Writing a business plan to raise funding can seem difficult, especially if you are doing it for the first time. However, it’s not as bad as you think. Below you will learn how to write a business plan step by step that will get investors and lenders excited to write you a check.
Your business plan must include the following elements:
1. Executive Summary
The goal of your executive summary is to provide a condensed version of the business plan, and more importantly, to hook the funding source.
Your executive summary should be brief, usually 1-2 pages long. These are the key components that you should include in your executive summary:
- Elevator Pitch: a brief overview of your company; what you do and why you are uniquely qualified to succeed
- Your company’s key accomplishments to-date
- Your management team
- An overview of your marketing strategy
- Funding needs
- Financial projections (Income Statement, Cash Flow Statement, Balance Sheet)
- Exit strategy (if seeking equity financing)
Investors will pay keen attention to why you are uniquely qualified to succeed, your funding needs, and your financial projections.
2. Company analysis
Use the company analysis section to give an overview of your company and its history.
You should write about the products and services your company offers and what sets you apart from your competition. You can also write about why your products or services fulfill a specific need in the marketplace.
The company analysis section can also be useful to show off your company’s track record. Make sure to include all your accomplishments, including product launches, funding rounds, partnerships secured, customer or revenue milestones achieved, etc. The best indicator of future success to funding sources is past success, so be sure to include all past successes here.
3. Industry analysis
The industry analysis section confirms that there is a market for your products and services, making your company a worthwhile investment.
A key piece of information to include here is the total available market, that is, the number of potential customers that your company could reach. Ensure that you cite credible resources when you describe the size and growth of your market. The data you present must be verifiable, and every fact and figure that you include should support your company’s prospects for success.
4. Customer analysis
Customer analysis is a critical section of your business plan. In it, you must identify your target customers and specify how your products or services satisfy their needs. Use data as much as possible to demonstrate their past and projected buying behaviors.
Your business plan should also include information about customer demographics and psychographics.
5. Competitor analysis
Competitor analysis identifies your direct and indirect competitors and demonstrates your competitive advantage. Direct competitors offer the same products or services as your company, while indirect competitors offer similar products or services.
Don’t just list out your competitors, but document their strengths and weaknesses. Also discuss the key drivers of differentiation in the marketplace.
6. Marketing Plan
The marketing plan section showcases your plan to penetrate the market, sell your products and services, and retain customers.
Detail your unique value proposition here. Also document your promotion plans for example pay-per-click advertising or print media or social media marketing.
You should also include details about your pricing and the rationale behind your pricing strategy.
Finally, you should include your action plan to retain customers through customer relationship management, value-added services, or other means.
In summary, your marketing plan should show investors and lenders that you can cost-effectively grow your business by recruiting and retaining new customers.
7. Operations Plan
The operation plan is crucial because it transforms the business plan from concept to reality. Here you will document the core processes that your company will perform on a day-to-day basis. Also document the key milestones your company hopes to achieve in the coming years.
8. Management Team
Investors are interested in your team. They don’t need you to have a certain number of employees, but they want you to have experienced people on board capable of executing the business plan. Investors and lenders generally feel that the quality of the management team is more important than the quality of the business idea.
9. Financial Plan
The financial plan section is perhaps what interests investors most. They want to know how you will make money and generate returns for them.
Ensure you detail all your revenue streams in your business plan. Also, the projected financial statements that you include in this section should be in sync with other sections of the business plan. For example, your projected sales clearly can’t be larger than the market size you specified in the industry analysis section.
Write clearly about how much funding you need and how you plan to use the funds. Also, document assumptions that were used in creating your financial projections such as sales projections and expenses for marketing, staffing, office space, technology, and other areas.
Conclusion
A business plan to raise funding should be written keeping investors in mind. Not only must you make it concise and direct, but make sure you convince them that your business will enjoy long-term success and will be able to give them the financial returns they desire.