How to Write an Investment Business Plan - Template

How to Write an Investment Business Plan - Template

Sep 29, 2021

Investment Business Plan – author’s notes

Although the financial forecasts may be the core of the business plan, the reader’s perception of their achievability depends on the detailed plans set out in the narrative. It is important that the narrative and the figures are consistent and support each other. They are both equally important and on its own neither tells the whole story.

The narrative provides the opportunity to argue your case and to justify the assumptions you have made in arriving at the forecasts.

It is important to tailor every business plan to the particular circumstances of the company. A lot will depend on how well your proposed reader already knows your company and, if the business plan is being used to support a fund raising application, how much is being asked for and for what purpose. It will not always be necessary to include each of the suggested sections, some could be combined. Alternatively, new sections may be needed.

Based on “The Business Plan”, WDA/Touche Ross & Co, 1987, Cardiff

Table of Contents

Preface        Important information regarding the status of this document

Section 1.    Summary        

Section 2.    Background        

Section 3.    Product          

Section 4.    Management and personnel                                                

Section 5.    Markets and marketing                                                           

  • Market                                                                                               
  • Marketing                                                                                           

Section 6.    Manufacturing process                                                               

Section 7.    Financial information                                                                  

Section 8.    Risk factors and rewards                                                           

Section 9.    Timescales and benchmarks                                                    



Section 1 – Summary

Although preferably written last, the summary should appear at the front of the business plan and should provide a concise overview of your proposals. The summary should indicate why this application is different – the success ingredient. It should ideally be one or two pages long and never more than three.

Remember that you are trying to attract the attention of a busy reader and convince him that he should take the time to read the rest of your business plan. The summary should be designed to do this. Remember that 60% of business plans sent to venture capitalists are rejected after a quick scan.

The summary should include:

  • The purpose of writing the business plan
  • How much money is required and for what
  • Brief description of product and markets highlighting the benefit to your customer
  • Management experience and relevance to the proposal
  • Financial highlights
  • Details of proposed exit vehicle
  • Return expected and when, showing how the investor will benefit.

Section 2 – Background

Here you should state the date of incorporation of the company and a brief history of subsequent years giving not only financial details but also a commentary highlighting significant successes of your business in the past and their relevance to the future.

You should set out the present financing of the company including details of its present shareholders and any security given to lenders.

Finally in this section you should introduce the project. If it is a new venture for your company, you should also set out your reasons for making the decision.

Section 3 – Product

You should normally cover the following topics under this heading:

  • Description of the main products or services stating in layman’s language precisely what is to be sold and to what purpose used.
  • The advantage of your product

-      Is it cheaper?

-      Is it better quality?

-      What unique features does it have?

-      What advantages do your customers derive from it?

-      Does it have disadvantages?

·      What is the current status of the product? For example is it still in the research and development stage or is it already established on the market?

  • What is the likely lifespan of your product?
  • What new products will your competitors be introducing and when?
  • What protection do you have for your product? Do you hold any patents and what proposals do you have for obtaining any in the future?
  • Does your product require any government approvals and does it have them? Are there any industry standards to be met?
  • What are your future product plans including the timescales for their introduction?
  • What are your research and development policies? Are there competing technologies?
  • What is the profitability of each product or service?

It is important to remember that the credibility of your sales forecast is often dependent on the investor’s perception of the product for sale.

Section 4 – Management and personnel

An investor’s assessment of management’s capability is an important factor in decision making. A comment often heard is: “It is better to back good management with a bad product than a good product with bad management.”

Overall the business plan must communicate the management’s capabilities and that they can achieve the objectives they have set.

In this section the following should be included:

  • A summary of key managers showing

-      their roles, demonstrating you have a balanced team

-      their age, experience and expertise

-      their past track record and achievements and their relevance to the future plans. Past track records are important; include size of previous companies and task undertaken

-      detailed CVs should not be included here but attached as one of the appendices

  • You should discuss the relationship between ownership and management and the long-term aims and objectives of key individuals.
  • What are the remuneration policies? How many of the key managers have performance related packages? How many have service contracts?
  • You should include in the appendices an organisation chart showing the position now and that proposed for, say, three years time. The chart should show the number of people each manager is responsible for.
  • Do you have any non-executive directors and what are their roles?
  • Will you need additional management in the future? How will you select them?
  • Be honest
  • ·Identify vacant positions or weaknesses in your team and set out your plans to rectify the situation;
  • Admit to previous mistakes. It is a strength to show that you have learned from these.
  • What are the present management information systems and what changes are planned for the future?

In this section you should also include brief details of the other managers and employees along the following lines:

  • Analysis of their roles and skills in tabular form
  • Remuneration policies
  • Union recognition
  • Future requirements
  • Recruitment and training policies

Section 5 – Markets and marketing

In many investors’ eyes this section is second only in importance to their assessment of management’s capabilities and it is often the hardest section to write.

Usually it is the sales figure that is the most difficult to forecast accurately and as a result is the most important to justify.

Too often business plans are written from the viewpoint of the producer (namely the company). Too often a company is very enthusiastic about a product but does not say why or how a customer will purchase it, expecting an investor to recognise immediately the market’s need for the product.

It would not normally be good enough to estimate simply that your company will achieve x% of the market. You must justify it and show that you understand your market and your role and position in it. The investor will want to know whether your company has a lead over its competitors and whether you can maintain that lead.

How do you go about achieving this? Marketing has been defined as the art of identifying a need and planning how to satisfy it.



  • You should describe your market generally and its future prospects, setting out for example the market size and the anticipated growth.
  • More important, you should clearly define your particular niche in that market in terms of product, territories, customers, etc. You should also set out your justification for being in that niche and what the particular prospects for that niche are in comparison with the market generally. It may be necessary to commission a market research study to obtain this information.


  • Who are they?
  • Where are they?
  • Why do they buy?
  • When do they buy?
  •  Do they buy by order or tender?
  • Who makes the decision to buy?
  • What is the typical order size?
  • What are the requirements of each customer? For example 80% of your particular niche may be dominated by only 20% of your prospective customers. You should show how you have recognised this.
  • Who are the ultimate customers and what influences on their purchasing habits are beyond your control?


  • Who are they?
  • Where are they?
  • What is their size and potential?
  • How much of the market do they enjoy?
  • What are their strengths and weaknesses?
  • Why will you compete successfully against them?
  • What will be the likely response by competitors to your plans?
  • Be realistic. An honest appraisal of your competitors adds credibility to your business plan.


·      What are your territorial objectives? For example particular parts of the UK, the whole UK, Europe or USA?

·      What is your pricing policy? Is it cost or demand based? How do you expect prices to move in the future? You should show that the pricing policy will allow penetration of the market, an increase in market share and make a profit

  • What are your support and after sales services and warranty arrangements?
  • What will be your minimum order size and your credit terms?
  • What are your proposals for advertising and promotion?

-      Public relations

-      Advertising

-      Trade shows

-      Sales incentives

-      Promotional literature

-      What percentage of turnover does the cost represent?

-      When will the cost be incurred and the benefit derived?

  • How will you distribute your product? For example:

Own sales force

  • Number of salesmen, location and coverage
  • Remuneration policy
  • Productivity (orders per call, average order size)


  • How selected
  • How remunerated


  • Size and location of shops and their staffing


  • Which countries?
  • Distribution arrangements

Delivery of goods

  • How effected
  • Costs.
  • What is the state of your present order book and enquiries on hand?
  • In connection with new products, are you able to provide endorsements from potential customers? If so, is it that they just like the idea or have they seen a prototype?

These items are crucial to the accuracy of the sales forecast and require substantial thought and effort to complete. The company must show a market need for its product, that it understands the customers’ needs and that its product meets these needs.

In writing this section you should try to look at your company and product from the viewpoint of your customer.

Section 6 – Manufacturing process

In this section you need to set out how you propose to manufacture your product both now and in the future, detailing the facilities available to you and the resources that will be required. In particular you should address the following:

  • A brief step by step description of the production process
  • The facilities available (property and plant)
  • Production capacity

-      now

-      future

-      steps to expand

  • What is the percentage yield and waste? What are the factors affecting the outcome and how are they to be controlled and monitored?
  • Security of raw material supply and alternative sources
  • Availability of skilled labour
  • Make or buy decisions
  • Any production advantage you have over your competitors
  • Quality control procedures
  • What are the costs at different volumes of production?
  • If a new product, you should carefully describe the transition from prototype to volume production and discuss the areas where delays may occur.

Section 7 – Financial information

The appendices should include the latest audited accounts and management accounts, thus setting out your company’s present position. 

The following detailed forecasts (normally for a three year period) should be included in appendices:

  • Profit and loss account
  • Cash flow statement or source and application of funds statement
  • Balance sheets
  • Statement of assumptions underlying the forecasts

You should include a summary of the most important figures in the body of the business plan. This can be shown in tabular form and for each year might include the following:

  • Sales
  • Gross profit margin
  • Net profit before tax
  • Retained earnings
  • Cash generated/used
  • Capital expenditure

You should also include a commentary on the forecasts to explain in layman’s terms what the numbers mean. This commentary should, if appropriate, comment on any early losses suffered by the project and the transition to profit. It should also relate the timing of the investment from initial outlays to sales being achieved to profits being earned through to cash being generated. It should also comment on the strength of the balance sheet and draw attention to any off balance sheet assets (e.g. intellectual property rights) which might affect a valuation.

Included with the forecasts in the appendices will be a statement of the assumptions underlying the forecasts. You should highlight in the narrative the key assumptions and justify them by reference to the other sections of the business plan. For example, the sales forecast should be clearly justifiable by reference to Section 5 – Markets and marketing.

You should also state here how much funding you are looking for and when it will be required, including likely additional requirements in the future. You should also give a broad outline of the type of finance you are seeking although it is best not to be too specific initially. If you are seeking finance from several sources it is helpful to indicate the progress being made with each. You should also state the effect on the company’s gearing of obtaining the requested finance both now and in the future.

Finally in this section you should discuss the proposed exit vehicle for the venture capital investor.

Section 8 – Risk factors and rewards

Don’t hide the problems! Remember that you and the investor have common aims and concerns. You are both risking money on the same project.

Highlighting risks adds credibility to your business plan. It shows that you have seen the risks in advance and have given thought to how you propose to overcome them or at least minimise the effect.

As one investor put it:

“Although I expect to run risks when I invest, I also expect to know what the risks are that I am running.”

You should therefore state the risks inherent in each part of your business plan and your opinion of the likelihood of their occurring. You should also show what steps you have taken or propose to take to minimise any impact these risks might have on the performance of your company.

Assuming the risks cannot be overcome altogether you should also include an analysis of the effect on both profit and cash of their occurring. The best method of demonstrating this is by carrying out a sensitivity analysis using a spreadsheet. You should, however, only include a summary of the results. No investor will want to look through reams of computer printout prepared on numerous and varying assumptions! It is important though to also include your comments on what is shown.

However, don’t be all doom and gloom. As with any selling document you should keep a sense of proportion in discussing the risks. Don’t put the investor off, merely demonstrate how you have planned to overcome the particular risks of your business.

A useful way of balancing the risk is to include a SWOT analysis.

As part of the Opportunities section you should include the rewards to the investor if the plan is achieved. You should demonstrate the worth of the company in say three or five years’ time and the return on investment this would represent.

You should also deal with any other criteria that the particular investor might have and demonstrate how your plans meet them.

If you are seeking a package of funds from different sources it would be helpful if you also demonstrate here that each of the criteria of the varying sources has been satisfied by your plan. 

Section 9 – Timescales and benchmarks

This section sets out in summary form the company’s objectives. These will not all be financial. For example, in increasing production capacity it might be necessary to take on additional skilled workers.

(A business plan being prepared for management’s own internal use might deal with this section in far more detail than business plan being presented to an outside body. It would probably also deal with the sub-objectives to be achieved on the way to the main objectives.)

You should set out:

  • The objectives by department
  • The timescale of major events and the resources needed to achieve them.

It is often helpful to represent this information graphically.

Stating your timescales and benchmarks not only shows that you have carefully planned the steps of your proposal but also helps with any subsequent monitoring.


The following would be typical items to include in the appendices to your business plan: Glossary of terms used; Product literature and technical specifications; Organisation charts; CVs of key managers; Market surveys; Patent details; Financial forecasts, profit and loss, cash/funding, balance sheets, assumptions; Latest management accounts; Third party confirmation, where available.