A business plan is a key document for investors, as it lets them know the viability of a business and how you plan to make a profit over the long term. Here are some general tips for creating a business plan that is useful to investors.
You don’t have to follow everything to the letter: a business plan can be very useful even if you don’t follow all the points to the letter.
Visuals matter: It is important that the document is visually attractive, with graphics and images that allow a better understanding of the information.
The most important thing is feedback from real investors: when presenting the business plan to investors, it is important to take into account their comments and suggestions, as they can provide a valuable perspective.
If you are seeking funding for your company, it is important that you know how to make a business plan useful for investors. This document is key to convincing investors that your business idea is viable and profitable.
In this article we explain the structure that your useful business plan should have:
Structure of the document
The structure of the business plan is fundamental. You must ensure that your document is organized in a logical and coherent manner. First, it is important to decide whether the document is designed to be read or presented. If it is to be presented, you should include less text and more graphs and tables. In addition, it is important to create versions adapted to the type of investor you are targeting. Finally, you should always write your useful business plan in English, as it is the universal language of business.
For your business plan to be effective, it is important that you pay attention to the structure of the pages. Each page should have an actionable and crucial title, containing a verb and a takeaway. This way, the reader will be able to quickly understand the content of the page. In addition, it is important to include a subtitle that indicates the section the reader is in. Pay attention to detail, making sure that parallel messages are consistent and no typos. The usual page structure is usually a slide with a central outline and side paragraphs. It is also important to use the magic number three and write short paragraphs with random bolding. Leave oxygen in your pages and don’t try to fill them completely. The explanation should be clear and concise, not exhaustive.
The cover page of a useful business plan is one of the most important parts, as it is the first thing investors and potential collaborators will see. It is important that it is simple but eye-catching, and that it contains basic information such as the name of the company, the date and an expression such as “investors desk”. You can also include a tagline that reflects the essence of your company.
The executive summary is the most important section of the business plan, as it is what will capture the attention of investors and motivate them to read on. In this section, you should include relevant information about what your company does, what makes it unique compared to the competition, and what the size of the opportunity is. Although not essential, it is very useful to include this section to clearly and concisely present your company’s value proposition.
State the problem
In this section, it is essential to identify the problem your company solves and explain why it is a real and relevant problem for your customers or users. It is advisable to use an attractive title that catches the attention of investors and backs up your arguments with data and reliable sources.
Present the solution
Once the problem has been identified, it is important to present how your company solves that problem in an innovative and effective way. It is advisable to use a conceptual and quantitative approach to explain how your product or service uniquely addresses the problem. In addition, to make a business plan useful, we must show how your product works in a visual way, either with images, videos or graphics that help illustrate the solution you offer.
The most important thing when talking about our product is to highlight how we solve it. To achieve this, it is necessary to use a visual strategy, since a picture is worth a thousand words and is more attractive to the user.
In this sense, we must focus on our main product and its functionality, prioritizing clarity over completeness. While it is important that our solution is complete, we should focus on highlighting those features that are most relevant to our investors.
If our product is complex, it is advisable to show the customer journey so that users can understand how it works and how it can help them in their project management. This journey can be presented in a single image or in two separate slides, depending on the amount of information you want to include.
To simplify our useful business plan, we created a simple outline that allows investors to easily understand the main aspects of our value proposition. In this scheme, we highlight key numbers that the investor can relate to: average ticket, margin, recurrence, etc.
The average ticket refers to the average sales generated per customer. This number is important because it allows us to project our revenues and understand how we are generating value for our customers.
On the other hand, margin refers to the difference between the cost of production and the selling price of our product or service. This number is important because it tells us how profitable our business model is.
Finally, recurrence refers to the capacity of our business model to generate recurring revenues over time. This is important because it allows us to project our revenues and ensure that our business is sustainable over the long term.
Following the iceberg approach, we can detail our main line of business and mention the other aspects that complement our value proposition.
Defining the market can be very difficult, but it is a crucial task for our useful business plan. Generally, we can define the market as the sum of the turnover generated by the same concept or product we offer. It is important to keep in mind that the market can be very broad and varied, so we must define our focus in order to compete effectively.
We must identify the size of the potentially attackable sector (TAM), i.e., the size of the market we can reach with our resources and capacity for action. Next, we must define our focus segment (SAM), i.e., the specific market segment we will focus on to maximize our chances of success.
Finally, we must identify the percentage of the market we can capture (SOM) to define our penetration strategy. It is important to keep in mind that market size can vary significantly, so we must determine whether we are in a large or disruptive market and how this will affect our growth strategy.
In terms of go-to-market, we must define how we are going to capture our potential customers, including large customers if we have them. This involves identifying the most effective channels to reach our target audience and how we will communicate our value proposition to differentiate ourselves from the competition.
To analyze our competitors, we will use a two-axis logic: on the X-axis, we will evaluate what they offer, while on the Y-axis, we will evaluate how they offer it. In this way, we will be able to have a more complete view of the competitors and how they are positioned in the market.
For this analysis of our useful business plan, we will use a matrix in which we will evaluate which competitors have certain characteristics. We must keep in mind that no one else has everything, so we must look for the strengths and weaknesses of each of them.
It is important to identify who competes for our market, either directly or indirectly. In this way, we will be able to analyze their strengths and weaknesses, as well as identify opportunities for differentiation and competitive advantages.
Clearly communicate what our unique value proposition is, what differentiates us from others and how we can offer better value to our customers. In this way, we will be able to compete effectively and stand out in the marketplace.
We will focus on presenting the structure and experience of the team that will lead the company. First, we will focus on having only top management, that is, a team of highly skilled and experienced leaders who will work together to lead our company to success, creating an overall structure for our team.
It is important to highlight everyone’s experience in the industry and startups. In this way, we can ensure a strategic approach and effective decision-making for our useful business plan.
Although at this early stage of the project some team members may be missing, our goal is to have a strong and highly skilled team that will establish a solid foundation for future growth.
Finally, as for advisors, we will only consider those who provide value in specific areas and in small quantities. In other words, we will only consider those who bring significant value to our company. In this way, we ensure that each team member has a clear and defined role in the company and can work together to achieve our objectives
In this section, we will present a simple but complete table or graph that reflects our financial statements. It is important that the table or graph clearly shows our revenues, costs and profits for a given period, as well as the KPIs relevant to our business.
It is critical that our investors and business partners can trust the financial statements we present. Therefore, we will ensure that the table or graph accurately reflects our P&L (profit and loss statement) and KPIs relevant to our business.
If we have traction, we will also include relevant information about our sales and the growth of our customer base in our useful business plan. Through this information, we will be able to demonstrate our growth potential and attractiveness to investors.
In addition to the table or graph, we will include explanatory paragraphs detailing the main financial aspects of our company. This will allow investors and business partners to better understand our financial situation and future growth projections. In these paragraphs, we will also explain our cost reduction and revenue enhancement strategies, as well as any financial risks we identify.
Size and use of the round
We will clearly define the size of the investment round we are seeking and the use to which we will put the funds. It is important that investors have a clear understanding of our financial objectives and how the funds will be used to achieve them.
As for a valuation, we can include an estimate, but it is important to be realistic and consider the market and competition in our industry. Investors may want to negotiate the valuation, so it is important to be prepared to discuss this.
We also need to make sure that the size of the round gives us a reasonable runway to achieve our objectives. This is a crucial aspect to avoid running out of funds too soon and having to conduct another round of financing earlier than planned.
Finally, it is important to mention future rounds that we might consider, if appropriate. For example, we can mention a Series A or B round if we expect to need additional funds to expand our business in the future.
The back cover of a useful business plan should include the company’s contact information, such as name, address, e-mail address and phone number. This will allow potential investors and collaborators to communicate with the company easily.
As for the appendix, its length will depend on the format of the business plan. If the plan is submitted in person, a more detailed appendix containing additional information, such as market research, financial reports, business plans, etc., can be included. On the other hand, if the plan is sent by e-mail or in digital format, it is recommended to include a short and concise appendix with essential information.
It is important to apply these tips in order to create a business plan that is useful in the short term and credible in the long term, as this is crucial for the perception of the company and its leadership. In this regard, it is important that the business plan takes into account factors such as revenue sustainability, potential churn, and fair and realistic pricing.
In addition, it is essential that the plan is grounded in concrete figures, as this is a key factor in the reliability of the company. It is essential that the company is transparent with its financing needs and that the business plan reflects this clearly and concisely.
Another relevant aspect to consider is the metrics, which should align with typical startup benchmarks. It is important that the company has a clear strategy to achieve these metrics and be prepared to defend them in case they are challenged.
In summary, the helpful business plan must be realistic, grounded in concrete data and take into account the key factors to be considered a reliable and attractive project for investors. You may also be interested in this entry on innovative business models.