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How to Create a Compelling Business Plan for Investors

How to Create a Compelling Business Plan for Investors

It is not easy to raise money for your company. To increase your chances of being funded, you will need to have a list of investors. Practice your pitch and be prepared to answer all questions regarding your business. The key to simplifying the whole process is to take the time to create a business plan. Of course, your business plan may not be required by all investors. However, the process of creating a business plan will help you to think through all aspects of your business and be ready to answer any questions during the fundraising process.

Why would investors like to see a business plan for their investment?

Investors don’t care about the business plan itself. Instead, the knowledge you have gained through the process is what’s most important. A business plan is a sign that you have done your homework and thought through the business model.

When creating a business plan, you need to think about your market, sales strategy, customer problem, and key competitors. The business plan gives you the framework to think through these issues and records your answers to prepare for any questions investors might ask about your business.

Even though investors may not ask for your business plan, the preparation you put into it will allow you to answer any questions they might have. If an investor asks for your business plan, you will be prepared to give it over. There is nothing worse than showing up at an investor meeting only to be asked for your business plan.

Investors will want to know more than your business strategy. They also need to be able to understand your financial forecasts. Investors want to know how your business will operate from a financial perspective. It is commonly called the “business model.” They also want to see where the money will be spent to grow your business. Therefore, it is essential to have a complete financial plan. It will help you make a business plan.

What are investors looking for in a business plan

Investors know that there is no perfect business plan. They’ve spent many years and sometimes decades listening to business pitches, reading business plans, and investing in companies. An entrepreneur and investor, Steve Blank, likes to say that “No business plan survives the first contact with a client.”

If this is true, why do you bother to write a business plan? Why do investors need them? What is the point of planning?

It’s not the final plan that is valuable, but the planning process that’s important. Investors want to see that you have thought through your idea and documented your assumptions. They also want to know that you are on track to validate these assumptions to remove any risk from your business.

What do investors look for in a business plan? These are not the usual sections. Instead, investors want the essential parts of your project.

Vision for the Future

Investors, especially those who invest in startups at the early stages, are interested to know your vision. What direction do you see your company heading in the future? What problems and who will they be? It may take many years to realize your vision. However, investors want to see that you are thinking beyond tomorrow.

Product/market fit and traction

Investors are looking for more than an idea. Investors want proof that your solution solves a customer problem. To build a successful company, your customers must wish for what you sell. Your business plan should describe the evidence you have that shows that your products or services will be sold to customers. You can have “traction” through early sales and customers.

Use of funds and funding

You need to know the amount you are asking for when you pitch investors. It can be done by looking at your financial forecast. You will need to raise enough money for your planned expenses, cash flow requirements, and additional funding to provide a safety net. You should also specify how you intend to use your investment. This section is commonly called “sources & uses of investment” in a business plan.

Strong management teams

The key to a successful business does not just have a good idea. Many people have great business ideas. It’s only the ones who can execute well that are most likely to succeed. Investors will pay close attention to the section in your plan that talks about your management team. They want to see proof that your idea can be turned into a profitable business. It’s okay to have gaps in your team and still need to recruit key employees. However, it is essential to communicate that you are aware of your needs.

An exit strategy

Investors seek to profit from their investments when they give money to help you start or grow your business. You could eventually sell your business to a giant corporation or go public. Investors will be interested in your ideas about an exit strategy for your company.

What documents are investors looking for?

Even though investors may not ask for a detailed plan, your business planning process must produce key documents that investors can access. Here are the documents you should have ready to pitch to investors.

Cover letter

A lot of fundraising outreach these days is done via email. You’ll need a short cover letter to attract investor interest. The cover letter should be brief but clearly describe the problem you are solving for your target audience. Sometimes, cover letters can be written in a story format. It allows readers to hook them with a real-world example of the problems customers face and how your product or service will solve them.

The purpose of the cover letter should not be to describe every aspect of your company. Instead, the purpose of the cover letter is to generate interest and get a meeting to pitch your business to an investor. Therefore, your cover letter should be concise, engaging, and direct.

Pitch deck

A pitch deck is a way to explain your business idea and give more details at an investor meeting. The pitch deck should include the problem you are solving, the solution, key market trends, and your business idea. Here’s a detailed guide to what to have in your pitch deck.

Executive summary and the Lean Plan

It is possible that you won’t get a meeting right away. However, a request for more information may be made by the recipient of your cover letter. It is when a solid executive summary or lean plan can help. Although it is still a short document, it contains more information than your cover letter. It also explains more about your company in just a few pages. Learn more about the components of an excellent executive summary and create a lean business program.

Financial forecasts

Investors will want to see your financial forecasts. A sales forecast, expense budget, and cash flow forecast are all necessary. You should also share historical results if you have them. Investors will always be interested in the inner workings of your business. Be prepared to share every detail about how your business works from a financial perspective.

What should you include in your investment plan?

A standard format is used to create a business plan for investors. You can customize your plan to suit your business needs, but it is best to follow a standard format. Your business plan is not about the document you create. It’s about the planning process that guides you through the development of your business strategy. These are the main features of investor business plans:

Executive Summary

Your executive summary, which is usually written last, gives a brief overview of your business. You might also use your executive summary to give investors more information about your business. You can find our guide to executive summaries here.


Your plan’s opportunity section covers your problem, your solution, and any data that can be used to show people will pay money for what you offer. This section should be highlighted if you have any customer validation.

Market Analysis

Define your market and the key trends in that market. Is there a growing market? Are purchasing patterns changing? What is your business’s position to capitalize on these changing buying patterns? Spend some time talking about your competitors and the problems your target market faces today. Then, discuss your solutions.

Marketing & Sales Plan

Businesses need to know how to spread the word and attract customers. A marketing plan is an essential part of your business plan. It should describe how you will reach your target market and the critical marketing initiatives you plan to take. If you have a sales process that requires time to close customers, it is essential to describe your sales plan.

Milestones / Roadmap

It would help to outline the key milestones you want to reach and the dates you will achieve them. This section should include critical dates for product development and key partnerships that you will need to establish and any other important goals that you intend on achieving.

Management & Company

It is where you will describe the core of your business. What is the structure of your company? What are the backgrounds of your team members? Do you have any key positions that you need to fill?

Financial Plan

As I said, you will need to forecast your profit and loss, cash flow, and balance sheet. Your financial plan should be realistic but optimistic. It is not an easy balance, and your forecast will be incorrect. However, it would help if you documented your assumptions as well as your plans for the business.


You can also include an appendix to provide additional information. For example, you can consist of product diagrams, details about how you deliver your service, and other research.

Next, what?

The purpose of a business plan is to prepare you for pitching your business. You’re unlikely to be asked for the actual business planning document. However, this process will prepare your best to answer any investor questions.

Disclaimer. The opinions and views expressed in this article are the authors Shalom Lamm.

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