statements that just might give you the goosebumps:

• Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
• Tesla: To accelerate the world’s transition to sustainable energy.
• InvisionApp : Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.
• TED : Spread ideas.
• Warby Parker : To offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses.

3. Products and Services

As the owner, you know your business and the industry inside and out. However, whoever’s reading your document might not. You’re going to need to break down your products and services in minute detail.

For example, if you own a SaaS business, you’re going to need to explain how this business model works and what you’re selling.

You’ll need to include:

• What services you sell: Describe the services you provide and how these will help your target audience.
• What products you sell: Describe your products (and types if applicable) and how they will solve a need for your target and provide value.
• How much you charge: If you’re selling services, will you charge hourly, per project, retainer, or a mixture of all of these? If you’re selling products, what are the price ranges?

4. Market Analysis

Your market analysis essentially explains how your products and services address customer concerns and pain points. This section will include research and data on the state and direction of your industry and target market.

This research should reveal lucrative opportunities and how your business is uniquely positioned to seize the advantage. You’ll also want to touch on your marketing strategy and how it will (or does) work for your audience.

Include a detailed analysis of your target customers. This describes the people you serve and sell your product to. Be careful not to go too broad here—you don’t want to fall into the common entrepreneurial trap of trying to sell to everyone and thereby not differentiating yourself enough to survive the competition.

The market analysis section will include your unique value proposition. Your unique value proposition (UVP) is the thing that makes you stand out from your competitors. This is your key to success.

If you don’t have a UVP, you don’t have a way to take on competitors who are already in this space. Here’s an example of an ecommerce internet business plan outlining their competitive edge:

FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.

5. Competitive Analysis

Your competitive analysis examines the strengths and weaknesses of competing businesses in your market or industry. This will include direct and indirect competitors. It can also include threats and opportunities, like economic concerns or legal restraints.

The best way to sum up this section is with a classic SWOT analysis. This will explain your company’s position in relation to your competitors.

6. Financial Strategy

Your financial strategy will sum up your revenue, expenses, profit (or loss), and financial plan for the future. It’ll explain how you make money, where your cash flow goes, and how you’ll become profitable or stay profitable.

This is one of the most important sections for lenders and investors. Have you ever watched Shark Tank? They always ask about the company’s financial situation. How has it performed in the past? What’s the ongoing outlook moving forward? How does the business plan to make it happen?

Answer all of these questions in your financial strategy so that your audience doesn’t have to ask. Go ahead and include forecasts and graphs in your plan, too:

• Balance sheet: This includes your assets, liabilities, and equity.
• Profit & Loss (P&L) statement: This details your income and expenses over a given period.
• Cash flow statement: Similar to the P&L, this one will show all cash flowing into and out of the business each month.

It takes cash to change the world—lenders and investors get it. If you’re short on funding, explain how much money you’ll need and how you’ll use the capital. Where are you looking for financing? Are you looking to take out a business loan, or would you rather trade equity for capital instead?

Read More: 16 Financial Concepts Every Entrepreneur Needs to Know

Startup Business Plan Template (Copy/Paste Outline)

Ready to write your own business plan? Copy/paste the startup business plan template below and fill in the blanks.

Executive Summary Remember, do this last. Summarize who you are and your business plan in one page.

Business Overview Describe your business. What’s it do? Who owns it? How’s it structured? What’s the mission statement?

Products and Services Detail the products and services you offer. How do they work? What do you charge?

Market Analysis Write about the state of the market and opportunities. Use date. Describe your customers. Include your UVP.

Competitive Analysis Outline the competitors in your market and industry. Include threats and opportunities. Add a SWOT analysis of your business.

Financial Strategy Sum up your revenue, expenses, profit (or loss), and financial plan for the future. If you’re applying for a loan, include how you’ll use the funding to progress the business.

5 Frame-Worthy Business Plan Examples

Want to explore other templates and examples? We got you covered. Check out these 5 business plan examples you can use as inspiration when writing your plan:

• SBA Wooden Grain Toy Company
• SBA We Can Do It Consulting
• OrcaSmart Business Plan Sample
• Plum Business Plan Template
• PandaDoc Free Business Plan Templates

Get to Work on Making Your Business Plan

If you find you’re getting stuck on perfecting your document, opt for a simple one-page business plan —and then get to work. You can always polish up your official plan later as you learn more about your business and the industry.

Remember, business plans are not a requirement for starting a business—they’re only truly essential if a bank or investor is asking for it.

Ask others to review your business plan. Get feedback from other startups and successful business owners. They’ll likely be able to see holes in your planning or undetected opportunities—just make sure these individuals aren’t your competitors (or potential competitors).

Your business plan isn’t a one-and-done report—it’s a living, breathing document. You’ll make changes to it as you grow and evolve. When the market or your customers change, your plan will need to change to adapt.

That means when you’re finished with this exercise, it’s not time to print your plan out and stuff it in a file cabinet somewhere. No, it should sit on your desk as a day-to-day reference. Use it (and update it) as you make decisions about your product, customers, and financial plan.

Review your business plan frequently, update it routinely, and follow the path you’ve developed to the future you’re building.

Keep Learning: New Product Development Process in 8 Easy Steps

What financial information should be included in a business plan?

Be as detailed as you can without assuming too much. For example, include your expected revenue, expenses, profit, and growth for the future.

What are some common mistakes to avoid when writing a business plan?

The most common mistake is turning your business plan into a textbook. A business plan is an internal guide and an external pitching tool. Cut the fat and only include the most relevant information to start and run your business.

Who should review my business plan before I submit it?

Co-founders, investors, or a board of advisors. Otherwise, reach out to a trusted mentor, your local chamber of commerce, or someone you know that runs a business.

Ready to Write Your Business Plan?

Don’t let creating a business plan hold you back from starting your business. Writing documents might not be your thing—that doesn’t mean your business is a bad idea.

Let us help you get started.

Join our free training to learn how to start an online side hustle in 30 days or less. We’ll provide you with a proven roadmap for how to find, validate, and pursue a profitable business idea (even if you have zero entrepreneurial experience).

Stuck on the ideas part? No problem. When you attend the masterclass, we’ll send you a free ebook with 100 of the hottest side hustle trends right now. It’s chock full of brilliant business ideas to get you up and running in the right direction.

About Jesse Sumrak

Jesse Sumrak is a writing zealot focused on creating killer content. He’s spent almost a decade writing about startup, marketing, and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped business. A writer by day and a peak bagger by night (and early early morning), you can usually find Jesse preparing for the apocalypse on a precipitous peak somewhere in the Rocky Mountains of Colorado.

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The 5 Things Investors Really Care About When Reviewing Your Business Plan

A business plan is an essential tool for startups and, when executed correctly, it serves two key purposes:

• It provides goals and a roadmap for you to follow in order to build a successful company.
• It provides the format and information lenders and investors need to determine whether or not to provide funding to you.

When preparing your business plan for investors , you must keep this audience’s unique needs in mind. Below, you’ll learn what these needs are and what investors will scrutinize most when reviewing your plan.

Investors will generally take equity in your company, or they will give you a loan that must be repaid. In either case, their primary goal is to get a return on their investment. For loans, they want to have great confidence that you’ll be able to repay the loan and interest. For equity investments , they want to see real growth potential and a reasonable possibility of your exiting at a significant multiple.

For those unaware of the phrases “exiting” and “significant multiple,” please allow me to explain.

By “exiting,” I’m referring to an event in which the equity investor will be paid. The most likely exit event is for you to eventually sell your company. Another positive exit event is taking your company public; while this is very favorable to investors, the likelihood of this happening is extremely low.

Next, a “multiple” is the return on the investment that investors will receive. For example, let’s say a venture capitalist invested $5 million in your business and, upon exit, received a $50 million check for their equity stake. In this case, the investor would have received a 10X multiple or return on investment. Equity investors generally want to see a five- to 10-time multiple. While this seems very high, it’s because they understand that many of their investments will not materialize at all.

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Below are five of the most critical things investors look for in your business plan to determine if they think you will give them the return on investment they desire:, financial needs and projections.

Investors need to know how much money you are seeking, the proposed uses of the funds and your financial projections .

Your financial projections should show your expected sales, expenses and profits over the next five years. Investors want to see significant growth and profits but need to feel confident about your assumptions.

For example, while it’s easy to assume that your sales will grow 500% per year, investors will want you to provide rationale behind this and other assumptions. Did your last company grow at 500% per year? Are there other companies in the market that are growing at this rate?

The more research you can do to bolster your assumptions, the more credibility they will have in the eyes of investors, which will make them more likely to believe in your business and fund your company.

Related: How to Create a Fundable Business Plan

Investors want to see that you’ve achieved traction. Traction is similar to the term “proof of concept.” It is getting users or, ideally, paying customers for your product or service. By gaining traction, you reduce risk for yourself and for investors.

For instance, consider two companies developing mobile apps . One just has the idea to create the app. The other has already built the app (i.e., they’ve proven they could successfully code and complete the app), they’ve acquired 10,000 users (i.e., they’ve proven they could market the app and that customers really want it) and 1,000 users are currently paying for a premium subscription of the app (i.e., they’ve proven they can monetize their business). As you can see, the latter company has already removed multiple risk factors to the investor and is thus much more likely to receive funding.

In the executive summary at the start of your business plan, you want to clearly describe what you do and explain any traction that you’ve accomplished thus far to get investors interested right away.

Note that if you are a true startup, it may be hard to show traction in terms of paying customers. However, you could show a prototype or research you’ve done proving customer interest in your product. Sometimes you need to get creative in showing traction!

Unique success factors

Documenting your unique success factors is critical to winning over investors, which is why any comprehensive business plan should include a section on this. Your unique success factors are those things that make your company more likely to succeed.

Traction, as just mentioned, is clearly a unique success factor. Other factors are past accomplishments of your management team. They can also be market research you’ve uncovered showing that market trends are moving in a direction that benefits your company over your competition. Another success factor could be a marketing partnership you’ve formed that’s sure to bring in a steady flow of customers.

Think through why your company is uniquely qualified to succeed in your given field, and stress this in your executive summary and throughout your business plan, as it’s imperative investors see and understand this.

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Marketing plan.

The marketing section of your business plan discusses the four Ps, which include:

• P roduct or service
• P lace, or distribution strategy, which is how customers will buy from you (e.g., via your website, storefront, direct mail, distributors, etc.)
• P romotions, which is how you will attract new customers

Within the promotions section, you need to explain to investors the cost of attracting a new customer, the expected lifetime value of your customer and whether or not there’s room to scale.

Regarding the cost of attracting customers, hopefully you have real figures to work with. If not, you can apply realistic assumptions. For example, you might assume that via pay-per-click advertising, it will cost you $2 per click, and one out of every 100 clicks will become a client. Thus, your customer acquisition cost (CAS) will be $200.

Next, you might be able to show that your average customer pays $100 for your product and buys 10 times over the first year at a 50% profit margin. This would mean that your average customer gives you a profit of $500.

Finally, you want to show the market is big enough to support your growth. Ideally, you can prove with market research that your target market includes, let’s say, 5 million customers.

In summary, you would be showing it costs you $200 to obtain a customer worth $500, and there are 5 million potential customers out there; this would prove to investors that you have a sizable and profitable opportunity.

The final thing investors really care about in your business plan is research. Research will appear in multiple sections of your plan, and the goal of it is to bolster the argument that your company is worth investing in. As demonstrated above, the right research will support your financial projections, unique success factors and other key sections.

Here is the key research you need to conduct:

• In your industry analysis section, you must provide research on the size of your market and trends
• In your customer analysis section, you should document how many target customers exist and their wants and needs
• Your competitors. Show their strengths and weaknesses, and conduct research to support your financial assumptions

Key takeaways on preparing your business plan for investors

Investors want confidence that investing in your business will give them a solid return on investment. It is your job as the founder of your company to make sure your business plan achieves this. Be sure to conduct your research, and pay special attention to your financial needs and projections, traction, unique success factors and marketing plan, and finding investors to write you a check will become much easier.

Originally published July 25, 2021.

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• financial projections
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What Do Investors Look for in a Business Plan?

This is the first in a series of posts that will elaborate on the specific answer to the question: What do investors look for in a business plan?

If you've tried to raise money or researched the business plan presentation for potential investors, you already see that there's a wide range of opinions and demands. In the end, investors are just as diverse and dynamic as the enterprises and entrepreneurs they invest in.

For example, some invest their own money (Angels) while others manage a fund (Venture Capitalists). Some invest in series pre-seed (commonly referred to as the idea stage) or series seed (commonly referred to as the MVP or prototype stage), and some invest in later stages such as series A or series B.

But there's one thing all investors have in common: the desire to grow their money. As simple as it may sound, one of the most common mistakes novice entrepreneurs make is failing to address how the investor will see a return on their investment (ROI).

However, before you begin to discuss the investor's return, you need to develop context and create a persuasive argument for your business, which you do by properly addressing these five essential topics in your business plan:

• Define the problem you're solving or the trend you're capitalizing upon
• Clearly convey the opportunity (this can be tricky, and I plan to devote several future posts to this topic alone)
• Communicate why now is the right time to enter or expand in your market (i.e. why is it the right time to invest)
• Explain how your solution is the best at solving the aforementioned problem
• Demonstrate how customers will find benefit by using or switching to your solution

To be clear, this is not a series devoted to your pitch deck, style or format, or pitching skills; these might vary as much as the investors you intend to target. This series is about analyzing the content of your business plan or investor materials and, if you are not well prepared, what to do about it.

Defining the Problem or Trend

Stated problems.

In most cases, investors wish to comprehend the problems you're addressing or the trend you're capitalizing on. It can be helpful for you to hear from prospective customers about their problems. You can also learn about problems by surveying customers of competitors in your field or by reading social media posts or technical forum threads that highlight their frustrations. These types of direct reports from customers are known as stated problems.

Implied Problems

However, stated problems are usually only a small piece of the picture and, in my experience, do not contribute significantly to innovation. To elaborate on this, my favorite quote that hits the nail on the head dates back to the invention of the Model T by the grandfather of manufacturing:

“If I had asked people what they wanted, they would have said faster horses.” - Henry Ford

Henry Ford understood a concept known as implied problems. The implied problems of his day? Horses are slow, require excessive maintenance (stables, hay, oats, grooming, etc.), and defecate in the streets. He recognized instinctively that there was a better way.

As an entrepreneur, you must also recognize implied problems the same way Henry Ford did, and concisely and effectively explain your logic and rationale about your target customers’ implied problems in such a way that the investor has an aha moment.

Due to the nature of trends, they are considerably easier to recognize. Generally, there is a social awareness and associated empirical data (research) that something is happening in a market or environment. The shift toward remote work is a prime example of a recent trend, and many businesses have positioned themselves to capitalize. In contrast, numerous businesses have been negatively affected by this trend.

Pro Tip: you may or may not have picked up on the fact that trends can, and often do, create problems, either stated or implied. Lean into this. Also, if you find the trends section of your brainstorming wall looking like that of a true crime detective, it’s probably not a trend. Trends should be easily explained, the investor should say, “yeah, I’ve heard about that.”

Clearly Convey the Opportunity

Now, novices frequently confuse opportunity with market size, so let's clear that up first. Opportunities are not always synonymous with market size; in fact, some opportunities generate previously unknown new markets. And understanding opportunities will help you position your product and brand, so it's pretty darn important. Suppose, for instance, you’re developing your business plan for angel investors and you have invented a novel, patented insert for coolers that keeps sandwiches and beverages organized and out of the water that collects at the bottom. And your product is well designed, well built, and expensive. You could spend thousands of dollars on gated (paid) research, which is crucial but only relays part of the facts. Why? Because market data tends to favor combined totals, which is significant, don't get me wrong, however, it only provides a partial picture of the opportunity. Accordingly, in the example of our cooler insert, it is essential that we understand the size and trends of the camping cooler market in the U.S.:

This information from Statista is valuable knowledge, showing that the market is substantial and continually expanding. However, it does not assist you in creating a strong narrative for your particular opportunity. Instead, utilize one or more opportunity lenses to allow you to get more specific. For example, you may use the complementary product opportunity lens which would have you focus your research on growth within a certain segment of the industry that corresponds with your product's intended customers (e.g., premium cooler customers). And information about the market leader in this segment may prove more compelling.  

Since 2015, the compound annual growth rate for YETI, the global leader in premium brand coolers, has been greater than 18%. In fact, YETI's cooler and equipment sales totaled $552 million in 2021.

This type of information will help indicate that you have a strategic, targeted approach to the opportunity and that you are tying data from a complementary premium category to your premium offering (i.e., cheap coolers are also lumped in with the broad market data and irrelevant to your product). This type of opportunity analysis frequently influences design decisions, market entry point, and marketing techniques. Wouldn't it be great if you reached an agreement with REI and Cabela's to place your cooler insert display next to the YETI display?

I cannot overstate the importance of focusing on the strategy outlined in your business plan or investor materials with one or more opportunity analysis lenses. Here is a list of the most common opportunity analysis lenses:

• Consumer segmentation opportunity analysis
• Direct competition opportunity analysis
• Indirect competition opportunity analysis
• Other industries’ opportunity analysis
• Complimentary product opportunity analysis
• Environment opportunity analysis

You may be wondering, aren’t opportunities the ‘O’ in a SWOT analysis and why aren’t you talking about that? Well, two reasons. First, this post is focused on startups and early-stage companies and they tend to be a little light on strengths, their weaknesses are, well … everything, and the same with threats. Second, remember how I started this post? You’re trying to convince investors, usually in about 5 to 20 minutes, that your business is worth investing in, and that it has the potential to create a return. They aren’t going to cut a check right away and you're focusing on getting a second meeting. Trust me, as you begin to forge a relationship with an investor (if they are any good) there will be plenty of time to get into the threats you both see on the horizon and what to do about them. So, for now, spend your energy, time, and resources on using the lenses to analyze potential opportunities. I’ll get into more detail on each specific lens and how they are utilized in a separate post, which I’ll link back to here. 

One of the most frequent questions investors ask our clients is, "Why is now the ideal moment to launch this product/company/brand?" This question can throw off an inexperienced or ill-prepared entrepreneur. After all, you don’t have a crystal ball. Or do you?

Trick question. You don’t. No one does.

In lieu of a crystal ball, though, you have facts and logic, which are much more powerful. Timing is all about capitalizing on the knowledge gained via research and analysis (see above). Typically, it is not rocket science, and if it is, you had best ensure that your investors are also rocket scientists (hint: investors are not rocket scientists). I recommend that you attempt to anticipate this issue and provide a response in your materials. What trends are you noticing or market events have transpired to indicate now is the optimum moment to enter your market? And be honest with yourself; if you're opening a specialty grocer in a growing suburb, has the population reached its optimal level, or are you too early? If you're too early, are you ready to burn cash by operating in the red to prevent a future competitor from entering the local market? If you're an app developer and you detect a certain trend that your competition hasn't addressed, is it the proper moment to deliver your solution to the customer? In general, your market timing assertion is a logical inference. However, you need also to be familiar with two distinct concepts: the first mover and fast follower.

Do you know if Google was a first mover or a fast follower? And don’t cheat by Googling it (whoa, this just got meta). 

I’ll get into the concept of first-move and fast-follower in another post and how investors tend to consider you when claiming to be either.

Proposed Solution

Why do I wait until now to discuss how fantastic my solution is? Don't investors want to know that my product satisfies every requirement and desire of customers? 

In all but a few instances, I highly encourage you to wait. Unless, of course, you’ve solved nuclear fusion and the world's dirty energy problems, or you have built a safe and cost-effective teleportation system. Essentially, if you've invented something that has been in the Sci-Fi zeitgeist for decades, if you merely demonstrate the solution, investors will be clamoring to invest in your company. However, for the rest of us, we must first grasp the problems, trends, and opportunities for ourselves and our company, and then be able to contextualize the situation for the investor. Without this context, the investor cannot even begin to determine if there is any meat on the bones of your solution. 

Lastly, your proposed solution does not depict your product, its features, or its benefits. Your proposed solution is the solution itself. Customer X has problem Y, for which our solution is Z. That's it. Going back to Henry Ford, he might have said something like this: Our target customer is any red-blooded American who travels more than three miles per day on horseback, is sick and tired of boarding fees, a sore butt, and feces-covered streets, and we will deliver him an inexpensive, fast, and reliable motorized carriage which will solve all these problems and more. Notice, Mr. Ford did not say anything about the Model T or its features (e.g. how many people it would carry, or how far it could go on a tank of gas).  

Pro Tip: One thing to keep in mind is that you likely began creating your prototype, sketching the schematics for your new retail concept, or developing the UX/UI of your app by anticipating and predicting the market's needs. I call this the entrepreneur’s intuition. I love working with entrepreneurs because they have the unique ability to predict when something will be in vogue or needed. However, when you do these exercises, make sure you are not merely searching for evidence to support your argument (confirmation bias). If you only look for information to confirm your assumptions, you will likely miss the chance to evolve or redesign your product or model based on those findings, thereby making your business plan even stronger; or you will be unprepared to defend your position when, inevitably, the investor asks the dreaded "but what about ________________?" You should search for evidence to both support and refute your assertion. Only then can well-informed reactions, positioning statements, and plans be formulated.

Again, resist the urge to dive into the product itself and all of its innovative features at this stage. Customers purchase products based on two questions: 1) Does this product solve my problem/pain (or do the job I hired it for)? and 2) What are the benefits I will receive by purchasing this product? Logic suggests that if this is how customers think, investors will want to know this because it will further convince them that their money is safe with your company. 

Benefits are, if you will, an additional lens that assesses and explains how your product will touch the lives of your customers. There are six benefit categories:

• Functional benefits
• Operational benefits 
• Emotional benefits
• Quality benefits
• Social benefits
• Financial benefits

It would be nice if customers were these tidy, little creatures, responding to a single benefit. However, most people, consciously or unconsciously, seek multiple types of benefits from the product they purchase. Kind of a two (or three) birds, one stone approach. Can you guess which types of benefits your favorite brands are communicating? I’ll give you a hint - even simple products, like candy bars, focus on more than one benefit. I will devote another post to defining and explaining each.  

Unless you've been meticulous in your business planning or investor materials development, you're probably feeling quite overwhelmed at this stage. I acknowledge that these are challenging topics and that there is no one-size-fits-all solution. If it were simple, everyone would do it. However, I am convinced that one of two outcomes will occur if you abandon confirmation bias, roll up your sleeves, and utilize this method to develop your model, strategy, and materials. Either you'll conclude that the idea you're working on is not as innovative and investor-worthy as you originally believed (which is good, as it saves you money, time, heartache, a bruised ego, and relationships, and allows you to move on to your next idea), or you'll be better equipped to help your investors realize that you’re a good bet, thereby facilitating the launch, growth, and success of your company.

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7 Most Important Things Investors Look At in a Business Plan

Do you want to write or submit a business plan to investors for your startup? If YES, here are 7 most important things investors look for in a business plan.

There are salient features of your venture that an investor might need to know before investing in your venture, and so for you to get funding for your startup idea, you should know what investors look for in a business plan. You need to show them how you’re going to make a profit. Or in other words, how are you going to bring in the money.

Investors have business plans coming their way every day, and the fact remains that they cannot invest in all these businesses; after all, they are still running a business and looking for the more lucrative ventures out of the lot. You need to understand that 99% of the business plans that investors receive are declined for one reason or the other.

The question should now be, why were these business plans dumped? What did they do wrong? And the 1 percent that are accepted, what did they do right? Here are 7 things that get the most attention from investors during the business plan evaluation process.

7 Most Important Things Investors Look for in a Business Plan

• Executive summary

The executive summary of your business plan is the first thing that the investors look at when they pick up a business plan. Nobody has the time to read a 50 or 60-paged business plan. Investors want to see those 3 to 4 pages at the start.

These pages help them to get a grasp of what are you planning to do with your business. If investors can’t see what they want here and if they can’t understand what your business is all about immediately, your business plan will end up being tossed away.

An investor can’t know your business better than you. That’s why your business plan, and especially the executive summary needs to be clear and concise. It should be clear in a way that even your grandmother can understand it. That’s how investors will recognize the opportunity that you’re offering to them. Investors are only encouraged to read your whole document when they are satisfied with your executive summary.

• Your Company Management

The other thing that investors look at in a typical business plan is the team, more specifically, the management team of the organisation. Yes, your idea itself may be huge, but investors regard your corporate team to be even more important.

These money bags get approached by dozens of companies daily that are pitching the same or similar business idea. But the question now remains which is the best team that is going to execute that idea and bring the results? You must have a team of experts that know their job and this has to be showcased in your business plan too. That’s how investors know that your business will go far.

As a start-up, it’s understandable that your team might still not have the experience to add up to their expertise. For that reason, it is recommended to get some help and advice on how to present your management team, if not, you will be seen as not being serious enough.

So when seeking to get funds with your business plan, make sure you pick the right team that will complement your business. If you have credibility and you trust your teammates, you’ll gain credibility with the investors and they will trust you too.

• Investors want to see your financial analysis

Your executive summary and management can draw in investors to look more into your business plan, but the real thing that would hold their interest is your financial analysis. They want to see numbers. Not just numbers, but numbers that make sense. After all, they want to see how they’re going to make their money.

This is not a section to start dreaming big and building castles in the air. You’re not going to be the next Amazon in two years so keep those thoughts out of your business plan. You have to be certify whether the amount of funding that you’re asking for can bring them a profit, as well as salary for you and your team.

This is definitely the most important section of your business plan and a lot of entrepreneurs seem to struggle with this section. This may be because of the entrepreneur’s myopia or unrealistic assumptions. The financials must be realistic with a rationale.

Business plans should never be prepared with the presumption of impressing investors. Most entrepreneurs do that and it is a mistake. Business plans should be constructed to mirror your idea and rationalized through research. The data and information in the business plan cannot be based on hunches and belief. It must be prepared to ensure that the business case in itself sounds appealing but not embellished.

Yet another aspects investors consider before they think or working with you is your competitive advantage. Your business venture does not necessarily need to be an unique innovation. It can be a traditional business but it is imperative to highlight the competitive advantage that you are offering to the market.

It can be a gap in supply and demand, or it can be a product or service with better performance and price or simply your offerings are more convenient. If you have a product or service that can genuinely compete in the market, your chances of getting a yes increases.

The clarity of the business model and the revenue model is the key to a business. This is one of the most important aspects of a business plan. If you do not have a clear business model in mind, let’s face it your planning needs some more homework. Present the business model that you are currently using and prove that it will help your company become more profitable.

6. Market size the company commands

angel investors typically invest in solutions that address major problems for significantly large target markets . On the other hand, venture capitalists look at market characteristics such as significant growth and limited competition when investing.

The larger and more stable customer base that your brand has, the stronger competitive advantage you will have when pitching to investors. A larger and more stable customer base will serve as proof that your company has a great impact to its target market.

Investors look for companies that can grow quickly and manage this high growth scale. Investors must see that the company can generate significant profits beyond the initial product idea with adequate financial projections and a plan to include multiple sources of revenue.

7. Company Scalability

Everybody starts small, however, you are not expected to remain small for any reason. The scalability factor excites investors. It justifies the risk reward mechanism; a typical investor would be interested in this aspect.

Other Less Important Things Investors Look at in a Business Plan

You must have extensive research done on your business plan to substantiate your business case. A business plan without proper research has no rationale. Adequate market research and competitor analysis must be a part of your business plan. Doing this would make the investors know that you understand what you are going on about.

• Product and Services offered

Your business plan must include the exact product or service you plan to offer along with the target market you are aiming at. Everything for everybody is not a very good idea and would not get you a second glance from investors.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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What does an investor look for in a business plan?

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Investing in a business is risky. Investors essentially put their trust in your business to deliver on their promises and take care of their money. Because of the risk, investors look for reassurance that they’re making the right decision – something to convince them that they’ll see a return on their investment. 

That reassurance comes in the form of a solid business plan . If you want to give yourself the best possible chance of finding investors for your business, you need to know what to include.

In this guide, we outline key things that investors look for in a business plan:

• Evidence 

Most investors are swarmed with business plans from budding entrepreneurs, so you need something to set you apart from the rest. 

A unique idea is great, but it’s tough to create a truly original one. Chances are, if you’ve had an idea, somebody else has thought of it already, but that doesn’t mean you can’t approach it in a unique or interesting way. 

Facebook wasn’t the first social media platform, Nandos wasn’t the first chicken restaurant, and Apple wasn’t the first computer company – it was their vision for the businesses that set them apart. 

Outlining a unique vision in your business plan will prove to investors that you’ve put some real thought into your actual strategy. Moreover, your vision is a chance to showcase your creativity as a business owner – a highly sought after skill in business. 

A creative business owner will adapt to problems and continue to innovate throughout their business’ life. 

Here are some common examples of businesses that developed a unique vision to compete in their respective markets:

• Apple –  To make the best products on earth, and to leave the world better than we found it
• Dyson –  To develop core technologies (such as motors, batteries, robotics, etc.) which enable it to develop better performing products. 
• IKEA – To create better everyday lives for as many people as possible.

A good idea isn’t enough on its own. You also need to prove that your business is a viable concept in the real world. Your business plan should include thorough market research about target audiences, opportunities for expansion, expenses, and revenue projections.

As well as research for your business, it will also help if you do some research about the investors you’re contacting. If you can give specific reasons why you’re approaching an individual investor, it’s a surefire way to get their attention. 

Do background research about the investor’s history – maybe even include something they’ve said before in a speech or statement. Little details like this will show you’re putting real thought into your business plan, rather than just throwing everything at the wall and seeing what sticks. 

It’s incredibly easy to start a business nowadays, so it can be difficult for investors to differentiate between serious business people and half-hearted entrepreneurs. 

If you want to prove you’re serious about your business, your business plan needs to show that you’re committed to the future. 

For example:

• Have you invested your own money into the business?
• Have you reworked your prototype after product testing?
• Have you reduced your working hours to spend more time on the business?

Ultimately, investors are putting their trust in people – the best idea in the world won’t work if the person in charge isn’t dedicated to the cause. 

Again, investing in a new business is a considerable risk, so investors want a little more than your best guesses and estimations. Providing specific figures shows your dedication and attention to detail while giving investors the respect they deserve. 

Your business plan should include exact figures based on detailed research, showing:

• What the market is worth.
• How much you’ll spend on start-up costs . 
• How much you’ll spend on running costs. 
• How your costs will change as your business scales. 
• Profit and loss projections for the first two years of business. 
• When they can expect to make their money back. 
• Your plan for the next stages of the business. 

While creativity and vision are important, investors have little interest in starry-eyed dreamers. Instead, they need to know that your ideas are rooted in realistic expectations. 

Don’t try to pull the wool over in their eyes with a flashy pitch that promises them the world – these are intelligent people who can smell nonsense from a mile away. 

Slow and steady business growth isn’t all that exciting, but it’s a realistic plan that shows you’re grounded in real-world expectations. 

Similarly, if you can foresee any difficulties in the future, don’t try to hide them. Instead, address those problems and explain how you plan to navigate them. 

It’s easy to make a business look good on paper, but investors will need a little more convincing before spending their hard-earned money. Your business needs to show, with actual evidence, that your business plan is viable. 

With enough market research, hard work, and product testing, you should be able to provide evidence of the following things:

• You’ve managed to progress the business on your own.
• There’s interest from consumers. 
• There’s enough demand to sustain long-term growth. 
• The financial projections you’ve provided are reasonable. 

When preparing a business plan, you need to provide accurate financial data and future projections. With the Countingup business account and app, you’ll have access to all the financial information you need, as well as a range of valuable features, such as:

• Profit and loss statements – Countingup uses real-time cash flow insights to generate accurate profit and loss statements.  
• Automatic expense categorisation – Countingup sorts your expenses into HMRC approved categories and shows you tax estimates throughout the year. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Start your three-month free trial today. 

Find out more here .

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Tips on presenting your business plan to investors

Find out what you need to know before you walk into an investor pitch. Presented by Chase for Business .

You put days, months — maybe even years — into crafting your business plan. You double- and triple-checked all the numbers. You had it professionally designed. And now the day has come. All that hard work has paid off and you have a chance to present your plan to a potential investor or group of investors. And while who you know is often a big advantage in business, in this case, what you know is even more important.

Know your business plan

Once you’ve made it to the step of presenting your winning business plan  to potential investors, chances are they’ve already read it, or at least part of it, and want to hear more. Be sure you know your plan inside and out. They may ask you to give a 30-second elevator speech, which is a high-level summary of your business, your customers and what sets you apart. Or they may want you to recite the entire executive summary from memory. The point is, you have to be ready for anything. Prepare to reiterate, elaborate or consolidate what’s in your plan, and anticipate any questions investors may have.

Know your audience

Many career investors will speak about their experiences, their backgrounds, what they look for in business partners, what they like to hear during a pitch (and what they don’t), industries they’re interested in and more. That’s why it could be valuable to do some research upfront. Look for any interviews they may have given, articles or blogs they’ve authored and what’s on their social profiles. If you know anyone in their network, talk to them. The better you know the audience you’ll be presenting to, the more you can cater the presentation to appeal to them. For instance, if you know that a potential investor is a staunch environmentalist who believes in saving trees, you may not want to bring a dozen copies of a 30-page business plan to the meeting.

Know your customers

Investors want to know the people they may be getting involved with, and that includes your customers. Thoroughly research your target audience. Instead of presenting a bulleted list about your customers, you might engage investors by telling a story. Walk them through a typical day in the life of a customer. Where do they live? What do they like to do? What are their needs? And how does your product or service help fulfill those needs? If investors become vested in your customers, they may be more likely to invest in your business.

Know your data

When it comes to letting go of their hard-earned money, most investors just want you to show them the numbers. It wouldn’t be unusual for a potential investor to ask for market statistics, revenue forecasts or customer acquisition costs during a pitch. Be sure you have realistic data and can back it up. After all, no matter how much investors like you as a person or believe in your product, their main goal is to make money. Their wheels are always turning as they try to figure how much of a return they can get on their investment and how long it will take.

Know your environment

You were so excited to get the meeting invite with a potential investor that you glossed over the details. But taking a closer look can make all the difference between being well prepared and scrambling at the last minute.

For an in-person meeting, the invite most likely includes the address, floor number, conference room name or specific location. If you’re close enough and have the time before the meeting, you may want to consider visiting the location. And if you’re able to get into the conference room, even better. If it’s not possible to visit, think about calling the meeting coordinator to ask any specific questions about the meeting room. Either way, here are some things you may want to confirm before the big day:

• What is the size/layout of the room?
• Is there one big conference table?
• Is there a large TV or monitor?
• Will everyone be sitting?
• Will you need a microphone?
• Does the room have an internet connection? Is it password protected?
• Are there available outlets?
• Will you need to bring an extension cord or an HDMI cable?

If the meeting is virtual, you’ll still want to prepare but in a different kind of way. With this type of meeting, you may have to work a little harder to keep your audience’s attention. Be ready with these tips:

• Make sure the sound, picture and material are clear, crisp and engaging.
• Set up your space ahead of time.
• Check the lighting in the room at the time of day as the meeting so that you can open or close shades, add additional lamps or make any adjustments.
• Be sure the background is uncluttered and professional.
• Try signing on to the video platform you’ll be using to avoid any last-minute login issues.
• Check that your speakers and computer microphone are working properly.
• Do a practice run with a friend or family member, and record the presentation to see what it will look like from your audience’s point of view. 

Know your time

The last thing you want to do is prepare an amazing 30-minute presentation, only to find out you only have 10 minutes to present. Even though the meeting invite may indicate a one-hour meeting, things change and some meeting booking programs don’t allow customizations. It wouldn’t hurt to confirm how much time you have to present so there are no surprises.

The bottom line

In the same way it helps to develop a business plan checklist when crafting a business plan, it’s also important to put the same time and effort into creating a strategy for presenting that plan to potential investors. Following these tips can be a great place to start. As with anything in business and in life, knowledge is key. The more you know, the more prepared and comfortable you’ll be come pitch day.

For more ideas on how to get funding to grow your business, speak with a Chase business banker .

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What do Investors Look for in a Partner? A 10-Point Checklist

Before approaching investors, it's important to find out what investors look for. Here's how to attract the right investor to your business.

Let’s face it, starting a business can be expensive. Few entrepreneurs have the cash on hand to get the ball rolling without some outside help. If you’re starting a small business or looking to grow your business, you might seek financing through a traditional loan, a microloan, or cash from your friends and family. You can also seek funding from investors, which is why it’s important to understand what investors look for in a potential business partnership.

Investors vs. lenders: What’s the difference?

Remember that investors are fundamentally different from lenders, and you’ll need to consider that when you decide what kind of funding you want. While lenders give you money under the assumption that you’ll repay it with interest, investors give you money in exchange for partial ownership of your business.

As such, their investments may come with restrictions. Some may require their approval for transactions over a certain limit, for example, or ask you to set up an independent Board of Directors. And investors have certain rights, too, which you should discuss with your lawyer before jumping in.

Why should investors invest in your business? A 10-point checklist to prove your readiness

Investors can be a great thing for your business. First, an investor won’t demand repayment every month because their involvement is not a loan. An investor can also be a reliable source of business advice and may have a strong business network that you can draw on. Still, you should understand that investment isn’t free money — your investors will have certain expectations.

If you do decide to seek funding from investors, your next step is to figure out how to draw them in. What is it that makes an investor decide to put money into one business over another? Here’s what you’ll need to convince them to choose yours.

1. Past performance data

More than anything, early-stage business investors want to see a return on their investment (ROI). If you can demonstrate that your business will make them money, then you’re 90% of the way there.

If your company has been up and running for a while, then you need to show excellent financial performance so far. (If your company has yet to start up, then you’ll need to rely less on exact numbers and more on projections in your business plan.) Here are some specific metrics investors will want to see:

• Gross margin : Sometimes called “gross profit margin,” gross margin is calculated by taking your total business sales revenue and subtracting the cost of goods sold. This number lets investors know the amount of profit a business makes before sales and administrative costs. That provides a good indication of a firm’s financial health.
• Revenue growth : This is sometimes called “the top line number” and shows trends in business income — that is, how your business is doing today compared to the same time last month or last year, for instance. Revenue growth is generally calculated as a percentage, and can be calculated for any given period of a business’s history. The formula is: Revenue growth = (Current period revenue – Previous period revenue) / Previous period revenue
• Monthly Recurring Revenue (MRR) : A company’s monthly recurring revenue is how much the business earns every month. By looking at this number over many months, investors are able to determine whether or not your revenue is consistent. Sometimes spikes in sales, and therefore income, are caused by ad-hoc events such as marketing campaigns or product launches. As much as possible, you want to show investors that your cash flow is steady month to month.
• Net income : Net income is also referred to as the “bottom line” or “burn rate.” Basically, this is the amount that’s left in the business after all expenses, including payroll, interest, and taxes, are subtracted from your total annual revenue. While a healthy business should, in theory, have positive net income, this isn’t always true for early-stage businesses that are still growing.
• Churn rate : Sometimes known as the attrition rate, churn is the rate at which customers drop off a company’s books over a period of time. This term is particularly relevant for subscription businesses. The higher the churn rate, the more customers you’re losing, which can reflect negatively on your product quality, your marketing practices, and your retention strategies . For that reason, investors generally look for low churn rates.
• Customer acquisition : How much does it cost you to acquire a customer? That’s your customer acquisition number. It’s cheaper to retain existing customers than it is to attract new ones , which is another reason investors value low churn rates. It can sometimes take a lot of investment to bring new customers through the door. While spending money is necessary to build a business, investors will still look at these numbers to determine whether your revenue growth can handle the ongoing expense.
• Revenue per employee : This metric is useful for measuring how efficient a business is when it comes to utilizing its employees. A high revenue-per-employee metric shows investors that your team is working efficiently . The reverse, however, can be an indication of poor management, overstaffing, and other inefficiencies.
• Liquidity : This is the amount of available cash a company has on hand, i.e., the immediate spending power of the business. This number allows investors to see whether or not the company can cover its expenses over the coming year. Good liquidity can demonstrate that your business has reserves for unforeseen circumstances and that it’s not overextended. Once again, it’s not uncommon for startups to have insufficient liquidity, but combined with other metrics, liquidity can be a valuable number for gauging the financial health of the business.

2. A rock-solid business plan

A solid business plan demonstrates to investors that you’re serious about your business and that you’ve given thought to your plans to make money. While your business plan alone won’t be enough to convince investors to back you, no investor will offer you funding without one. If past performance data shows that you’ve historically succeeded, a business and financial plan will show that you will continue succeeding in the future.

Among other things, your business plan should include:

• Your intended market, with data to show why that market is your target
• Data-based, hard-number financial projections
• Sales channels, with data to show why those channels will be effective
• Marketing plans and goals, with data to show why those plans will be effective
• Analysis of the competition for your product or service
• Projected timeline for when you’ll start making money
• Potential obstacles and your plans for dealing with them

3. A unique idea

Both investors and the general public get excited about the words “new and innovative.” The bottom line is that if the market is saturated with hundreds of identical products, then your company isn’t likely to be a huge hit.

Convey to investors what it is about your product or service that makes it stand out. Is there market potential for your unique product? Does it solve a unique problem? Is it a brand-new innovation or invention?

You don’t have to have come up with a brand new invention, but you do need to show why your product or service is different from or better than what your competitors offer. In business terms, this is your “competitive advantage,” also known as your unique selling proposition (USP). It’s what will make you successful over your competitors. You may also show that your business is going to fulfill an unmet need — like a bakery in an area that doesn’t already have one.

4. A market for your product or service

Your job is to convince investors that not only is there a big enough market for your product, but that your place in that market is a sure thing. You also need to make sure your requested investment capital makes sense. If you’re asking for $100,000 in investment for a 10% share in the business, for instance, you need to show that there’s sufficient market size for you to become a million-dollar company.

To do this, first lay out data proving that there’s a large market opportunity and customer base. Then, explain in detail how you have an unprecedented advantage, how your business model makes you unique, and what problem you’re solving that your competitors aren’t. If you’re an early-stage founder seeking venture capital and lack past performance metrics, it’s even more crucial to get this right.

5. A strong narrative

Investors hear a lot of pitches packed with hard data. So, given two companies with similar projected returns, what makes an investor choose one over the other? Your story. Investors are people, not robots, and they can be swayed by a great narrative about why this business matters to you, where the idea came from, and where you’re planning to take it. What need is your business going to meet? How will it change the world? What makes it special? Opening you pitch with your story is a great way to set the tone and draw your potential investors in.

6. Background and experience

Your business idea is only a small piece of what will push a company to succeed. The other piece, of course, is you. Investors know that a startup’s founding team is crucial to the success or failure of the business. They don’t want to lose money because the founders or management team lacked experience in the marketplace or weren’t the right fit for a partnership. This is why — in addition to your idea and your financial projections — investors want to know about you before they make an investment decision.

What experience do you have with this business and industry, or with business in general? Have you founded a company before? What is the nature of the relationship between the co-founders? Is this a team that knows their market, their brand, and their business — or are they still trying to figure it all out? You’ll need to build a compelling case for you and your team as part of your pitch.

7. A passion for solving customer problems

The difference between a numbers-only business robot and someone with a passion is that the passionate entrepreneur won’t give up — even when everything seems to be going wrong. Where others call it quits, a passionate team keeps fighting, launching new products, trying new marketing strategies , and coming up with new ideas. That’s the kind of commitment and determination investors are looking for.

All things being equal, a passionate entrepreneur is more likely to stick it out through the inevitable difficulties that come with starting a business and eventually push it to success. For that reason, investors want to know that your business isn’t just your job — it’s something you feel you were born to do.

8. Business readiness

Many people have great business ideas, but not many people have the drive and wherewithal to shape those ideas into a working, financially viable business. Show your investors that not only can you talk the talk, but that you’re ready to walk the walk.

Is your company ready to take off and hit the ground running? If you can show that you’ve got all the key components in place, you’ll pique the right investors’ interest because they know that they’ll get a return on investment sooner rather than later.

To show business readiness, you have to do your homework, including your market research and your business plan. You also need to show that you have a clear plan in place (for example, that you’ve already staked out a new location and the right suppliers).

9. A good reason for the investment

Your investors aren’t just going to hand you the cash you want and walk away. Again, they’re in this for the return. So they’re going to want to know exactly why you need the cash and exactly what you plan to do with it. They’ll also want to know when they can expect a return; that should be a part of your business plan.

Investors will also be looking for an exit strategy, and you need to think about that in advance. When they want to sell, will you buy them out? Can they sell to another party? If they don’t know that they can get their money out if things start to go south, they’re not going to want to put it in in the first place.

10. A clear investment structure

Buying ownership of a company has legal ramifications, and investors will want to know that you’ve already considered them. You’ll need to have a business structure in place that allows other parties to buy in. You’ll also need to have a clear plan for how the investment will work. If the investors are partners or shareholders, will they have the right to vote on business decisions?

Part of this involves having a clear valuation for your business — a way to back up your request for a certain amount of money in exchange for a certain amount of ownership. This brings us back to that previous example: If you want $100,000 for a 10% share, you need to be able to show that your business is actually worth $1 million.

This involves putting together a stockholder’s agreement (and maybe also a corporate constitution ) that clearly sets out the rights of all owners. Your stockholder’s agreement should include:

• owners’ rights and obligations
• what happens if an owner wants to sell
• what happens if there’s a change in leadership
• what happens if the business closes, among other issues

Will investors get dividends or just the increase in the value of their shares over time? If you’re planning on distributing dividends, you need to have a plan for how much, how often, and what will happen if you can’t make a distribution.

Note that this particular area is likely to involve some negotiation . Your investors may want a larger share for a lower price and they may request adjustments or additions to the stockholder’s agreement. The trick is to come into the negotiation prepared, knowing that these issues are important and that you’ve already thought of them. This is one of those times when you should really consult your lawyer — you don’t want to grow into a successful business only to find that you’ve lost control to your investors.

The bottom line: Imagine yourself in the investor’s shoes

Investors are in it to make money. Your task is to show them that you’ll do just that — and that you’ll do it better than their other investment opportunities. To make a successful pitch, the most important thing you can do is to be prepared. What would you want to know if you were the investor?

Your business plan should be as watertight as you can make it. Your story should be compelling and well thought-out. You should know exactly what you’re going to do with the money and exactly how the investment partnership is going to be structured. Show your potential investors that you’re thinking about the future — because that’s their number-one concern.

Explore funding opportunities with Accion Opportunity Fund

If you’ve exhausted all your investment options but still need funding for your business growth, consider a small business loan instead of, or in addition to, investors. Accion Opportunity Fund works with the dual goals of supporting small businesses and advancing justice, ensuring that no business owner goes without the funding they need. Our loan programs are flexible and customized to meet each individual business owner’s needs. To find the right program for you, visit our small business loans page today.

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How to attract investors.

Table of Contents

Attracting Investors To Your Startup

Introduction.

An investor is anyone who invests money with the expectation of profit. He could be an individual, a company shareholder, a foreign investor, or another company, all of whom have varying risk tolerances, capital, and preferences. Startups are more expensive to establish and operate. That is, when they look for investors to help them finance their operations. Investors help startups raise capital. They also provide valuable contacts, helpful advice, and motivation to work harder to grow your business. Entrepreneurs must demonstrate their ability to outperform other investment opportunities. So, using a variety of strategies can help you gain the support of investors. Here are some ideas for attracting investors to your business.

1. Develop a Strong Business Plan

The first and most crucial step in attracting investors is to create a business plan. A business plan is a written description of your company’s future, a document that explains what your company is all about, the goals you need to achieve, who your potential customers are, what you intend to do, and how you intend to do it.

An executive summary, company overview, management team, market, and competitive analysis, sales and marketing plan, and financial analysis are all business plan components. Potential investors can see where and how they’ll fit into your business with a fully defined business plan , making future partnerships easier to establish. In short, it should be simple to understand and demonstrate a clear strategy for making your business idea profitable.

2. Avoid Herd Mentality

To attract investors to your business, you must ensure that your product offers something new and unique while addressing relevant issues. If you want to invest in investors, doing the same thing as others is not the best approach. Many entrepreneurs take something that already exists and tweak it slightly to stay in a different line.So it is critical to consider ideas outside the box.

3. Ask For Advice

Instead of calling and emailing investors and begging them to invest in your company, try something different, such as seeking their advice. You may be able to build a good relationship with an investor by reaching out to them for advice. It may lead to them being more willing to invest in what you’re doing and allowing them to point out flaws in your business and ways to overcome them.

4. Social Media

Social media can be an invaluable resource for startups looking to attract investors. Investors typically have well-rounded LinkedIn, Facebook, and Twitter social media profiles. Connect with them and inform them that you are a dedicated follower. Investigate their responses and followers and whether they have previously invested in a similar industry. LinkedIn can be used to send cold messages and seek quality introductions, Facebook can be used to maintain relationships with investors , and Twitter can be used to have thoughtful conversations and engage with relevant information shared by investors. Spend enough time getting to know them personally and professionally.

5. Conduct Market Research

Find the right investor who understands your business segments by conducting market research . Start researching them in detail. Collect facts, ideas, and information and gain as much knowledge as possible about pitching and finding an investor. The motive is to show that your idea solves a real problem and market for the product/service. Further, it would be best if you also researched your investors to find information about their past investments and genuine commitments.

6. Scalability

Investors seek opportunities that can rapidly expand and deliver significant returns on their investment. A scalable business model allows a company to grow its revenue without proportional increases in costs, demonstrating efficiency and the ability to capture a larger market share over time. Thus, your startup should be built with scalability in mind.

7. Obtain Customer References

Apart from meetings and discussions, investors like to refer to customer satisfaction regarding your products/services. Investors look to understand whether they are happy customers, what value the company brings to its customers, your procurement process, and what differentiates them from competitors. So, arrange for customers to offer interviews to potential investors when the time comes.

8. Be Realistic With Your Pitch:

Getting attention from investors before you start discussing your business proposal is essential. Pitch after pitch may fail, but don’t be over-aggressive or defensive. Be patient and professional. The investor has to understand accurately when their contribution can begin bringing the return and how you will get them a return on their investment. Most importantly, rehearse your pitch, anticipate investor questions, and have answers ready. Please explain what is unique about your product/services, your targeted audience, and how you intend to acquire customers and show them your exit strategy.

9. Explain Your Financial Statements

Financial statements tell a lot about how you operate the business. Simultaneously, they should be set out professionally in a spreadsheet such as Excel. Firstly show them the revenue model, expected cost, and profit prediction based on market research that you will use for your business to assure them that the money they are investing is worth the investment. Prepare a profit and loss account, balance sheet, and cash flow statement for the first five years. Also, it proves that your business model and financial information are realistic and will become profitable for your startup.

10. Use Brilliant Sales Tactics

After the pitch, it’s time to utilize your experience and knowledge to sell this idea to investors.  Consider storytelling, exciting sales pitches, and soft-selling through networking as some ways to attract investors through sales tactics. Indeed startups must convince investors that people are willing to buy their products or services and should have the potential to shake up the marketplace. You must show them what makes your product or service different from others, which means you must highlight your USP (Unique Selling Point).

11. Have Co-founders

Starting a company alone is overly complicated, so it is essential to have co-founders rely on it, which can be a vast upliftment. Find the right co-founder who introduces you to valuable knowledge, advice, and connections and makes the startup process easier beyond just attracting investors. Nevertheless, having the wrong co-founders can ultimately lead to the failure of your business. So, choose them wisely

12. Solid Management Team

Show that you have an innovative and strategic management team to lead the business. Investors seek a solid team with in-depth talent, skills, experience, and excellent business ideas . When the team members have had achievements in the past, it indicates they can succeed in the future. So, build a team that is efficient and passionate about working hard and contributes to startup success.

13. The Way You Present is Extra Essential

Investors might meet hundreds of people in a month, so you need to be different in those terms to make a difference for them to consider investing in your business. Be exceptionally clear, compact, and audible about the words you are expressing in the event; otherwise, it is doubtful you can break the arrangement. Using the latest ways to present your idea will leave an admirable impression on your investors.

14. Strengthen Your Brand’s Online Presence

Strengthening your startup’s online presence is crucial for attracting investors because they inevitably research your business before making any investment commitment.

Building a community of supporters prior to pitching serves as tangible proof of interest in your project, demonstrating market validation and demand. An amateurish web presence can erode faith in your abilities, while a professional and up-to-date website and social media accounts leave positive first impressions.

15. Expand Your Network

Work on expanding your network. Similarly building a diverse network allows you to access potential investors with varying interests and expertise, increasing the chances of finding the right match for your startup. Moreover, investors often prefer recommendations and referrals from trusted sources, making a strong network an invaluable asset in gaining credibility and trust.

By cultivating relationships with potential investors, you can increase the likelihood of interested parties approaching you who are genuinely interested in your startup.

Attracting investors is an incredible struggle and a time-consuming process. It is especially true for startups because they lack a trade history. Today’s business world is rapidly developing, so if you are looking for ways to attract investors, you must be well-planned and prepared. Need help getting investors for your startups? Trust us to find the right investor for you!

Related topic: Types of Investors every Entrepreneur must know

Attract Investors and Fuel Your Startup’s Future

Transform your startup’s investor appeal with our dedicated services. From financial modeling to business plan writing, we equip you with the tools to attract investors effortlessly. Let’s pave the way to funding success – Book a meeting with our experts!

Strong leadership team, Scalability, Solid financial projections , Familiar Industry, Strong market potential.

To attract the right investors, define your ideal investor profile, research suitable networks, attend events, and customize your pitch to align with their interests. Also, engage on social media and be persistent in your efforts.

Investors primarily focus on assessing the viability and potential of a business when considering an investment opportunity. They look for a compelling value proposition that addresses a market need, a significant and growing target market, and a well-structured business model. Proof of traction, such as customer acquisition and key achievements, is essential, along with a competitive advantage that sets the business apart. Investors also evaluate the team’s capability to execute the plan and realistic financial projections. Additionally, they analyze potential risks and the clarity of the exit strategy.

Main elements any investor look for in a business pitch include a Compelling Value Proposition, Market Opportunity, Strong Business Model, Traction & Milestones, Competitive Advantage, Solid Team, Financial Projections, Risk Assessment, Exit Strategy.

Yes, certain industries or sectors tend to be more attractive to investors. Technology, healthcare, renewable energy, and fintech are examples of sectors that often garner significant investor interest. This is because these industries usually offer high growth potential, innovative solutions, and opportunities to address pressing global challenges. Investors seek sectors with scalable business models, strong market demand, and the potential for substantial returns on investment. However, attractiveness can vary based on market trends and economic conditions, so it’s essential to conduct thorough research before seeking investment in any specific industry.

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Tesla investor Ron Baron backs Musk's $56 bln pay plan

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Elon Musk is mad at one of Tesla's biggest investors for saying it's voting against his pay package

• Telsa faces investor pushback on reinstating Elon Musk's $55 billion pay package.
• The largest public pension fund in the US currently plans to vote against the pay plan.
• Musk called out the pension fund for "breaking their word."

Tesla is facing increasing pushback from investors regarding its bid to reinstate Elon Musk's $55 billion pay package.

On Wednesday, there was yet another sign that Tesla might be facing an uphill battle when the CEO of the California Public Employees' Retirement System, Marcie Frost, told CNBC the fund plans to vote against the proposal to reinstate Musk's pay plan, pending any future conversations with Tesla.

"We do not believe that the compensation is commensurate with the performance of the company," Frost said.

CalPERS is the largest public pension fund in the US and is among one of Tesla's 30 largest investors with about 9.5 million shares, according to Bloomberg . Frost told CNBC that the fund initially voted for Musk's pay package when it was taken to a shareholder vote in 2018, but CalPERS later corrected her comments in a post on X, clarifying that the fund voted against the proposal in 2018 as well.

Musk does not receive a salary from Tesla and his pay package is centered on a series of goalposts around the carmaker's financial growth. The plan, which was valued at $55 billion by Bloomberg when it was struck down by a Delaware judge in January, involves a 10-year grant of 12 tranches of stock options that are vested when Tesla hits specific targets. When the company hits each milestone, Musk gets stock equal to 1% of outstanding shares at the time of the grant. Tesla said it hit all of the 12 targets as of 2023.

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Musk quickly posted on social media to criticize CalPERS's stance on the proposal on Wednesday.

"What she's saying makes no sense, as all the contractual milestones were met. CalPERS is breaking their word," Musk wrote on X.

CalPERS is joining a growing list of investment funds that are publicly expressing their desire to vote against Tesla's compensation plan for Musk. On May 21, a group of shareholders filed a letter with the Securities and Exchange Commission calling for investors to vote against both Musk's pay package and the proposal to reelect James Murdoch and Kimbal Musk. Separately, proxy advisory firm Glass Lewis said in a report on Saturday that the pay plan was "excessive" and presented investors with "uncertain benefits and additional risk."

Meanwhile, Tesla has been pulling out all the stops to promote the proposal. On Wednesday, the company began offering investors the opportunity to tour the Texas gigafactory alongside Musk in exchange for proof they'd voted in Tesla's annual meeting. Tesla has also argued the compensation plan is "critical to the future success of Tesla" and has even paid for a handful of advertisements promoting the pay plan.

The annual meeting for investors will take place on June 13. Shareholders will be asked to vote on several proposals in addition to the proposal to reinstate Musk's pay package, which was struck down by a Delaware judge earlier this year. The company is also asking investors to vote on a proposal to move Tesla's state of incorporation from Delaware to Texas and a separate proposal to reelect Tesla board members Kimbal Musk and Murdoch.

A spokesperson for Tesla did not immediately respond to a request for comment.

Correction, May 30: This story has been updated to reflect that CalPERS has said it voted against the 2018 pay proposal for Elon Musk, not for it, as its CEO initially said during the interview with CNBC.

Are you a Tesla investor, do you work for the company, or have a tip? Reach out to the reporter via a non-work email and device at [email protected] or 248-894-6012

Watch: What happens when Elon Musk moves markets with a tweet

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