How to write a business plan

Your start-up is ready to fly, but it needs funding. It's time to write a business plan that will get people sitting up and ready to invest. Here's a crash course.

by Alexander Garrett
Last Updated: 20 May 2015

Get the format right. There's no single ideal template for a business plan, beyond having a start, a middle and an end. But length is important. 'If you are writing a plan for yourself, then by all means make it long, detailed and comprehensive,' says Oliver Woolley of Envestors London. 'But the version you give to others must be much more concise. We believe that you can write a compelling plan in 12 pages.'

What's essential? 'The three most important parts are the executive summary, details about you and your management team and the financial forecasts,' says Woolley. 'These are the bits that the reader will look at first.'

In a nutshell ... Many investors will never read beyond the executive summary of your product/service, which should explain how it is different, why it will be disruptive and the size of the opportunity available.

Know your audience. While it may not be possible to tailor every copy individually, your business plan needs to address the interests of the recipient. 'If it's for a bank, it will be different from a plan written for a venture capitalist or an angel investor,' says Anthony Clarke, chief executive of Angel Capital Group. And don't send your plea for £50,000 to an investor who never puts in less than £500,000.

Excite your readers. Lay out your vision, as well as the nuts and bolts and explain why you believe your investors will receive handsome returns. Use eye-catching visuals. The best way to convince them that you are worth backing is to reveal your drive, passion and determination.

Where's your skin in the game? 'We will want to see what entrepreneurs - and their friends and family - have committed,' says Clarke. 'The biggest risk for investors is the owners flipping back to the day job if it doesn't work.'

Show me the money. Robust financial forecasts - including revenue, cashflow, and P&L (profit and loss) - are vital. But, just as important, tell the investor or lender exactly what their money is going to be used for. HSBC advises: 'Small-business advisers at banks and your local business-support organisation will often help you put together your forecasts free of charge.'

Demonstrate realism. There's a balance between getting carried away and lacking ambition. 'Smart entrepreneurs give you three versions of their forecasts, relating to different scenarios,' says Clarke. 'Investors can then make their own judgement.'

Give a clear timeline. Show what stage the business is at, how it will develop and how and when investors will get their exit.

Do say: 'The £500,000 equity investment I am seeking will be used to bring production online and fund a national trade advertising campaign ... '

Don't say: 'This company is already worth millions. Believe me, you will be kicking yourself if you let this opportunity pass you by.'

Find this article useful?

Get more great articles like this in your inbox every lunchtime

What's the most useful word in a leader’s vocabulary?

It's not ‘why’, says Razor CEO Jamie Hinton.

Lessons in brand strategy: Virgin Radio and The O2

For brands to move with the times, they need to know what makes them timeless,...

Why collaborations fail

Collaboration needn’t be a dirty word.

How redundancies affect culture

There are ways of preventing 'survivor syndrome' derailing your recovery.

What they don't tell you about inclusive leadership

Briefing: Frances Frei was hired to fix Uber’s ‘bro culture’. Here’s her lesson for where...

Should you downsize the office?

Many businesses are preparing for a 'hybrid' workplace.