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How to write a business plan

You need to prepare your business plan based on the investor or fund, which are your customers. Customer is always right, and every customer has his/her own interests in business plan sections which takes the major role in his interaction and decision.

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How to Write a Business Plan

I've met investors from different cultures and countries and decided to put a rule of thumb, which is to go prepared with all possible business plan sections and formats ready for the presentation day. I decided in this article to show how to be prepared for such day and how to behave for each customer question to help entrepreneurs who spend most of their time in drafting and reviewing business plans.

Business Plan Formats

When it comes to common formats, I prefer to draft the following documents:

  • Editable Document File: Google Document (cloud) and Microsoft Word. This file contains the full details of your business plan and all the sections possible. Kindly, don't hesitate to download this business plan template Word format where you can play around and add/edit/remove sections based on your investor and case
  • Spreadsheet File: Google Sheets (cloud) and Microsoft Excel. This document contains the financial model with your assumptions, as you will be definitely change some numbers if finance people are present
  • Presentation File: Google Slides (cloud) and Microsoft PowerPoint. This file contains only brief descriptions of all sections with info-graphics and beautifully designed charts, mainly about finance figures. It is usually called the pitch deck presentation
  • Portable Document File: Adobe PDF. This file is your editable document file converted into PDF to avoid compatibility issues when asked to present your business plan on the customer's devices

It's easy to convert between those files but, as stated above, you need to be prepared and sometimes one option will not work for you, so always make the alternative one ready.

I remember I prepared a presentation once for a multi-millionaire on my laptop and I discovered during the meeting that the file was corrupted and I couldn't open it.

When do you Need to Prepare a Business Plan

Investors and funds provide money for attractive businesses only. Your analysis of investor/fund starts from the day you are informed that he/she is a potential funding or partnership/investment source for your business. Business plans can be prepared for internal or external customers. Internal customers are your board members and top management, and external customers are the third party individuals or organizations that you target to get your funds/loan/equity.


The customer or his investment team will interact with you to inform you that you have a chance at a specific date to present your idea, and will give you some hints of what to prepare. This could be your golden chance to ask few questions in order to facilitate your process and save your time. Ask as much as possible of questions because your time is valuable as much as the investor's/fund's time.


Remember always, by writing your business plan, you are proposing to your audience how you are going to generate money. The first step towards being accepted or approved with your innovative idea is to ask the community about that customer and check if they can give any hints of what to prepare and save your efforts, as well as increase your odds of winning a deal with them by highlighting preferred subjects and hiding others.


Your due diligence about the customer is critical and will give you hints of what and how to prepare the business plan and what to present within it.

How to Write a Business Plan, business plan template word, business plan download, business plan sections, business planning
Sources of Funding in the US, 2014

There are many types of customers who requires a business plan from you as an entrepreneur, all having in common money and business plan requirements, and differing in the stage of your company and other factors:

Personal Savings

At a certain stage of your business, you might think that you need to invest using your personal money to fund your business and save it from an expected failure. You can also use family savings that will save you and propose for them a certain profit percentage. In both cases, the invested money should have a formula to return to your account or your family member's accounts with an interest. Such cases, you don't need to prepare a detailed business plan if your business is small. 

Otherwise, you might need to prepare a detailed business plan for your partners showing them the benefits of using this money and how it's going to affect the return on investment in profits or dividends.

Angel Investor

These are high net-worth individuals, who provide early-stage capital to startup businesses in the form of either debt, equity capital, or both. They are accustomed to undertake calculated risks that have a high potential of generating revenues. They provide financing for the following types of startup and early-stage firms:

  • Those that are too small to get the attention of Venture Capitals
  • Firms often too limited in their revenue potential at maturity to interest Venture Capitals
  • Firms considered too risky for bank loans and for most Venture Capital appetites

Thus, business angels fill a huge financing void and are a good fit for a first stage of serious equity. Companies like Google, Amazon, Starbucks, and PayPal began with angel investments.


Connecting with angels is extremely easy and they tend to assemble in an online platform or local associations to regulate the access to their world. If not, you can catch them in public events as they will announce their willingness to invest with specific strategies and requirements.


The same concept applies for companies or organizations looking for investment opportunities. These companies have funds and they might be willing to invest in your company. Thus, you need to prepare your business plan to suit their requirements and conditions for partnership. They don't provide loans unless under very strict conditions.

Crowdfunding

In 2015, more than $2 billion of funding was generated through crowdfunding in the United States. There are many types of crowdfunding but the idea is simple. If you are looking to use this method, you are assuming that people will buy your products earlier than expected in exchange for rewards. The types of rewards can be an equity in the company and can be as simple as gift items.

In crowdfunding, the prepared business plan is internal for your board members and top management team to convince them about the fund that will be generated using financial forecasts, with an accuracy accepted to the majority of members.

Incubators and Accelerators

These programs provide support for entrepreneurial companies in the early stages of their operation to experiment and to test their business models and other assumptions, quickly. They provide entrepreneurs the physical space and the support to learn by providing coaching, mentoring, networking, funding, and educational programming.


Incubator and accelerator terms are often used interchangeably, but while they have many similarities, they also have differences.


An accelerator is a time-limited cohort program that comes with equity investment. Accelerators, mostly work exclusively with early-stage businesses. They tend to be more competitive than incubators, particularly for the stronger programs. They offer funding in exchange for equity.


An incubator is a less structured and less time-bound program. Incubators can be independent or connected to a bigger firm, an academic institution, a government arm, or a nonprofit. They usually either operate as a nonprofit or charge your venture for rent (you share co-working space with other young companies). Work with an incubator is not limited to the early stages of a venture's development; some incubators specialize in later-phase growth.


In this case, an internal and external business plan might be prepared. Airbnb and Dropbox are examples of companies who used accelerators during their startup for financing.

Venture Capitals (VC)

You will never show on the radar of venture capital companies if your company is small or in its early stages. 


As a high-risk investor, a VC firm seeks an equity position in a startup or an early-growth company with high potential. In return for capital, the VC typically takes a significant percentage of ownership of the business and a position on its board. 


VCs take part in the strategic management of your company and often help connect you with suppliers and potential business allies through their networks. In many cases, VCs also help recruit the technical and managerial personnel your company need to succeed. They also provide useful advice.


As much as you manage your financials strongly when presenting your pitch to VCs, as much as you reduce from their ownership of your company, because VCs rely on your financial weaknesses to offer you more intangible advantages in return to equity ownership.

Commercial Bank Loans

Some startup companies request the commercial banks for loans and pay them back with high interest rates. The business plan preparation for those loan providers are strict and complex as you need to provide a lot of guarantees and sign collateral documents to secure their money. 


A detailed analysis of your business is required and the bank will request his own personnel to investigate every aspect and agreement signed in your company to track and forecast all possible revenue streams. Their acceptance of funding your business is often related to an earlier success in generating profits. You will be very lucky to secure a commercial bank loan at early stages.

Government Fund

These are public funds backed up by their governments to attract strategic projects in their operating countries. They tend to be large institutions announcing their financing programs on their website portals to attract local and foreign investors to approach them and request financing. But, the procedure of approval in those institutions take a long time and sometimes passes through sick bureaucratic procedures.


However, it is worth approaching for big projects having a know-how and contributing to the local economy sectors like local manufacturing, local content, import and export, and logistics.


Prepare your guarantees very structurally and yourself to abide to their strict rules and conditions, as well as their own business plan templates. They might call required documents as feasibility study rather than business plan, but for the majority of the contents, they should look similar.

Hedge Funds

These are managed portfolio companies built from pooled funds for the purpose of achieving returns through diversification. This means that multiple investors dumped their money into one organization account under one fund manager or fund group of managers to invest in companies with a specific strategy.


IF you are going to prepare a business plan for such funds, there are some strict differences between both which I recommend to dig more on the internet as this article cannot fit for such a long discussion.

Merger and Acquisition (M&As)

If you are planning to merge with another entity or acquire another entity, you will need to go through a long cycle of preparation. This cycle often includes strategy, culture, marketing, operations and financial analysis of both parties. The business plan is studied and tested on different milestones to check the viability of the merger/acquisition operation.


Subject matter experts and highly skilled consultancy firms are hired for such processes but it often involves business planning with a lot of strategic activities to make sure the short and long term effects of this operation was the right choice.

Going Public

Once your company reaches or expects to reach an exceptional revenue potential, that is a signal to go public. Companies seek financing through an Initial Public Offering (IPO) through a process of sharing the ownership shares of the company to the public market of individual investors, mutual funds, and pension funds, which results in a huge exchange of trading shares equal to the amount of cash the company is planning to have financing for.


IPO is a long process of financing, and it announces that your company has reached a noticeable level of client trust, as well as it implies a larger accountability to more stakeholders and financing rules.

What Should a Business Plan Contain?

We will go briefly through the sections of the business plan and we will dedicate later a topic for each section separately.

Download your free business plan template in word document from here: 

👉👉Free Business Plan Template👈👈

Executive Summary

Always stated at the beginning of each business plan but it is also always written the last paragraph, as it contains the summary of your plan sections stated in order in one page to prepare the audience mentally and challenge them about the feasibility of your business.

Operations Section

  • What is your vision? mission? strategy? 
  • How are you going to manage your business?
  • What is your business model? key stakeholders and shareholders.
  • What are the assets required for this business? What are the raw materials? equipment and machinery?
  • Who is your management team that will operate this business and what are their competencies and skills?
  • Is there any technology required? software and hardware? training for your team and skills required?

Marketing Section

  • How are you going to inform the world about your existence? 
  • How are you planning to manage the competition? 
  • Have you studied your market thoroughly? What is your competitive advantage? segmentation, targeting and positioning.
  • What is your product pricing strategy? discount strategy? promotions strategy?
  • Have you studied your consumers and their behaviors?
  • Have you planned for your digital marketing strategy? How much budget is dedicated for it?
  • How are you going to satisfy your customers? Supply chain details and marketing campaign details.
  • How are you going to contribute socially with your community and the world, and what budget is required?

Financial Section

If your detailed spreadsheet document is ready then it's time to open it when asked to. Otherwise, you can summarize the following for your audience:

  • History and forecasting of Balance Sheet, P/L Statement, and Cash Flow Statement
  • NPV (Net Present Value), Payback Period and IRR (Internal Rate of Return)
  • Financial ratios related to your business type and highlighting the key financial figures (profit margins, operating margins, return on assets, return on equity, ...)

Exit Plan

Very often presenters forget to include this section in their business plan and it might create an embarrassing moment for the audience when requested. Investors and fund providers are living with us in this VUCA (Volatility, Uncertainty, Complexity, Ambiguity) world, and they will think about an exit strategy.


You need to draw their attention about key points when exiting their involvement with you by minimizing their liabilities in a fair way for both parties. They should feel that they are free to exit any time but with certain manageable restrictions or due liabilities that will not affect their whole investment. Simply, put yourself in their shoes and imagine what you plan for when exiting a business.

Content of the Slides and Spreadsheets

While the spreadsheet contains your financial model, your slides file needs to have 10 to 15 slides briefing the contents of the editable document in graphs and info-graphics. Don't put much stress on the coloring and make it as simple as you can with short sentences, and clear and concise meanings.


If possible, try to use the same styles used in the other documents for these two as well because consistency plays a major role in attracting the cognitive consciousness of the audience.

Resources

  • Harvard Business Review Entrepreneur's Handbook
  • Financial Times Essential Guides: Making Business Presentations
  • Financial Times Essential Guides: Writing a Business Plan
  • Investopedia.com


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  1. Great article! I agree on nearly every aspect of this information you have written. You have great insight on this topic. Thank you for making this so clear and understandable on how to write business plan.
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