How to Fundraise: Business Plan Guideline

Blog cover picture_How to Fundraise Business Plan Guideline
Emilija Banytė

Emilija Banytė

Emilija is a BSc Communication Science student at the University of Twente and 2020-2021 Brand Director at DSIF. She is responsible for online/offline marketing and is one of the decision-makers when it comes to investing.

The business plan is an opportunity to scrutinise the potential challenges before taking off. With it, you lay the foundation of your start-up and explain its potential to investors. In this blog, we provide you with an ultimate guideline for the business plan.

Benefits of the business plan

With the business plan, flaws and weaknesses become visible, creating the opportunity for them to be addressed before it is too late. The overlooked weaknesses could become brilliant ideas that might only increase the value of a start-up. Also, the business plan gives you confidence in your projected financials to determine the development’s needed capital. In a similar manner, it gives you time to consider different strategies for sales and marketing. If you have time and motivation, then the business plan will surely strengthen your start-up’s idea.

Tips

  1. Do not beat around the bush. Investors dislike long texts with little meaning. Get straight to the point and be specific.
  2. Present the business plan in a concise and branded way. That way, you show your visual differentiation from other businesses.
  3. If you use external sources, be sure to include them. Investors trust in facts, not in what you think other people think.
  4. When backing up your idea with research, be sure that its target audience aligns with yours.
  5. Avoid poor grammar at all costs. To save time, make use of free online writing assistants, such as Grammarly.
  6. Avoid the “salesy” tone. Your business plan should be an objective document, not a marketing campaign.

Note: the order of the content in the business plan is up to you

Business plan content guideline:

1. Executive summary

This part should provide a brief summary of your business plan. Give an overview of the business idea, product/service, unique selling points (USPs), target audience, brief introduction of a team, and an investment goal. It is a fundamental part of a business plan since for investors, it gives the first impression of what to expect from the rest of the document. Be sure to write the key elements of your plan and by that try to create curiosity and excitement for the text that follows.

Tip: Start writing this part after you have completed the business plan. This way, it will be easier to summarise the information provided in a plan. Also, try to stick to a 1-page length.

  • What is your business idea?
  • What is your product/service and its differentiating USPs?
  • For whom is your product/service created?
  • Who are the founders?
  • What investment opportunity are you seeking?

2. Company description

The Company’s description is about the core beliefs and essential elements of a start-up, while the executive summary is a shortly described business plan. This section should outline the purpose, mission, vision, objectives, industry, legal structure, and shareholders. Be specific and short, this part should be no more than 1-page in length.

  • What is the start-up’s purpose, mission and vision?
  • What are the short- and long-term objectives?
  • In what industry is your start-up?
  • What is the (planned) legal structure of your venture?
  • Who are the shareholders, and what is the division of shares?

3. Start-up timeline

A start-up timeline gives a sense of the past, present and future milestones and achievements. It shows the stage of a product/service, funding rounds, progress in product/service traction, product/service testing, and accelerators/incubators/hackathons/competitions attendance. For investors, this section shows your motivation and determination.

  • What is your start-up’s timeline?
  • What are your start-up’s achievements?
  • What are the achieved milestones?
  • What are future milestones?

4. Team

Your investors might become your potential partners, keep this in mind and show them your competence. For each member provide a short biography that summarises their skills in terms of entrepreneurial experience. State the background information, such as education and interests. Also, state the current role in the start-up and the responsibilities of it. Additionally, your initial start-up team might have advisors and mentors. They can be business consultants, attorneys, accountants, and so forth. It is also essential that you include them by stating their role. 

  • Is the team motivated, diverse and competent? 
  • What is the founding team’s background?
  • What are the roles of each person in a start-up?
  • How did the team come to work together?
  • Who are your advisors and mentors?

5. Problem

Who is the villain in your story? Describe the problem by outlining how severe it is. The better you will articulate the problem, the easier it will be for investors to understand the severity of it. If you plan to expand internationally, write about this problem’s state in other parts of the world. By explaining the problem, do not entirely exclude your target group out of the picture.

  • What is the problem you are solving?
  • How severe is the problem in the local and international settings?

6. Solution

Every hero fights a villain. Explain to investors your unique solution to eliminate/minimise the problem; be the hero in this part. Focus on disclosing your start-up’s potential from the customer’s point of view. Explain how your potential or existing clients can benefit from it, and why they would come to you and not to your competitors.

  • What is your solution to the problem?
  • What are your USPs?
  • Why will customers be interested in your product?
  • How do you differentiate from your competitors?
  • At what stage is your product?

7. Product & Technology

In the solution part, you explain your product from a customer’s perspective. In this part, you should aim to explain it from an investor point of view. Focus on explaining technology/product/service functionalities, its development, and technical differentiating factors from competitors. Also, clarify the current situation on the intellectual property of your innovation. Investors put a great emphasis on whether you have a patent or other type of intellectual property.

  • If applicable: How did you develop the technology?
  • How does your technology/product/service work?
  • How does technology/product/service look like?
  • What is your plan for intellectual property? Do you own a patent or copyright?

8. Competition

This part should consist of your key competitors. List them by giving information on their location, market size and their unique features. Do not only look locally but also include international competitors. Additionally, discuss your competitive advantages by comparing yourself with your competitors, and by showing your superior product offering. Include the comparison of the pricing and explain your strategy to stay ahead of your rivals. Make use of graphs or tables to present it properly and appealing.

  • Who are your local and international competitors?
  • What is the focus, size and location of your competitors? 
  • What is your superior product offering?
  • What is your pricing in comparison with your competitors?
  • What is your plan to stay ahead of the competition?

9. Market opportunity

In the market opportunity, explain if the industry has open doors for you. Put your effort into a market research in order to be certain about its viability. Describe the market in terms of your target group, by explaining its size, growth potential and demand. Prove that there is a product-market fit.

  • What is the size of your target market? Does it have a growth potential?
  • What is the size of the market?
  • What is the national and international growth potential of a market?
  • What is the demand for your offering? 
  • Product-market fit?

10. Marketing plan

The big question in the marketing plan is: how are you planning to reach the target audience? Precisely define your target group’s demographics by addressing their age, gender, occupation, educational level, income, and location. If your start-up is B2B, then address the industry, location, size, and business stage. Explain the positioning strategy and outline how you want to be perceived in customers/clients’ eyes. Give a plan for online and offline targeting strategy and its channels. Alongside that, explain your go-to-market strategy.

  • Who is your target group?
  • How will you acquire customers?
  • What is your positioning plan?
  • What is your strategy for paid, owned and earned media?
  • What is your plan for offline and online marketing?
  • What is your go-to-market strategy?

11. Risk assessment

Risk assessment enables you to identify the potential threats that could affect business operations. It could be related to your team, market, finance, technology/product/service or business operations. In this section, let the investors know the potential risks in terms of probability of occurrence, impact and risk level. 

  • What are the risks regarding the market, finance, team, product/technology and business operations?
  • What are the risks in terms of probability of occurrence, impact and risk level?
  • How are you going to cope with these risks?
  • How does your SWOT analysis look like?

12. Business model

Business model refers to a strategy for profitably doing business. Identify your type of a business model, whether it would be a subscription model, freemium model or another kind of model. Explain if you intend to make it B2B, B2C, C2C or C2B. For the revenue model, explain how the start-up earns money from its business model. Outline your main profitability growth drivers. Alongside the things mentioned earlier, define your scalability potential because most investors are highly interested in it. This could be combined with the financial overview.

  • What is your business model and how does it work?
  • Is your business B2B, B2C, C2C or C2B?
  • What is your revenue model? What are your main growth drivers?
  • How scalable is the business model?

13. Financial overview

One of the most crucial parts of a business plan is the financial overview. In this section, you present financial projections and, if applicable, the current financial state. Present monthly and annual forecasts of sales, budget, profit and loss, income statement, balance sheet, cash-flow statement, and a breakeven analysis. The purpose of a financial overview is to show your start-up’s scalability and exit potential. 

Tip: Be honest, in most cases, investors see if a start-up exaggerates the numbers.

  • What are your realistic and optimistic financial projections? Recommended to include pessimistic financial projections.
  • How does the forecast for sales, budget, profit and loss, income statement, cash-flow statement, balance sheet, and breakeven analysis look like?
  • How much does it cost to produce your technology/product?
  • What are the key metrics for progress tracking?
  • If applicable: what is your progress in terms of the profitability, revenue, engagement partnerships/clients, registered/active users, traffic and etc.?

14. Funding strategy

In this section, you should describe the projected use of capital and expected results. Additionally, provide your further fundraising plans.

  • What is the sum of money that you are raising?
  • What are your funding goals?
  • How will you spend the invested capital?
  • What are your further funding plans?

15. Current investors (if applicable)

This section only applies if you have fundraised before. If it does, then list your current investors and provide a capitalisation table (cap) that describes the start-up’s ownership.

  • Who are your current investors?
  • How much was invested in your start-up?
  • What is your cap table?

16. References & Appendices

Do not hinder the reader by putting your supporting documents right away in different parts of your business plan. Instead, refer to them and lead the investor to the references and appendices section. If you have any additional information that you believe will help you get the funding, put it also in the appendices. You should aim for investors to get the full picture of your business.

  • What are your supporting documents?
  • What are the pieces of evidence?
  • What are the sources you used?

Summary

DSIF Blog - How to Fundraise_Business Plan Guideline Picture

In need of support?

Golden Egg Check offers investor readiness assessment and market research.

The START program by Novel-T is a validation sprint for an innovative business idea in Enschede.

Incubase is a student incubator that offers start-up support in Enschede.

Further readings

Business plan examples

Business plan template

Still struggling with the one-pager? Check out our blog explaining it in detail.

Ready to start your venture? Apply at DSIF!

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