Writing a business plan that raises money from investors is both an art and a science. Here we share some tips on how to write a business plan that is effective at communicating your proposition to investors.

It's quite easy to find templates and software-driven solutions claiming to guide you down an easy road to composing the perfect business plan on your own. And if you're not a great wordsmith, it's not hard to find business plan "specialists" that will churn out a document for you in record time. Our experience informs us that either path will eventually lead you to these two conclusions: (1) writing a truly effective business plan on your own is difficult even for the most skilled writers, and (2) as cliché as it may sound, you get what you pay for.

We share tips on how to write an effective business plan.
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We're not implying that writing your own business plan can't be done—it most certainly can if you have the time, patience, and skill-set. There are pros and cons to writing your own.

Some say that one advantage to writing your own is you'll be forced to dive deeply into your concept, uncovering all the things you never knew you needed to know.

But on the opposite side, realize that presenting your business plan to investors is a bit like standing before a judge in a court of law. You'll be better off with an experienced consultant like us by your side—someone with a "bag of tricks" who can foresee things you simply can't due to lack of experience and training.

Moreover, since you'd be spending hundreds of hours composing this document on your own, ask yourself if it's time better spent refining your product/service and finding customers.

If all you need is a nudge forward to what may ultimately become a solid plan, then having a "business plan factory" pop-out a document that reflects at least some of your concept back to you isn't a complete waste of your money (mostly, but not completely). At the very least, you'll probably get some perspective on the viability of your venture. But finishing a document that is truly investor-ready will require considerable additional work on your part. Be prepared to put in hundreds of hours of research, thought and a lot of writing (and rewriting).

Again, writing a business plan that motivates investors is both an art and a science. Just as important as the presence of certain key elements (the "bones") is the creativity and expertise that goes into writing it (the "meat"). Here we outline some of the components of a solid business plan as well as share a few tips.

The "Bones" of the Plan

After decades of experience composing business plans that get funding, we at Brass Ring Consulting Group find that investors are looking for the following key sections—each complex documents in their own right:

Executive Summary

As the summary of the entire plan, the Executive Summary is always the LAST section of the Business Plan to be written but the first to be presented in the document.

It is often quite a challenge to condense a 30 to 40 page document into a few pages while retaining the same informative qualities. The Executive Summary must "hook" the reader immediately, so another challenge is to convey a high level of excitement about your venture without sounding unrealistic.

Page one is the quintessential "elevator pitch": ideally, start with identifying the problem your business solves, then introduce your solution. You have very little time to truly capture the attention and interest of an investor, and it is the job of the Executive Summary to do just that.

Summarize the main sections of the full Business Plan with the following format, aiming for 5 pages or less in an easy-to-read format (don't cram!):

  • Elevator Pitch
  • About the Company
  • About the Team
  • Marketing
  • Financial Projections (summarized Cash Flow, P&L, Balance Sheet), Offering & Proposed Use of Funds
  • Exit Strategy & Valuation Considerations

The Company and the Product/Service

Give an overview of your business and its history, if any. Include a brief overview of the industry. Delve into the product/service your business offers, discussing what distinguishes you from your competition and why your product/service fills a particular need in the marketplace.

Successful concepts show a large market opportunity to solve a real problem; even better is a concept that may be difficult for would-be competitors to recreate.

Discuss product/service mix, pricing, gross margins and manufacturing considerations (if applicable).

If available, include an overview of strategic partnerships and any existing social validation of the concept—both of which are incredibly valuable to have.

Organization Plan

Even before you get into how you're going to sell your product/services and all the money you're going to make, an investor wants to know about the team and the organization surrounding it.

In the end, putting aside all your financial projections, investors are investing in you and your team. You don't need a full team, but you do need experienced key people on board.

In some cases, this section may best be presented immediately after the Executive Summary.

In this section, discuss such things as the organization structure; ownership of stock or LLC member interests, as well as contributions by the founders to-date; the Management Team and key employee positions (including bios of each); salaries and benefits; composition of the Board of Directors and Advisory Board; vendors, suppliers, distributors; and intellectual property (trademarks, patents, etc.).

Marketing Plan

The Marketing Plan is usually one of the more complex section of the Business Plan.

Discuss such things as: industry profile; target market demographic and psychographic profile; market strategy (your "unique selling proposition" and marketing messages); advertising and promotion, including promotion budgets; a SWOT analysis (strengths, weaknesses, opportunities and threats); and how you compare to the competition. (Look for more advice to come from our blog.)

Financial Plan

The almighty numbers!

Obviously investors want to know how you (and they) will make money; banks want to know how you're going to pay back their loan. This means looking into the future, and the future is based on assumptions. Are those assumptions based in reality? Investors and banks consider this very carefully and see through made-up figures.

In the Financial Plan, lay-out professional, realistic financial projections—Cash Flow, Profit & Loss, and Balance Sheet—for three (minimum) to five (maximum) years into the future.

You might discuss the valuation of the company based on your historical earnings (if any) or your future assumptions, the projected returns to investors (including a calculation of Internal Rate of Return), production costs and profit margins, plant/equipment costs, breakeven and sensitivity analysis (how does a change in price or production costs affect your earnings?), exit strategy, and the proposed use of funds.

Some suggest you shouldn't propose a valuation for your investment offering. We disagree.

Those who argue against proposing a valuation expresss the concern is that you might either undervalue yourself or price yourself out of an investor's consideration.

On the other hand, we have always proposed a valuation in business plans. Why? First, you need a high level of confidence in your plan and the assumptions backing it up. Think of a proposed valuation as a starting point for negotiation.

If you're selling a home—even one with no historical sales values or easily comparable sales—you're going to assign a price. Why wouldn't you do the same with your business venture assuming you're confident it's a fair proposition?

If you don't propose a valuation, then understand that just by having financial projections you will indirectly suggest a valuation to a sophisticated investor.

So when there is total confidence in the quality of the plan, we lean towards proposing a valuation since we find most investors want to see and get excited about a nice ROI without having to do the math—until, of course, they really start their due diligence on your plan, at which point you had better be ready to back up your assumptions!

Another important component of the Financial Plan is an honest assessment of the risks your business might face as you execute your plans, and the possible impact to your financial projections.

These risks might include such things as sudden unavailability of key resources, inability to secure sufficient capital for expansion, or difficulty attracting and retaining executive talent.

This risk assessment might be thought of as an extension of the sensitivity analysis (which you need as part of the Financial Plan). While you may not have all the answers to every one of the risks you list, try to provide a reasonable response to each that minimizes the impact to your business.

Growth Plan

The Growth Plan is your chance to extend the concept beyond the confines of the plan itself. Include brief descriptions of future new or ancillary products. Talk about your exit strategy.


The Appendix contains all the gritty details upon which your year-to-year financial projections are based: assumptions, detailed financial projections for multiple years, broken down monthly (income statements, cash flow, balance sheet); payroll; production schedules; sales projections; equipment costs and depreciation schedule; and an analysis of how your financial ratios (projected) compare with the industry as a whole. Also included in the Appendix are any contracts (including employment contracts between key employees and the company); resumes; market studies (if any); licenses and permits; leases, etc. This may be presented as a separate document from the rest of the Business Plan, or simply included with the main document.

The "Meat" of the Plan

Making sure all the right information is included in your plan is just half of the equation. How you write the business plan is equally important if you want external funding. Here are a few things to consider, though this represents just a subset of qualities we consider when writing a business plan for clients:

Be concise. Investors have little patience for "fluff." Keep your message concise and direct.

Detach and test. Business owners (and entrepreneurial owners-to-be) are naturally attached to their business. However, those who are successful learn to detach—to step back and view their business from the perspective of an outsider. In the context of writing a winning Business Plan, try to put yourself in the investor's shoes and ask yourself some tough questions every step of the way. Test EVERY assumption; if you don't have solid backup, either find it or find a better way.

Healthy competition. "Nobody's doing this... I have no competitors." It's unlikely nobody's doing what you're doing, at least in some form. Learn as much as possible about your competitors, both direct and indirect. Competition is healthy because (a) it tells you there is a market for your product/service, (b) it prompts you to discover ways to differentiate yourself to secure a place in that market, and (c) you're not blazing a trail to find a market all by yourself. Regardless, if you truly are a trailblazer (and that's perfectly fine if so), think about the money you will need to be first-to-market, and to maintain your position as the market leader. On the other hand, honestly assess whether your market is too saturated and if so, it may be best to just move on.

Plan A, B and C. When it comes to your financial/sales projections, it's often helpful to have three scenarios at least prepared, if not shown in the plan: the best case, the middle case, and the worst case. Make sure you can survive each of them (it can be just as hard to survive your best case scenario as it is to survive the worst case). Consider these variations with respect to not only sales achieved but also to funds raised. For example, your "worst case" might be where you've raised only 25% of what you're seeking, and where you only achieve 25% of your projected sales.

Skin in the game. You need to show that you have "skin in the game." Keep a close record of the money—and time—you and those closest to you have put into your venture to this point. Make that clear in your plan.

Don't give away the farm. You're probably going to need more money than you think. Set milestones for your business and think about what money you'll need to raise at each step. But don't "give away the farm" (i.e. too much of your equity) in those first couple rounds of investment, no matter how badly you need it. There are other investors out there. How much is too much? That will depend on the milestones you set.

Ok, give away just enough of the farm, but at the right time. Entrepreneurs can be unreasonably optimistic about the valuation of their new venture. It's true that savvy investors expect optimism from the entrepreneur—"Shoot for the stars and you might hit the Moon"—but they also expect a healthy dose of realism. Consider breaking the investment up to reflect your financing needs along a steady path through the milestones you've set. Accept that you may start out owning a majority share, but with round after round of funding you'll need in order to become the next Amazon.com it might not stay that way. After all, you really DO want to have 16% of a trillion dollars (like Jeff Bezos) versus 70% of nothing.

To escrow or not to escrow... It can be a good idea to set a minimum of funds to raise before you touch the money. This not only helps investors feel more comfortable but keeps you from burning through funds before you really have what you need to execute your plan. You might consider placing the funds you raise in an escrow account until you hit your minimum requirement (your "worst case" scenario per the above suggestion); if you fail to raise the minimum before a set date, investors have the option to get their money back (or let it ride).

However, we've experienced scenarios where the company is better off setting the minimum rather low (or even non-existent) and getting operations underway as soon as possible to take advantage of customer demand. Let's just say, "it depends on the situation."

Knowing how to write a business plan is one thing. Doing it is another. We can help.

There is an extraordinary range of things to consider when writing a winning Business Plan. Seeking professional, experienced help from a firm like Brass Ring Consulting Group can save you immense time and money in the end, and provide you with creative guidance that may improve your concept and chances of getting funded. Working with a consultant will also ensure you maintain the balance between love for your concept and the realistic perspective an investor expects.

Need a business plan to get your business funded? Talk to us.

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