How to Write a Business Plan That Attracts Investors

Successful businesses are built on paper before they set foot in the real market. 

Building a business requires working simultaneously on multiple projects, and it’s easy to get overwhelmed. When that happens, a business plan becomes a guiding light.

Many organizations use business plan software to make their business plans. New companies use it to make future projections and ensure that a business idea is viable. It allows them to tweak ideas ahead of time and see where they might face challenges. Established businesses take advantage of business plan software to explore expansion opportunities.

Why is a business plan important?

A business plan serves as a roadmap for navigating a business’ future. Developing this crucial document requires a thorough analysis of business operations and the whole industry to accurately represent its internal and external situation.

Despite being time-consuming and laborious, developing a business plan is essential.

It establishes a clear path for scaling the business by outlining key components such as market research, competitive analysis, marketing strategies, financial projections, and operational plans.

The process of creating a business plan encourages entrepreneurs to perform a risk assessment, develop contingency plans, and recognize market trends that may influence the business's trajectory. 

Beyond serving as an internal guide, a business plan is also a powerful external communication tool. It demonstrates credibility and preparedness to investors and lenders, making it easier to secure financing or attract strategic partners.

For businesses looking to innovate or pivot, a well-crafted plan provides a structured approach for exploring new products, markets, or services while evaluating their financial feasibility.

Business model vs. business plan vs. strategic plan

A business model is a mechanism through which a company creates, delivers, and captures value in social, economic, and cultural contexts, resulting in profits. Leaders use a business model canvas to create and manage strategies for recruitment, customer acquisition, partnership, and business development.

A business plan is a written document that describes a business strategy and its predicted financial performance in the foreseeable future. It’s a roadmap to achieving strategic business goals and achieving the company’s vision. 

A business plan maps out a business’s profitability in a given time frame. A business model is a vehicle for enabling ventures to achieve that goal.

A strategic plan is more concerned with competition. This document examines current and potential markets and assesses which products or services will succeed in those markets. It also identifies how the company will perform better than its competitors to win over customers. 

The strategic plan does not just focus on making the most money; it also considers how the company should deal with potential problems such as low morale among employees or low customer satisfaction.

5 types of business plans

New business owners aren’t the only people who create business plans. Various leaders in different stages of development make plans for specific purposes. Below are some common business plans that leaders or management teams create. 

1. Standard business plan

A standard business plan is a comprehensive document that outlines the goals, strategy, and roadmap for a business, guiding its operations, growth, and development. It typically includes several key components:

Executive summary

An executive summary provides information about a company and why it will be successful. It covers details on the following aspects of a business: 

• Mission statement
• Product or service
• Leadership team
• Employees
• Location
• Financial information
• Overview of growth plans

Company description

A company description covers detailed information about the company and the opportunities or problems it’s solving. It describes the following aspects:

• Problem statement
• Gaps in the market
• Target consumers or companies
• Competitive advantage
• Expertise
• Strengths

Market analysis

Market research and analysis help a company understand the target market and industry outlook. It answers the following questions:

• What are competitors’ strengths and weaknesses?
• What are the trends and themes in the industry?
• Why does a competitor strategy succeed or fail?
• Can the new venture address gaps or leverage opportunities in the market better than competitors? 

Management

The management section talks about the company structure and who will be leading it. It describes the following elements of a business:

• Legal structure
• Type of company registration – C or S corporation, or general or limited partnership.
• Organizational chart
• Individual expertise
• Resume or CVs of key members of the team

C and S corporations: A C corporation follows standard Internal Revenue Service (IRS) rules. An S corporation elects special tax status with the IRS and benefits from tax advantages. 

Service or product

This section informs the reader about the services and products a company offers. It includes details on:

• Benefits of a product or service
• Product lifecycle
• Intellectual property, such as patents or copyrights
• Research and development of products or services

Sales and marketing

In the sales and marketing section, a business plan creator can describe the following: 

• Customer attraction
• Customer retention strategies
• Sales process
• Sales strategies 

Marketing and sales strategies will likely evolve and be tailored to fit unique business needs.

Investment or funding requirements

This section outlines a company’s fund requirements over the next five years. It includes the following details: 

• Equity or debt needed
• Terms and conditions
• Time duration in which these funds will be utilized
• Investment usage
• Future strategic financial plans

Financial projections

The financial projections section includes objective details about company financials and projections, showing that the business is stable. Companies can provide the following financial statements: 

• Income statements, if available
• Balance sheets
• Cash flow statements
• Prospective financial outlook for the next five years
• Forecasted income statements, balance sheets, cash flow forecasts, and capital expenditure budgets. 

Appendix

New businesses can use the appendix section to provide additional documents requested by the investor or lender. It can include:

• Resumes
• Product pictures
• Letters of recommendation
• Licenses
• Patents
• Permits 
• Legal documents
• Contracts

A standard business plan aggregates some or all of the above sections. Entrepreneurs can decide to keep, add, or remove sections based on their business’ specific requirements.

2. Startup business plan

A startup business plan is a strategic document that outlines the vision, objectives, and roadmap for a new business venture.

It serves as a blueprint for launching and growing the startup, guiding entrepreneurs through the early stages of development, and helping attract investors, partners, and other stakeholders.

While it shares similarities with a standard business plan, a startup business plan often emphasizes innovation, scalability, and growth potential. Below are the key components typically included in a startup business plan:

Partnerships

The partnership section includes detailed information on: 

• Suppliers
• Manufacturers
• Subcontractors
• Other strategic partners

Activities

This section will include operations that a company would conduct to gain a competitive advantage—for example, implementing a direct-to-consumer (D2C) strategy that allows a business to enjoy higher profit margins, leveraging technology to automate and increase operational efficiency, and more.

Resources

All resources that create value for consumers are listed under this section. It includes the following assets: 

• Staff
• Capital
• Intellectual property

Value proposition

A value proposition explains the distinct value that a company brings to the market. It can be about solving a problem, leveraging an opportunity in the market, catering to customer needs, or providing a benefit. 

Customer segments

Customer segments cover a company’s target audience and describe an audience group that a business wants to service. This can include target market demographics and communication channels relevant to target consumers.

Cost and revenue structure

A cost structure will include recurring expenses, one-time costs, and more. In this section, the business defines its strategy to control costs. Additionally, revenue structure covers how a company earns money. It includes techniques like direct sales, subscription models, or advertisements on the website.

3. Feasibility plan

A feasibility plan is a decision-making plan that explores and evaluates companies’ growth opportunities, new product lines, and new markets.

Below are some of the common elements of a feasibility plan.

• Proposed growth method
• Target demographics
• Market analyses
• Capital requirements
• Objective standards

Feasibility plans are primarily for an internal audience. But if a company seeks external funding, this type of business plan would include a company description, financial analysis, and other product and service-specific sections

4. One-page business plan

A one-page business plan covers the highlights of a lean startup business plan. It’s also called a business pitch, as it gives a snapshot of the business to vendors, partners, and investors. 

Below are some common elements in a one-page business plan.

• Company brief and description
• Product or service
• Target market
• Timeline
• Current and future sales projections

5. Growth plan

A growth plan can focus on an internal or external audience. Business leaders create a growth plan to evaluate and present growth opportunities in new segments for a running business. 

A growth plan consists of the following things:

• Specific growth opportunities
• New market segment description
• Financial projections
• Capital requirements
• Budget analyses
• Milestones

An external growth plan includes a business description, product or service, market, management, an overview of the financial aspect, and the points mentioned above.

How to write a business plan

The audience of a business plan plays a significant role in determining the ideal approach to its creation.

Understanding the audience’s needs is essential for effectively catering to them in the presentation. For instance, the needs of an angel investor or a lending institution differ from those of employees or senior leadership.

Companies within the same industry or those offering similar products or services may have varying business plans. However, certain fundamental elements are common in every effective business plan template.

Below are some standard sections for structuring a business plan.

1. Write an executive summary

An executive summary summarizes the key information from other business plan sections. If you plan to identify the most vital points in writing a business plan, it’s advisable to write this section last. 

2. Create a company description

Mission statement, history, and objectives are the three pillars of a good company description. They contextualize the bigger picture so investors know your company’s purpose and goals.

A mission statement looks like a simple sentence, but it holds many thoughts associated with the company’s existence. It often has inspirational and emotional elements that encourage others to believe in a mission.

Writing a company’s history is comparatively simpler. It requires facts such as the founding date and team, number of employees, locations, flagship products, and milestones aggregated in a simple list or a paragraph.

Objectives mention a company’s goals. These goals are often tied to expected results, providing a clear overview of the goals and helping employees work toward a common purpose.

3. Showcase market research and potential

Build up your business plan by summarizing your market research. Define target customers, market segment, size, and competition. If you target a broad market, describe how your company has a competitive advantage.

For example, if you say a product caters to anyone who has a four-wheeler, it might pose a red flag for investors. Investors generally look for a precise target market to evaluate a product’s success potential.

Present your market analysis with details about potential customers’ age, income, location, education, profession, hobbies, and more. When estimating a market size or forecasting its potential, look out for being overly optimistic. You want the big numbers to be realistic. If they’re not, or you think investors would need further convincing, it’s better to have solid and practical reasoning handy to support your analysis.

4. Perform competitive analysis

Understanding what your competitors are doing and what’s working for them can benefit your company’s growth. You can take inspiration from them and innovate to create a strategy fit for your business. It helps you locate gaps in the market that you can address while learning about the target market you will enter.

Understanding competitors' strategies around advertising, communications, customer service, sales, and pricing is advantageous, but it isn’t necessary to use their same methods. Although competitive analysis helps you create a benchmark, you should plan an approach that helps you grow beyond it. 

You can research their customers’ reviews on G2 to identify customer pain points and devise ways to address those issues before they occur.

If you don’t find a competitor for your product or service, research better because a similar business entity is likely a few clicks away. However, if there’s no direct competitor, you can research other companies that offer a product or service close to your offering to understand their market.

5. Explain your product or service

This section details your products or services. Cover the benefits, manufacturing process, product lifecycle management, and distribution. You can concentrate on the unique features of your product or how it’s better than others on the market. Cover how your customers perceive your product, both emotionally and practically. List any patents or intellectual property rights you own.

You can briefly explain how your products are created, the raw materials involved, and how you ensure their quality. Supply chain logistics and inventory management are also important parameters to discuss in this section. You can also share your knowledge about potential cross-selling or up-selling opportunities that might show up after purchase. 

6. Create a sales and marketing strategy

Growth strategies are as critical to a business’s success as water is to humans. You should develop a strategy around how your sales and marketing will grow your business. Reiterate a few points around value propositions, ideal target market, and existing customer segments in this section.

Next, mention your product launch plan and different approaches to attracting potential customers. You can also share your expansion plans and retention strategies. Mention ways you’ll leverage different channels, such as search engine optimization (SEO), social media, display and print advertising, and word of mouth.

Summarize what you have done, what you’re going to do, and the results you expect to achieve. Your strengths in this section will help you stand out from the competition in the market.

7. Prepare a financial plan

You need to document your budget and financial plan, even if you’re just starting. If you've been operating for a while, list financial statements such as cash flow statements, income statements, profit and loss statements, and balance sheets. 

Provide a report of close to three years of operation and be as accurate as possible. If you presume there will be some gray areas for your investors, it’s better to prepare a justification around it beforehand. Make sure you aren’t underestimating any business costs or overheads because this might cause investors to doubt your business skills. 

8. Highlight organization and management

Introduce your team with their experience and expertise, justifying how they can transform your idea into a successful business. Describe your management team’s qualifications and responsibilities in this section and make a strong case for your investors to trust their leadership. 

You can also talk about future hiring plans and the roles that will be critical in supporting future growth. Ensure you have the support of relevant legal and finance departments to advocate for your future hiring plans.

9. Describe investment requirements

When you explain your funding requirements to angel investors or lending institutions, support it with reasoning. Be clear about why you need funding, where you’re going to invest it, and what expectations you have after directing the funds to set departments. 

Be realistic, and show value to your investors to get them excited about collaborating with you.

If you don’t arrive at a precise number, it’s better to fix a range. Have a best- and worst-case scenario around your funding requirements. An investor may expect a dividend, which is a share of the company's profit. If it’s a lending institution, they will expect the principal and debt to be paid within a specific time frame. Plan well in advance to prepare the most suitable funding request.

10. Support the plan with an appendix of additional documents

Create a well-organized appendix with other documents that support your business case. These documents will help investors conduct due diligence and provide context for your plan. Include legal documents, deeds, permits, and other certificates.

 While you create an appendix, add a table of contents and footnotes throughout the plan to attract readers' attention.

Benefits of a business plan

Creating a business plan in the early days helps leaders make informed and calculated decisions. It provides an essential roadmap to achieving goals and highlights all important aspects of a business. 

Below are a few expected benefits of making a business plan. 

• Enhances clarity. Companies enjoy increased clarity in decision-making after writing a business plan. It helps leaders remain accountable for key decisions and also identifies critical priorities to reach milestones and achieve business goals.
• A business plan conveys investment worthiness. It answers critical questions about profitability, sustainability, scalability, and revenue generation. Entrepreneurs use a business plan to make a strong case for securing investments or loans.
• Supports top talent acquisitions. A business plan explains a company’s long-term vision to potential partners and employees. It describes how a business will achieve its goals and how employees will contribute to their roles. This encourages the right people to join the mission, empowering leaders to hire top talent.
• Establishes a structure. A business plan defines management objectives and acts as a reference to track and measure revenue targets and activities.
• Creates a baseline for marketing. A business plan describes the target audience or markets and various ways to promote its products and services. It builds a foundation for marketing to strategize their operations accordingly.

Challenges of writing a business plan

When writing a business plan, it's essential to keep your target audience in mind. As the founder, you’re likely the most invested person in your business idea and therefore, the most knowledgeable. 

You will probably have to remind yourself to explain things that seem obvious or second nature to you but may not be obvious to other people. Find ways to effectively communicate why your business is a good idea to convince your reader that it is a business worth investing in.

Another challenge of writing a business plan is ensuring that the text is engaging and easy for readers to understand and follow. You want your audience to be interested enough and engaged enough to continue reading the document all the way through, rather than skim over it or lose interest along the way.

To combat this challenge, use storytelling techniques and try to take an informal tone throughout the document. This will make it feel more relatable and engaging for your readers.

When you're emotionally connected to your business idea, it can be difficult not to project unrealistic expectations about its success. Don’t fall into the trap of projecting hope rather than reality regarding future growth. 

Best practices for building a business plan

Adopt these best practices to create an effective business plan for a new venture.

Understand the reason

Creating a business plan requires a lot of effort and focus from entrepreneurs to get investors, bankers, employees, and partners excited about the company’s vision and obtain buy-ins. 

Business leaders should understand why they’re writing a plan and consider the following  aspects:

• Business promotion: A business plan helps leaders communicate their vision and roadmap effectively to get investors or banks interested in becoming a part of the mission.
• Effective negotiation: A business plan conveys the leaders’ commitment to the company’s vision and supports granular evaluation of their new venture. It provides them a robust foundation to support their business idea while negotiating with external or internal parties.
• Strategic operations: A business plan enables leaders to direct the right amount of time, capital, and other resources to specific activities that help them achieve their strategic goals. 

Identify the audience

Businesses should understand their audience and tailor their language and level of detail accordingly. For example, traditional investors or bankers would need a standard business plan with detailed descriptions of every component. On the other hand, a growth plan would serve internal stakeholders better.

Divide responsibilities

Writing a business plan is a time-consuming process. It’s better to divide its components among trusted team members. Leaders can hire a professional writing consultant to edit the draft thoroughly.

Maintain readability

A business plan holds a lot of information. Entrepreneurs should write it so that it’s easy for investors or bankers to comprehend. The size of a business plan depends on the intended audience. Most business counselors and experts recommend keeping it to 30 to 50 pages.

Top 4 business plan software

Business plan software helps users manage and share business plans while identifying goals, strategies, and financial needs for new companies or major projects. It describes opportunities and risks related to starting a new business or launching a major project. 

To qualify for inclusion in the business plan software list, a product must:

• Allow users to customize business plan templates and samples
• Enable users to modify a business plan using the drag-and-drop feature
• Offer business plan customization for branding purposes
• Define and evaluate goals, opportunities, and risks
• Provide documentation related to the business plan such as financial statements

*This data was collected from G2’s business plan software category in November 2024. Some reviews may be edited for clarity.

1. Upmetrics

Upmetrics is business plan software that revolutionizes business planning with AI. It helps entrepreneurs and small business owners succeed in their business planning processes and growth strategies.

What users like:

"We found the single-page business plan incredibly valuable for aligning our entire team around our mission and goals. It streamlined our focus by eliminating unnecessary details, enabling us to concentrate on what truly matters."

- Upmetrics Review, Sumit S.

What users dislike:

"There is a need for additional integrations with accounting software to enhance functionality"

- Upmetrics Review, Abhishek K.

2. Modeliks

Modeliks is business planning software that helps startups and SMEs create pitch decks, business or financial plans, and investor reports. You can create your plan alone or in collaboration with your team and share it with investors and external stakeholders. 

What users like:

"As the accountant for our small company, I’ve found Modeliks to be an exceptional tool, especially for scenario analysis and financial planning. One standout feature is its formula-based forecasting, which has significantly transformed my approach to work. The precision it offers in our forecasting has enabled us to make accurate projections, anticipate various financial scenarios, and make informed strategic adjustments. I highly recommend Modeliks to fellow accountants seeking a dependable solution for scenario analysis and financial planning."

- Modeliks Review, Aleksandra T.

What users dislike:

"We can't add our brand colors to the platform. Including this possibility would create a positive impression, especially when I present expenses and ask for budget approval from C-level executives."

- Modeliks Review, Philipp J.

3. LivePlan

LivePlan is a software application that helps businesses and startups perform business plan development, budgeting, forecasting, and performance tracking tasks. Business owners use it to plan, fund, and grow their businesses.

What users like:

“It allows us to simplify how we carry out our business plans in a much simpler and easier way. The ease of configuration and use is perfect for me and my business since we can simply design all our plans and strategies.

- LivePlan Review, Samantha C.

What users dislike:

“Sometimes, it doesn't have enough options in the forecasting area to include a projected revenue or volume increase by a percentage month over month. 

- LivePlan Review, Daniel J.S.

4. Cuttles

Cuttles helps entrepreneurs and business owners plan and grow their businesses using a fully interactive and guided business plan software. The software provides features and guides to create a startup pitch, write a business plan, define a startup team, and do budgets and financial projections.

What users like:

“It's simplicity and ease to understand and implement. In the end, you have a great plan and become ready to go for pitches and gather investment.”

- Cuttles Review, Yves Y.

What users dislike:

“So far, nothing major. Perhaps having a proof-of-concept kind of template would be nice to get some ideas.”

- Cuttles Review, Aizat H.

Frequently asked questions on business plan

Q. What must an entrepreneur do after creating a business plan?

After creating a business plan, an entrepreneur should review and refine it based on feedback, set clear objectives, and secure the necessary funding. Next, they should assemble a capable team and start implementing the plan by executing marketing and operational strategies. Monitoring progress regularly and staying adaptable to changes, along with engaging with customers and building valuable partnerships, is crucial. 

Q. How to write a business plan for a loan

To write a business plan for a loan, start with an executive summary that outlines your business idea and the loan's purpose. Include a description of your business, a market analysis detailing your target audience and competition, and an overview of your organizational structure and management team. Finally, provide detailed financial projections, including income statements, cash flow statements, and a break-even analysis, to demonstrate your ability to repay the loan.

Q. How long should a business plan be

A business plan typically consists of 15 to 30 pages. However, the length can vary depending on the complexity of the business, the intended audience, and the specific requirements of potential investors or lenders.

Q. Which section of the business plan should be the bulk of the plan?

The market analysis section should typically constitute the bulk of a business plan. This section provides a detailed examination of the industry, target market, and competitive landscape, helping to justify your business strategy and approach.

From chaos to clarity

Create a business plan even when you’re confident your idea will work in the market. You’ll discover many things that would motivate you to tweak your strategy and execute it differently. This knowledge is crucial as it shows you a bigger picture and helps you think of long-term instead of short-term benefits.

Building a business is like raising a child. You need to plan properly to ensure that your family has the right support so the child flourishes. A business plan provides that support, so the company thrives and prospers.

Learn more about how strategic planning software can help you accomplish your business mission and track progress.