How to Write a Business Plan Investors Will Read

A founder once handed me a 64 page business plan bound in a glossy black cover, and it taught me more about how to write a business plan than any textbook. In fact, he had spent four months on it. It had a mission statement, a vision statement, a values statement, eleven pages of industry history, and a five year financial model broken out by month. Furthermore, he had sent it to nineteen investors. However, not one replied with a question. Only two replied at all, and both said “not a fit right now.”

So when I asked him which section he thought mattered most, he said the financials. Then, when I asked him who his first hundred customers would be, he paused for a long time.

That pause, in short, is the reason I wrote this. After years of working as a business plan consultant, I can tell you that most plans fail before anyone judges the idea. Instead, they fail because nobody finishes reading them. Therefore, if you want to know how to write a business plan that gets past the first three minutes, you have to stop writing for yourself. Rather, you need to start writing for a tired, skeptical person with forty other plans in their inbox.

Why Most People Who Write a Business Plan Never Get It Read

Investors are not lazy. On the contrary, they are overloaded. For example, research from DocSend, which tracks how investors interact with the documents founders send them, has shown for years that review time is short and getting shorter. In particular, investors spent 24% less time looking at pitch decks in 2022 than in 2021, averaging just under three minutes. Worse still, for decks that failed to raise, they gave up after about 2 minutes and 13 seconds.

Read that again. Two minutes, in other words, is roughly the time it takes to read the first page and skim the second.

Meanwhile, the same research points to something more useful. In 2020, investors spent over four minutes on decks that went on to raise money, but only about a minute and a half on decks that didn’t. As a result, it is clear that attention is not given. Instead, it is earned page by page. So the first lesson in how to write a business plan is simple: make the first page so clear that the reader wants the second.

What One Harvard Professor Learned From 5,000 Plans

Similarly, William Sahlman of Harvard Business School made this point decades ago, and it still holds. In his classic Harvard Business Review piece, he argued that most plans “waste too much ink on numbers” and spend too little on what matters to intelligent investors. Later, in an interview with HBS Working Knowledge, he said he had read perhaps 5,000 plans and had seen only three companies actually meet their plan.

Of course, that is not a reason to skip the plan. Instead, it is a reason to write a different kind of plan, one that shows how you think rather than pretending to predict the future.

Know Who You Write Your Business Plan For

Before you open a blank document, first decide who the reader is. Admittedly, this sounds obvious. Yet almost nobody does it, and that is why so many guides on how to write a business plan miss the real starting point.

For instance, an angel investor wants to know if you can build something big and if the team can survive the first two years. A venture fund, on the other hand, wants to know if this could return the whole fund. Likewise, a bank wants to know if you can repay the loan even if things go badly. Meanwhile, your future business partner wants to know what you expect from them. And you, at 2 a.m., want to know whether this thing is worth quitting your job for.

Clearly, these are different questions. Consequently, a plan that tries to answer all of them at once ends up answering none of them well.

Write the Business Plan for the One Person Who Matters Most

That is why, when a client comes to me, the first thing I ask is: “Who is the one person you most want to say yes?” Then we write for that person. For example, if you are applying for an SBA backed loan, the lender cares a lot about collateral, cash flow, and your personal credit history. In contrast, if you are raising a seed round, the investor cares about market size, early traction, and why your team is the one to win. In short, it is the same business but two very different documents.

Pick Your Format Before You Write Your Business Plan

The U.S. Small Business Administration describes two broad formats. Specifically, most business plans fall into one of two common categories: traditional or lean startup. A traditional plan is detailed and comprehensive. A lean plan, by comparison, is fast, high level, and focused only on key elements.

Moreover, the SBA notes that a traditional plan suits you if you are very detail oriented, want a comprehensive plan, or plan to request financing from traditional sources. In its own guidance, the agency also says a lean plan can be written in as little as an hour and is typically one page.

Matching the Format to Your Reader

Here is how I explain it to clients who ask me how to write a business plan for a specific audience. If a banker or a formal grant committee is your reader, then write the traditional plan. However, if an equity investor is your reader, write a tight plan of 10 to 15 pages that can stand alone, and pair it with a pitch deck. After all, nobody in venture capital wants to read 40 pages before a first meeting. Besides, they will ask for the full model later if they are interested.

Above all, the deepest mistake is choosing the format based on what feels impressive. Length signals effort, but it does not signal quality. Indeed, a short plan that is clear is far harder to write than a long one that is vague, and investors know it.

How to Write a Business Plan Investors Will Read: The Order I Use With Clients

Interestingly, the order your sections appear in the final document is not the order you should write them in. Below, therefore, is the sequence I use whenever I teach founders how to write a business plan, along with what each section actually needs to do.

1. Start With One Sentence

Before anything else, write a single sentence that explains what you do, for whom, and why it matters now. In other words, not a tagline but a plain statement.

Bad: “We are revolutionizing the logistics space through innovative technology.”

Better: “We help independent furniture stores deliver large items within 48 hours by pooling their deliveries with nearby stores, which cuts their delivery cost by about a third.”

If you cannot write that sentence, then you are not ready to write the plan. In fact, I have had clients spend an entire first session on this one line. Even so, it is never wasted time, because every section that follows is simply that sentence, expanded and defended.

2. Write the Problem and the Customer Into Your Business Plan

Next, describe the problem from the customer’s side of the table, not yours. Who has this problem? How do they deal with it today? Also, what does it cost them in money, time, or frustration?

Notably, the strongest problem sections I have read include a real person. For example: “Maria runs a 3,000 square foot furniture store in Tucson. As a result of slow delivery, she loses roughly four sales a month because customers will not wait two weeks.” An investor remembers Maria. By contrast, they do not remember “the fragmented last mile delivery market.”

Additionally, if you have talked to customers, say so, and say how many. After all, “we interviewed 42 store owners in three states” carries more weight than any industry report you can quote.

3. Your Solution and Why It Works

Now explain what you are building or selling and, most importantly, why it solves the problem better than what people do now. In particular, avoid listing features. Instead, explain the outcome. If you have a product, for instance, a short description of how a customer uses it in their first week is often more convincing than a technical overview.

Equally important, be honest about where the product is today. Investors spend real time checking product readiness. Thus, saying “we have a working prototype used by six paying customers” is far more credible than implying a finished product that does not exist yet.

4. Market Size Without the Nonsense

Unfortunately, this is where many plans lose credibility fast. Typically, the founder finds a report saying the global market is worth $400 billion, claims 1% of it, and then calls that a $4 billion opportunity. However, every investor has seen this move a thousand times. As a result, it tells them you have not done the work.

Instead, build your market from the bottom up. First, how many potential customers exist in the segment you will actually sell to first? Second, what would each one pay per year? Then multiply. Admittedly, that number may be much smaller than the headline figure, and that is fine. Ultimately, a believable $80 million first market that you clearly understand beats a fantasy $4 billion market every time.

After that, show the path outward. For example, once you win independent furniture stores in the Southwest, who is next? Appliance retailers, perhaps, or other regions? This is where, finally, the bigger number earns its place.

5. Competition: Name Names

Never write “we have no competitors.” After all, if customers are solving the problem somehow today, even badly, that solution is your competitor. For instance, spreadsheets, a cousin with a truck, and doing nothing at all are all competitors.

In fact, DocSend research found that VCs spent 88% more time on the competition section in the decks they studied. In other words, investors look closely here because it reveals how well you understand your market.

So name the real players. Then show where they are strong. After that, explain clearly where you are different and why that difference is hard to copy. Generally, a simple comparison table works well. Moreover, honest admissions, like “Company X has a larger sales team than we do,” make the rest of your claims more believable, not less.

6. The Business Model

How do you make money, and how much does each customer bring in compared to what it costs to win them? Naturally, this is where I push clients hardest.

At minimum, you need to show your pricing, your expected gross margin, roughly what it costs to acquire a customer, and how long a customer stays. If you do not have real data yet, then use clearly labeled assumptions and explain where they came from. For example, “We assume a customer acquisition cost of $600 based on our pilot, where we spent $3,600 on outreach and signed six stores” is a perfectly good assumption. Because it is grounded, it can be challenged and improved.

Furthermore, DocSend’s analysis found the business model section is where investors spend the most time on decks. Likewise, that matches what I see in meetings. In short, investors will forgive a rough model. Still, they will not forgive a model that has clearly never been questioned.

7. The Team

Sahlman argued that the people matter more than almost anything else in a plan, because execution decides outcomes. Similarly, a recent HBR explainer on his framework stressed that seasoned investors focus on the team since they believe execution skills matter most.

Therefore, do not just list job titles and universities. Instead, explain why this specific team can pull this off. For instance, has someone run operations for a regional delivery company? Or has a cofounder sold software to small retailers before? In each case, point to the experience that directly lowers the risk of this business.

At the same time, be candid about gaps. For example, “We do not yet have a technical cofounder and plan to hire a lead engineer with part of this raise” is a mature statement. Conversely, pretending the gap does not exist is the immature version, and investors will spot it in the first meeting.

8. Write Business Plan Financial Projections That Hold Up

Above all, keep this section clean. For most early stage businesses, three years of projections is enough: monthly for the first year, then quarterly or annually after that. Also include a profit and loss statement, a cash flow forecast, and a simple balance sheet if a lender is your reader.

However, the single most important page in your financials is the one most founders skip: the assumptions page. On it, list every major assumption in plain language, such as growth rate, pricing, conversion rate, hiring plan, and churn. That way, when an investor disagrees with your revenue in year three, they can point to the exact assumption they doubt instead of throwing out the whole model.

Finally, here is one rule I give every client learning how to write a business plan: your projections should show when you run out of money if things go slower than planned. Ultimately, investors respect founders who have looked at the bad case.

9. The Ask and Use of Funds

Next, state how much you are raising, what kind of deal you expect (equity, a convertible note, or a loan), and exactly what the money will buy. Then tie it to milestones. For example: “This $750,000 gets us to 120 paying stores and roughly $90,000 in monthly revenue within 18 months, which positions us for a Series A.”

That last part, in particular, matters. After all, investors are not buying your company today. Rather, they are buying the next stage of it. So show them what that stage looks like.

10. Write a Risks Section Into the Business Plan

In addition, include a short section on what could go wrong and what you will do if it does. For instance, think about regulation, a key supplier dropping out, slower adoption, or a larger competitor entering the space. Generally, a plan that describes an unbeatable position makes the founder look naive. On the other hand, a plan that names its weak spots and has a response for each one looks like it was written by someone who has actually run a business.

11. Write the Business Plan Executive Summary Last

Only now, with everything else finished, should you write the executive summary. Ideally, it should fit on one page, two at most. Also, it needs to cover the problem, your solution, the market, your traction, the team, and the ask, in that rough order.

After all, this is the page that decides whether the investor reads page two. For that reason, I usually have clients write it three times. Typically, the first draft is too long. Then the second draft is too vague. Finally, the third draft is usually close.

How to Write a Business Plan That Is Easy to Read

Structure, of course, is half the battle. The other half of how to write a business plan, however, is the writing itself. Here, then, is what I fix most often when I edit a client’s plan.

Make Every Heading Say Something

For example, “Market Analysis” tells the reader nothing. In contrast, “Independent Furniture Stores Lose $1.4 Billion a Year to Slow Delivery” tells them the point before they read a line. Ideally, an investor skimming only your headings should still come away with the core argument.

Lead Each Section With the Conclusion

In other words, put the finding first, and then the evidence. After all, business readers do not want suspense.

Cut the Adjectives

Words like “innovative,” “disruptive,” “cutting edge,” “world class,” and “seamless” add nothing. In fact, every investor has a mental filter that deletes them automatically. Instead, replace them with a number or a fact. For instance, “seamless onboarding” becomes “stores are live in under two days.”

Keep Paragraphs Short

Generally, three or four sentences is plenty. After all, white space is a gift to a tired reader.

Use Charts Sparingly and Label Them Properly

For example, one clear chart showing monthly revenue growth is worth more than six decorative ones. Also, every chart should have a title that states what it shows.

Read It Out Loud

If you stumble over a sentence, then so will your reader. Surprisingly, this old trick catches more problems than any editing software.

Mistakes I See When Founders Write a Business Plan

Unfortunately, some errors come up so often that I keep a running list. In fact, avoiding them is half of knowing how to write a business plan well. Below, therefore, are the ones that hurt plans most.

Trying to Write One Business Plan for Everyone

As mentioned earlier, a plan meant to impress a lender, an angel, a grant panel, and a cousin who might invest ends up impressing none of them.

Treating the Plan as a One Time Document

The SBA describes a business plan as a written tool that projects three to five years ahead and lays out how your business intends to make money and grow revenue. However, that projection changes the moment reality shows up. Consequently, the founders I see succeed revise their plan every quarter. As a result, it becomes a working document, not a museum piece.

Hiding the Bad News

Low early sales, a lost pilot customer, or a cofounder who left are all things to disclose. Otherwise, if an investor finds them during due diligence instead of reading them in your plan, you have lost trust you will not get back.

Overbuilding the Financial Model

For example, I have seen 30 tab spreadsheets that model office supply costs in year five. Clearly, nobody needs that. Instead, investors want the key drivers, clearly explained.

Copying a Template Word for Word

Admittedly, templates are useful for structure. Nevertheless, they are terrible for voice. In fact, if your plan reads like every other plan built from the same template, it will be read like every other plan: quickly, and then closed.

Forgetting Why Now

Every plan should also answer why this business makes sense at this moment. For instance, it could be a new regulation, a shift in buyer behavior, or a technology that just became cheap enough. Moreover, TechCrunch’s review of DocSend’s 2022 data noted that investors were spending noticeably more time on the slide explaining a startup’s purpose, the “why are you doing this” part of the story. Thus, timing and purpose are both part of that answer.

A Final Pass Before You Hit Send

Before any client sends a plan to an investor, we first go through these questions together. In my experience, this checklist is where knowing how to write a business plan turns into actually finishing one.

1. Can someone understand what we do from the first paragraph alone?
2. Does each heading state a point rather than a topic?
3. Is the market sized from the bottom up, with sources?
4. Are real competitors named, with honest strengths listed?
5. Is there a clear assumptions page behind the numbers?
6. Does the ask connect directly to specific milestones?
7. Are the biggest risks named, with a response for each?
8. Has someone outside the company read it and explained it back to us correctly?

Of all these, the last question is the real test. In other words, if a smart friend who knows nothing about your industry cannot explain your business back to you after reading the executive summary, then keep editing.

Free Help to Write Your Business Plan

Fortunately, you do not have to do this alone, and you do not have to pay a consultant like me to learn how to write a business plan. For example, the SBA offers a free business plan tool and a self paced course. In addition, it connects founders with resource partners such as SCORE mentors, Small Business Development Centers, and Women’s Business Centers. Many of these advisors, moreover, have read hundreds of plans and will give you honest, free feedback. So use them, especially for your first draft.

Final Thoughts on How to Write a Business Plan

Ultimately, learning how to write a business plan is really learning how to think clearly about your business and explain that thinking to someone who owes you nothing. After all, the investors reading your plan are not looking for perfection. Instead, they are looking for evidence that you understand your customer, your market, and your numbers, and that you will be honest with them when things get hard.

As for the founder with the 64 page plan, we eventually cut it down to 14 pages. First, we moved the customer story to page one. Then we rebuilt the market size from the ground up. Finally, we added a risks section he had been afraid to write. Afterward, he sent it to eleven investors. As a result, four asked for a meeting, and one wrote a check.

In the end, nothing about his business changed. Only the plan did.

Frequently Asked Questions About How to Write a Business Plan

How long should a business plan be for investors?

For equity investors, aim for 10 to 15 pages plus a separate pitch deck. However, lenders and formal funding programs often expect a longer traditional plan. For more detail, the SBA small business guide explains when each format makes sense.

What is the most important section to write in a business plan?

The executive summary comes first, because it decides whether anyone keeps reading. After that, investors tend to focus on the team, the business model, and the competition. Notably, William Sahlman’s thinking on what investors actually value is summarized well in this HBS Working Knowledge interview with William Sahlman.

How many years of financial projections should I include?

Generally, three years is standard for most early stage businesses, with monthly detail in the first year. Still, some lenders ask for up to five. In addition, this SBA blog on why founders need one describes the typical three to five year planning horizon.

Do investors still read business plans, or just pitch decks?

Most investors look at the deck first and then request the plan or the model only if they are interested. For this reason, your plan needs to stand alone and reward a quick skim. Indeed, DocSend’s pitch deck research shows how little time investors spend on a first look.

Should I use a template to write a business plan?

A template is fine for structure. However, rewrite every section in your own voice and remove anything that does not apply to your business. For a simple framework on how to write a business plan, Entrepreneur’s seven step guide is a useful starting point.

How often should I update a business plan after I write it?

Ideally, update it at least once a quarter, and also any time something major changes, such as a new product, a lost customer, or a funding round. Similarly, the SBA recommends treating it as a living document, as explained in its article on plotting the course for small business success.

References

1. U.S. Small Business Administration, Business Guide. Read on SBA.gov
2. U.S. Small Business Administration, 5 Reasons You Need One. Read on the SBA blog
3. U.S. Small Business Administration, Plotting the Course for Small Business Success. Read the SBA article
4. Harvard Business School Working Knowledge, Updating a Classic. Read the Sahlman interview
5. Dropbox DocSend, Pitch Deck Research. View the DocSend research
6. Dropbox DocSend, The Guide to Pitch Deck Design. View the design report
7. TechCrunch, Looking at 320 Pitch Decks. Read on TechCrunch
8. Entrepreneur, Seven Steps for Founders. Read on Entrepreneur