In my experience many UK business plans are written solely as investment business plans to raise funding. I wish more business owners would make planning part of their everyday operations. But as they don’t, I thought it might be helpful to pull together some key tips for writing winning investment business plans.
There are a few potential pitfalls that a business owner and business plan writer needs to be aware of when seeking loan or investment funding. I have listed my top tips to help you and your advisors prepare for and write a winning investment business plan.
Before I go further, it is worth reiterating that your business plan should tell a story about who you are, what you do, how you go about doing it and where you want it all to end up, or at least where you are headed over the next three to five years.
If your story is for the eyes of potential investors, you need to establish credibility and you need to do this without boring them to tears, i.e. in as short a space as possible. If you are not good at writing clearly and concisely about yourself and your business, it is worth employing a business plan writer to assist you.
At the end of the day what the investor will be seeking to find out is whether your company is worth investing in, which means they need to know how much risk is involved in making the proposed investment.
Here are some tips and things to think about when writing your investment business plans
Sell yourself and your business
Remember the investor does not believe in you and your business, like you do, so you are selling yourself and your business. It goes without saying that you need to be honest, but also show yourself and your business in a good light. Be as concise as you can. You should aim to make your plan less than around 30 pages, excluding appendices (that is not 30 pages of minuscule type! 12 pts is a good typeface size).
Set the scene
Even start up businesses have history, so if you are a start-up say why you are starting this particular business and what you and your team’s experience is, that equips you to set up and run the business. A word of warning for start-ups you will need to be able to demonstrate ‘proof of concept’. If you cannot do this you are unlikely to get funding. If you are already established, talk about your track record and how you got to where you are today.
Get a good team together and say why they are good
For an investment business plan, in particular (less so for a business plans for a bank loan or overdraft), you need to demonstrate that you have assembled a good team, covering all the main skills you need in your business, including a financial advisor and a legal advisor. Describe the knowledge, skills and experience that each brings to the business and what their role is.
Make sure there are no unresolved issues in your business or your plan
Investors won’t want any unresolved issues left in the plan, so if there things that need resolving, like a patent that is due to run out, that is very important to the business, or a key person that is coming up for retirement, deal with them before seeking investment.
Include an executive summary
The investor wants to get a feel quickly for what the business is about and your earning potential, so ensure that you include an executive summary, to enable the reader to gauge the risks and potential rewards as soon as they start reading your plan.
The following headings are a guide to the main areas of content for investment business plans (if you use business planning software all these sections will be covered by the software):
Include a well thought through finance plan
The finance plan needs to look forward for at least three years and include a balance sheet forecast, a profit and loss forecast and a cash flow forecast. Good business planning software such as Business Plan Pro is invaluable in helping you get the financial sheets together. Don’t be tempted to be over optimistic in your forecasts. Put some time into your figures to make sure your forecasts are as accurate as you can reasonably make them.
Present your winning investment business plan nicely
Presentation is important, so bind your plan, include an index and write in plain English without using jargon. The people who read investment business plans will not have knowledge about every business sector, so they may not have as much knowledge about your business sector as you do. Treat them as an educated layperson in terms of what they may know about your business sector. If your plan has been around for a while, update it before giving it to a new potential investor.