CEO Insights: What Your Business Plan Should Include to Tell Potential Investors

17 Apr 2024

CEO Insights: What Your Business Plan Should Include to Tell Potential Investors

You've developed your company concept into a potentially profitable firm with room to grow. You're looking for your first round of finance after gaining some initial momentum in the market. How then can you make sure that your company plan is prepared for investors? Make a lean plan first.

An investor-ready company plan that is lean is the ideal kind.

Create a strategic lean business plan as your primary goal while drafting a company plan for investors. Compared to a standard plan, this kind of company plan is more adaptable and shorter. Your Lean Plan will assist in keeping the essential details about your company clear, simple, and easy to review—much like the executive summary. This eliminates the constraints of a conventional business plan style while making it ideal for presentation to investors.
Not only is it simple to review, but it's also lot simpler to edit, add to relevant sections, and use in other contexts besides presentations. Consider it a tool for extracting insightful information about your business, its prospects for growth, and the areas where you might want to adjust your business plan. Items that any potential investor will want to know and validate that you are aware of.

What should go into your investor-ready business plan?

Before you send over your executive summary and financials, make sure you’ve already completed your full Lean Plan. It will share some common topics with your executive summary, but it should go into more detail—and it should still be fairly brief. Here’s what you need to include in your Lean Plan:

  • The problem or need that you’re solving for your customers
  • Your product or service—how you’re solving the problem
  • The target market size and demographics
  • Your sales channels
  • A basic marketing plan (the results of your market research)
  • Competitor analysis and your competitive advantage
  • Real financial projections including a full cash flow forecast
  • Key milestones in your business to date and a timeline of expected milestones to come
  • Key team members, business owners, and advisers championing your success

For more on how to write your Lean Plan, check out our introduction to Lean Planning.

Key elements to focus on with your investor ready business plan 

It’s true that the angel investors or venture capitalists that you pitch to may never read your whole plan, even if it is a Lean Plan. However, anyone interested in handing you thousands or even millions of dollars will want to do due diligence before they invest in your venture. They’ll be especially interested in your strategic roadmap, your business model, and a solid financial plan. You can cover all of these elements with the following sections.

Executive summary

The executive summary you share the first time you reach out to an investor should be short—one to two pages. It doesn’t include any unnecessary details, but it should support and outline the financial forecast you present. In short, this should provide a summary of your business model, your strategy and what research led you to that specific structure.

Make sure your executive summary covers:

  • Who you are—your name, your business name, your contact information
  • What you offer and the problem your business solves
  • Your target market
  • How much startup funding you’re seeking
  • The size or scale of your business
  • Any remaining critical details that investors definitely need to know

A full financial forecast

No matter who you pitch to, investors will want to know if you’ve thought through the financial feasibility of your business. You can explain this using your financial forecasts within your full financial plan. 
Your full financial forecast should include a projected profit and loss statement, a projected cash flow statement, and a projected balance sheet.
The easiest and most accurate way to do this is to build the financials from the bottom up, starting with identifying your share of the market. First, figure out your TAM, SAM, and SOM. That is, your total addressable market (TAM), then what percent of that market you are going to go after, or your segmented addressable market (SAM), and your realistic share of the market (SOM).

Make sure you answer the following questions with your financial forecasts

  • What’s the average lifetime value of your customers?
  • How much is it going to cost you to get them (acquisition costs)?

If you’re seeking investment, you’ll have to prove that you’ve had some initial traction. So, as you build out your forecasts, use your actuals to help model what you expect to see for the next few years. Even if you don’t have robust financial results, you can still develop extensive forecasts and explain how you’ll continue to review and refine them as your business launches and grows.

How to develop your pitch presentation 

When you first reach out to an investor, plan to share solid financials and an impressive executive summary that piques their interest. They will ask you for whatever additional information they’re interested in. When your Lean Plan is finished and your executive summary and financials are ready to send, prepare your pitch deck and presentation. Here are a few things to keep in mind before you start the conversation with potential investors.

Do your homework

You’ve likely conducted plenty of research around your available market, potential competitors and the customers you intend to serve. But, before you pitch your business, you’ll also want to research who you’re pitching to. You want to be sure that you know who you’re speaking to and have a sense of who they’ve funded before and what they really want to get out of your presentation. 
The key here is that by the time an investor says “yes” to the pitch meeting, you’ve already done all your homework, have a thorough plan in place, and you’re prepared for whatever investors want to know. 

Craft a story

Your pitch will include many of the same elements as your Lean Plan, but don’t just read your executive summary to investors when you have them in the room. Use storytelling to your advantage, craft a tale around who your customers are, and how your solution serves them better than anything currently available. 
You can even focus on your company mission, culture or anything else that sets your business apart and helps reinforce the viability. If you can, make this part of your investor research to be sure you know what elements of your business they care more about.

Practice your pitch 

Keep in mind that just like your Lean Plan, your pitch should be brief. Brevity and knowing how to answer specific questions only comes from practicing what you intend to cover and how you’ll use your pitch deck as a resource. 
Practice your pitch on your family and friends so you get comfortable with the delivery. Ask them to ask you questions about things they’re not clear on so you can start to anticipate and prepare for the hardest questions investors will ask. Here’s a guide to pitching to help you get started.

Keep your business pitch lean

When you’re ready to seek funding for your startup, resist the urge to send over a 200-page business plan to a potential investor. Keep in mind that investors get piles of pitches just like yours every day. Make it as easy as possible for them to digest who you are and the opportunity your business presents. Just make sure that when you get that callback, you have a strong financial plan, and a well-thought-out Lean Plan in your back pocket, so you’re not scrambling.

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