Many business plans written for investors reveal a naivete by the business owner. I have seen too many which expect an investor to just hand over the money for the CEO to spend as he or she sees fit and there is a consequential disconnect between the cash investment and the cash return expected by the investor. Other CEO’s do not even have a developed sales plan connecting what he or she is selling with the needs of the market, why someone might buy their product or service and no clear understanding how they might find their customers, or the processes involved in developing a sales pipeline and nurturing those prospects until they become customers.

So, what does the winning business plan look like?

➡️ There is a clear description of the product or service on offer and it is written in a manner which means that a non-technical person can easily understand what it is and why someone would buy it. Too often this description is hidden behind technical jargon which means that the investor is unclear what is the product or service.

➡️ There needs to be a clear communication of the market which the product or service is aimed at. Why it meets a market need, who the competitors are, why the product is better than the competition and how the sales process will work to obtain customers. This communication is very important since investor confidence that you can meet the sales line is crucial in obtaining investment.

➡️ There needs to be an underlying financial forecast from which you can show that you have understood all your costs and the relationships between the cash implications of the ramping up of sales, associated cost of sales and the timing issues around customer and supplier payment terms. This section will need to have worked through a series of scenarios to ascertain the most optimum but also to understand the implication of deviation from the selected sales forecast.

➡️ If the product or service requires capital investment, then the timescale for this to be undertaken and the cash flow implications for the new product or service to be available will require more investment before sales can commence. This raises the costs of the project and the timescale before the business becomes cash positive. The plan will need to provide explanations for this work and reassurance that there is confidence in the management team’s ability to deliver.

➡️ The experience and capability of the management team will be scrutinised since they will be responsible for the delivery of the plan and the investor must be confident that they believe that they can deliver the plan.

➡️ Most business plans by implication include a need to scale the business in order to create a business which can be sold a deliver the returns to the investors and the management team.

➡️ Most UK investments have strong element of being tax driven and the proposal should be EIS or VCT compliant in order to make it appealing to UK based investors. Obviously overseas investors are different and will have different requirements