In an investment funding pitch, your business plan plays a critical role. Investors want to see this document when undertaking their due diligence investigations, and it should provide an overview of everything they want to know about you and your business. Beyond this, it could be the difference between convincing an investor that your idea is worthy of investment or if it is left to the side with the countless other pitches they listen to daily.
We have previously created a whitepaper that dictates the many components you need to include in your business plan. Still, it is essential to tailor each part to the specific detail an investor is looking for. Doing this will boost your chances of securing their backing and obtaining the funding you need.
In this guide, we have outlined what investors want to see when reading your business plan sections and the considerations you should make to maximise your chances of success.
- Executive summary
- Company structure
- Company objectives
- Value proposition
- Market analysis
- Financial model
- Operational strategies
Executive summary
This is the introduction of your business plan, so it is the first thing an investor will read. Here, you want to give a brief overview of your company and what you are looking to achieve to provide a flavour of what the rest of the plan will contain.
When drafting the executive summary, you must be concise whilst still conveying a powerful message about your venture. By doing this, you will engage your audience from the start, ensuring that their interest is sustained to carry on reading. If this doesn’t engage the investor, they will not read any further.
Company structure
The company or corporate structure section of your business plan will detail the practicalities of how you will operate, including who will be at the helm of the company. Naturally, you need to ensure your structure makes sense in line with your value proposition and goals to show you can deliver on the promised output.
There are a few things investors will be looking for in this section. Firstly, they will be seeking evidence of a strong leadership team. This includes you, as the company founder, and any co-founders and directors you might have, as well as anyone in a prominent role elsewhere in the company. You will need to provide information about these individuals, including their role, their skills, previous successes and any experience they have that justifies their ability.
You will also want to showcase any achievements you have earned to date as a company, as this will put across the real-life value you can offer and pique investors’ interest.
Secondly, you need to show how the structure might change as your company grows over time. An investor will always prefer a business that can grow, bringing increased profit and return on investment. However, you need to be able to scale up your company in order to realise this growth, so demonstrate how this might happen over the years.
Company objectives
This is where you will discuss what you expect to achieve in the long-term of your business. It could cover short-term goals for various aspects of your business, as well as the larger, over-arching objectives that you will strive for years down the line.
When setting your objectives, it is vital to be ambitious to highlight the magnitude of the results you want to achieve and how investors will benefit accordingly. But you must equally be realistic to indicate that you can deliver on the goals you set. While it may be tempting to promise the earth, most investors will be aware that this isn’t feasible, and you’ll lose credibility as a result.
You should also present how funding will help you to achieve your objectives. This will validate your need for investment, and any external finance you secure will be used for, emphasising the end results.
Your objectives must tie into your brand vision and how you want your customers to perceive you. For example, if you are an eco-friendly brand, it will be expected that you have an objective tied to environmental impact. By connecting these, you will demonstrate an understanding of your market and the bigger picture of your business.
Value proposition
Your value proposition is focused on the products and services you offer and how these provide value to your target customers. You will detail any marketplace gaps you aim to serve and customer pain-points you will address. This should link directly to the public demand for your business and how you will leverage this for sales.
The most significant part of this section is that your value proposition must be strong. Without a good proposal behind your company, you will be unlikely to garner sales and revenue, which will provide an immediate red flag to investors. So, it is vital to emphasise your services and products matter to ensure buy-in and convince investors of your business’s worth.
Market analysis
Here, you need to illustrate how well you understand your target customers. The better you know your audience, the more likely they will convert into genuine customers with carefully selected tactics, messaging, and products/services that suit their needs. So, be sure to demonstrate this with an emphasis on how it will lead to sales and revenue generation.
Alongside this, you need to understand the market in which your business will sit. This includes any competitors you need to track, including how you will maintain an edge over them and increase your market share. By placing attention on this, you can outline the potential barriers you may face and the action taken to overcome them.
Remember that market analysis should focus on the present and future. For example, will new competitors emerge? Will a change in context render your proposition invaluable? Consider these factors and present your contingency plans to convince investors that there is longevity to your venture, enabling you to achieve broader goals and grant better profit.
Financial model
This section is comprised of financial information and projections. You will explain the expenses you need to operate your business (such as set-up costs, ongoing investment, overheads, supplies and other running costs) and the expected financial trajectory over time (such as your break-even point, sales, revenue and profitability). You will also need to factor in your external finance needs and how this will enable you to achieve your financial goals.
When examining the financial model, an investor’s primary concern is when they will receive their funding back and what rate of return they will expect to see. So, you need to make this abundantly clear as part of your projections. You need to specify what their investment will be used for.
It is equally crucial that your financial projections are accurate and honest. Use past data from your accounts if you can or utilise market data about similar businesses to form your predictions and clearly show how these have been worked out. This will enable an investor to see that you are financially-savvy, increasing trust in your ability to handle their money and substantiate the claims you are making.
Operational strategies
The operational strategies segment of your plan will cover the various departments of your business and what strategies you will use to achieve results. These strategies must align with your objectives and help you reach the ambitions you have set out for your company.
Most importantly, your operations need to make sense. Often, investors will have vast business experience, perhaps even specifically in your industry, so they will know what works. This means your strategies should match their expectations of how a company is run, and if you are doing anything drastically different, you need to make it clear why.
Your strategies should also uncover how you will generate demand (such as sales and marketing) and serve need (through customer service, logistics, and production). By maintaining this balance, you will ensure a growing but satisfied customer base – which spells growing revenue, favourable reputation, better profit and increased return on investment. So, be sure to dedicate time to the strategies in each area, such as sales and marketing, and how these feed into the bigger picture.
Get advice
Creating an effective business plan is one of the most crucial things you can do to increase your investment readiness. By refining your business plan to meet investors’ goals, you will improve the likelihood of investors engaging with your plan and providing you with sizeable funding.
With this, you can then begin the process of turning your idea into a successful venture for both you and your investors.
Due to the importance of the business plan as documentation, it is essential to get it right. Getting a third-party perspective is an excellent way of establishing your business plan’s strength and identifying where it could be built upon to optimise the impact on investors.
As part of our start-up services, we can work with you to tailor your plan and presentation to secure investor engagement. Our team of advisers have experience working with a range of businesses to obtain funding, so we know what works.
We can also put you in touch with valuable contacts to kick-start your funding journey.