When you are applying for external finance for your business, the likelihood is you will need to provide some form of documentation that proves why you are worth investing or lending money to and your ability to make returns on any investment given. This is where a business plan comes in.

A business plan used to secure funding is more than just mapping out your journey; it’s about ‘selling’ the value of your business and its full potential, to investors. As such, understanding what an investor is expecting to read is the most critical element of writing a successful funding plan. It is often a significant part of any pitch you present to gauge interest in your company and bring investors on board.

It’s as much about what you present as to how you do it. Any written plan must flow in a way that the reader not only understands what your business does and how you will use the funding to grow, but it must also excite the reader and distinguish your plan from the rest.

With this plan taking such a vital role in your access to finance and the potential to reach your entrepreneurial goals, it is crucial to get it right. In our blog, we have outlined everything you need to include to create a business plan that wins funds every time.

1. Executive summary
2. Company information
3. Your offering
4. Operational plan
5. Financial model
6. Our tips for writing

Executive summary

The first step of the plan is the executive summary. This is your opportunity to highlight all of the critical information to grab the investor’s attention early.

Defining your business is the crucial first step. You need to give the investor a realistic sense of scale and be confident about what you are trying to achieve. Detail the progress made so far as well as any future milestones you intend to meet – both long and short-term – especially concerning the funding you are requesting.

The executive summary is the first thing anyone picking up your plan will read, and therefore it is deciding factor between whether they continue through it or put it back down into the reject pile. You must provide all of the information needed to help you through this stage successfully. Remember to be brief but focus on the strengths in your business, with goals that investors should genuinely feel excited about.

Ideally it should not be more than 2 pages either.

Company information

The next section of a business plan is focused on the company information and any trading history to date. This should include an outline of the corporate set-up, current ownership structure, including any change of ownership through the previous succession, an overview of the management team and a summary of significant successes so far.

A positive cash flow and strong sales traction are always favourable. Combined with a well-defined set of objectives, or key performance indicators – which should be measurable – you will give the investor confidence that you have a realistic understanding of your potential success and assure them you can achieve it.

Your offering

Next comes your chance to write about the product or service being offered by your enterprise. Investors are more likely to provide funding on a proposition that has a low risk of failing, so you’ll need to prove that there is a demand in the market. At this stage, an in-depth competitor analysis is not required: it’s instead an opportunity to promote your USPs. Just an overview of the competition should be included, so to highlight what the market looks like. You should also emphasise any gaps in the market that you will fill with your offering, including the pain-points your potential customers face and how you will empower them to overcome these.

You should invest some quality time in presenting your company objectives too as they underpin your financial projections. Information to highlight includes the sales model and average sales cycle, three-year sales targets, a full description of the assumptions you have made based on the sales targets, as well as any planned and budgeted marketed activity over three years.

Operational plan

The next part of your plan should be information about your operations: how will you logistically make the vision for your business a reality? Does your team have defined roles, or is it an everybody-pitch-in approach?

You’ll need to describe the current organisational hierarchy and respective responsibilities. Outline the facilities you already have or will need and any equipment to be purchased as well as details of manufacturing processes and other supply chain information. When listing your future requirements, whether that be additional equipment or personnel, ensure you include your rationale. You may also have information about staff and how you envision this to grow as you scale up.

Investors will be interested in the management team too – who they are, what is their experience and history within the business, what is the share ownership structure and future management requirements. An outline plan for succession planning is key to include here as it will give the investor an idea of the direction in which the business is heading.

Financial model

The final section is about the financial model – including a summary and description of the financial forecasts, what the funding is required explicitly for and how it will help you reach your next financial milestone.

It is essential to include a completed set of financial documents to support your business plan, including full three-year profit and loss and cash flow forecasts and a robust balance sheet. This level of detail will give potential investors an indication of your business’ success to date as well as an idea of its projected sustainability. This should be added as an appendix.

Before you start writing this model, it is essential to be fully aware of your funding needs and how it all adds up to the big picture of your enterprise. This will help you to plot out exactly what you want from any investment and incorporate it into your plan.

As part of this section, you should also look back on your finances to date and play out different scenarios which could affect your company. By doing this, you will be able to map out contingency plans and best/worst-case scenarios. As a result, the investors reading will see the resilience of your business and be more convinced of getting the required rate of return on their investment.

Remember that investors will be most interested in the proposed return on their investment and the plan to ensure they will receive this: this will be influential in their ultimate decision to invest.

Our tips for writing

When writing your funding business plan, remember the following to increase your chances of a favourable outcome:

• Be honest – use a SWOT analysis to highlight weaknesses in your business, including skills and experiences that it lacks and address them within the plan with solutions such as training, recruitment or outsourcing certain elements.
• Be realistic – wildly ambitious plans are not going to win over an investor. The finances should look realistic, even if they are just an estimation. Consider any worse case scenarios so you have an idea of what might go wrong and what would be needed to put things right. Financial forecasts should be easy to digest, so an investor can quickly see if the business will make money, with different scenarios shown.
• Be strategic – identify your business goals and work backwards from there to calculate what financing is required to achieve them and make your business profitable.
• Be persuasive – the aim of a funding business plan is to get someone to agree to give you money. This means that relevant details are essential, including what the investor will get in return.

Summary

By following the steps outlined above as the foundation for your business plan, you will be able to craft compelling evidence of the value of your enterprise in a way that captures the attention on investors and tells them everything they need to know. And doing this should help you progress onto that next step: arranging a pitch meeting and moving towards funding success.

With your plan created, you need to bear in mind who it is you want to work with and what requirements you need to have fulfilled. This will help you to get in front of only the people who will genuinely help your business.

If you need support either in creating a winning business plan or understanding who it should be directed to, we are here to help. Our team of experts have years of experience in finance, having been pitched to by businesses of every shape and size – so we know what makes a great proposal.

Furthermore, we have access to a varied network of financial contacts, enabling us to put you in reach of lenders and investors aligned to your unique needs and challenges.

Get in touch today to speak to an advisor and kickstart your funding journey.