When writing a business plan, you’ll want to keep your audience in mind. Even if you’re writing the plan for yourself, there’s still an audience: other investors who might be interested in your company.
If you write it like too much of an advertisement or sales pitch, however, it won’t be taken seriously by other people who read it. They need to know what’s going on with your business – how much money is being made and how fast that number is growing – as well as what your goals are as an entrepreneur (and how those goals relate to their own).
| Takeaways |
|---|
| 1. Crafting a business plan that investors will actually read is essential for securing funding and support for your venture. |
| 2. Focus on presenting a clear and concise executive summary that highlights the unique value proposition of your business idea. |
| 3. Conduct thorough market research to provide compelling data and insights into your target market, industry trends, and competitive landscape. |
| 4. Showcase a detailed financial plan with realistic projections to demonstrate the potential profitability and return on investment for investors. |
| 5. Engage investors emotionally by incorporating storytelling elements that convey the passion, vision, and impact of your business venture. |
1. Consider The Audience And Make A List Of What’s Important To Them
It’s important to consider the audience you’re writing for. You want them to be able to understand the plan, so make sure they can relate it to their needs. To do this, write down everything important to them:
What are their concerns?
What do they need to know?
Is there anything, in particular, they want from your business plan? For example, is it more about the product or company? Or does it matter more how successful your business will be?
Understanding the role of a business plan in securing funding is crucial for entrepreneurs. Learn more about how a well-crafted business plan can attract investors and funding opportunities in our comprehensive guide on Does a Business Plan Help You Get Funding?.
2. Tell A Story About Your Product
People love stories, and investors are no different. The best way to showcase why you want to build a business and how it will change the world is by telling a story about your product or service and how it solves an existing problem for someone in a meaningful way.
Make sure every person can connect with this story, whether they’re customers or potential investors, or partners. You’ll also need to make sure you include enough data points so that people feel confident in investing in your company, even if they don’t have any experience with whatever industry category you fit into (eCommerce, social media marketing).
3. Skip The Pro Forma Section (Unless Asked For One)
In most business plans, you’ll see a section called “Pro Forma.” This is where the writer forecasts future performance usually based on financial projections to show how the company will perform once it launches and begins to take off.
This section can be helpful if you have been asked specifically by investors to provide this information (it also helps if they are looking at your financials), but otherwise, it’s not required. Investors know that it is impossible to accurately predict the future,
So they don’t want you spending time creating an inaccurate forecast for them when there are other parts of your plan that are more useful and informative for evaluating your business idea and its potential for success.
A successful business plan should address essential questions that investors often have. Discover the key questions every business plan should answer in our insightful article on 12 Questions Every Business Plan Answers.
4. Include Basic Financial Information, But Don’t Overwhelm With Unnecessary Numbers
In a section entitled “Financials” or something similar, you should include a pro forma section that shows your revenue, expenses, and cash burn. The pro forma should also show how much money you need to raise to get from point A to point B. Do not show actual financials (like P&L statements).
There are two reasons for this: 1) You don’t want investors looking at your business as just another number on paper they’ll want to know about your business first and foremost, not just its numbers; 2) Investors aren’t going to be able to do much with the actual financials anyway since they don’t have any context around them.
Some investors like seeing monthly burn rates and runway lengths, while others prefer quarterly or annual forecasts instead.
It’s up to you whether or not these metrics are relevant enough in the context of your situation; but if they’re necessary given what stage of growth you’re at right now then it’s best practice and an easy way into explaining other key aspects within this section such as how much capital is required going forward over time until profitability
5. Use A Big Market Size Number, But Include Your Math
The big market size number is good for investors to know, but not so good for them to have to do the math themselves. So make sure you include your math, too. That way they can see how you came up with the number and how you think it will grow over time.
Here’s an example of how this might look in a business plan:
To date, X has sold $Y worth of products across five different countries. Yet we believe there’s a much bigger opportunity if we can expand our presence into other regions or add another product line that appeals to buyers in different areas around the world.
And we want to show investors why this is true by giving them some numbers on how much cash is going through their fingers right now (by selling more) or how much cash they’ll get by expanding into new markets (by selling more).
6. Make Sure There Are No Spelling Or Grammatical Errors
This should go without saying, but you’d be surprised at how often people misspell words or use the wrong homonyms. And if you’re using thesaurus synonyms that don’t fit your meaning? You run the risk of confusing your reader and making them question whether they can trust anything else in this document.
It’s also important to make sure that grammar is correct. This means checking for spelling, punctuation, and syntax errors as well as ensuring that sentences are properly constructed and flow together smoothly (and not awkwardly).
If you’re having trouble with something that feels vague or unclear in your writing and especially if it’s been like this since day one it’s probably best to consult a professional editor before submitting anything to investors or other professionals who will be reading it carefully (or even just casually scanning for errors).
Writing a business plan is a fundamental step in turning your vision into reality. Find out why a business plan is essential for success and learn how to create one effectively in our comprehensive guide on Why You Should Write a Business Plan and How to Do It.
7. Use Tables When You Want To Show Comparisons Or Rankings
Tables are a great way to show comparisons and rankings. For example, you could use a table to show how your business compares with other similar businesses in the same industry. Or if you’re looking for funding or loans, you could use a table to show how much money is being spent on certain things (like salaries) compared with others (such as marketing).
When it comes to tables, think “comparison” when choosing which data points are most important for investors or lenders to know, and then present that data in an easy-to-understand format. Tables can be helpful when presenting:
Comparisons of numbers over time
Rankings based on multiple criteria
Trends within data sets over periods (e.g., sales growth)
Distributions across categories (e.g., age groups)
8. Avoid Long Paragraphs, And Keep Things Simple With Bullets When Possible
Avoid long paragraphs, and keep things simple with bullets when possible
Bullets are easy to read, scan and understand. A lot of business plans have very long paragraphs that are too dense to read quickly. If you try to put everything into a single paragraph then you will lose your reader’s attention very quickly.
Instead break down what you are saying into smaller chunks that can be easily scanned by the investor’s eye and processed in their brain, otherwise known as “skimming”.
9. Use Color When It’s Necessary To Draw Attention To Something, Like An Important Chart Or Graph
You can use color to show a comparison or ranking. For example, if you want to show that your business is doing better than last year, you might use bright green to indicate the current year and dark green for the previous year. This makes it easy for investors to spot growth at a glance.
You can also use color to show a trend over time, such as when your company has been steadily increasing its sales numbers since its launch in 2014. Color helps draw attention here because readers are always on the lookout for positive trends like this one!
Finally, you can use color to break down numbers more clearly by using different shades of grey (and sometimes even black) instead of solid colors so that readers know exactly how many people are working at each job function throughout each month of the quarter being described in your business plan document.”
10. Keep It Short; Investors Are Busy
You should keep this in mind when writing your business plan: investors are busy people who have a lot of other stuff going on.
They don’t want to read a long-winded document that requires them to use more brain power than they have available at any given moment. This means that you need to make sure your business plan is short, sweet, and simple and I mean really short and simple.
When I say “short”, what I mean is five or six pages max (more on length in a minute). When I say “sweet”, what I mean is not filled with industry jargon or insider slang; if you speak like an insider, it makes no sense for anyone else outside of that world to understand what you’re talking about (unless they happen to be an expert on whatever topic).
And when I say “simple” well just write plainly for goodness sake! There’s no need for fancy words here either; just use the simplest language possible so everyone can understand what it says without needing an English degree first!
A business plan should be written in language that any investor can understand, while still going into detail about the company and its goals.
For example, if you’re discussing the market size of your industry in a business plan, it’s best to cite sources and put that information in context. For example: “The market for [INSERT PRODUCT] is expected to grow by [5% – 10% – 15%] per year over the next three years.”
Crafting a business plan doesn’t have to be overly complicated. Follow our straightforward and practical steps outlined in our article on 7 Ridiculously Simple Steps to Writing a Business Plan to create a compelling plan for your venture.
Here Are Some Tips For Making Sure That Any Investor Can Understand Your Business Plan
Use simple language. You don’t have to write like someone who just learned English as a second language but try not to use overly technical or niche terms that might confuse investors who aren’t familiar with them.
If you do use specialized terminology or acronyms, make sure they’re explained somewhere in the document so readers won’t be left wondering what they mean (and/or accidentally mispronouncing them).
Write formally. This doesn’t mean using fancy vocabulary or flowery prose just make sure every sentence is written without unnecessary filler words like “very” and “really.” Also, avoid being too casual (e.g., writing about how excited you are about all this) and instead focus on conveying facts as clearly as possible that way everyone will know exactly what’s going on!
A well-structured business plan can be the key to financial success. Learn how to build a business plan that not only impresses investors but also leads to monetary gains in our guide on How to Build a Business Plan That Puts Money in Your Bank Account.
Conclusion
We hope you now feel confident in your ability to write and share a business plan that investors will read.
If you follow the guidelines above, it’s hard not to succeed! Keep in mind that writing is always an ongoing process even the best writers make mistakes from time to time. The important thing is to keep learning new skills, practicing them regularly, and always striving for better results.
Further Reading
How to Write a Winning Business Plan: Learn valuable insights from the Harvard Business Review on crafting a successful business plan that stands out.
Write a Business Plan That Investors Will Actually Read: Discover practical tips to create a business plan that captivates investors’ attention and drives funding opportunities.
Writing a Business Plan Investors Will Love: Get expert advice on writing a business plan that resonates with investors and maximizes your chances of success.
FAQs
What are the key elements of a compelling business plan?
A compelling business plan should include an executive summary, market analysis, competitive analysis, a clear value proposition, financial projections, and a detailed marketing strategy.
How do I make my business plan stand out to potential investors?
To make your business plan stand out, focus on presenting a unique and innovative solution to a problem, provide clear and well-researched market insights, and showcase a solid understanding of your target audience.
How important is financial data in a business plan?
Financial data is crucial in a business plan as it demonstrates the viability of your business model, projected revenue, and profitability. Investors want to see a well-documented financial plan to assess the potential return on their investment.
Should I tailor my business plan for different types of investors?
Yes, customizing your business plan for different types of investors is recommended. Different investors have varied interests and risk appetites, so tailoring your plan to address their specific needs and concerns can increase your chances of securing funding.
What role does storytelling play in a business plan?
Storytelling in a business plan is essential for engaging investors emotionally and creating a compelling narrative around your business idea. A well-crafted story can help investors connect with your vision and see the potential impact of your venture.
Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.
