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What Investors Want to Learn From Your Business Plan — CEO Insights

Posted march 23, 2021 by bailey koharchick.

You’ve built your business idea into a scalable, high-growth potential startup. You’ve demonstrated some initial traction in the marketplace, and now you’re seeking your first round of funding. 

So, how do you ensure that your business plan is investor-ready? Start with a Lean Plan.

The best investor-ready business plan is a Lean Plan

When writing a business plan for investors, focus on developing a strategic lean business plan . 

This type of business plan is shorter and more flexible than a traditional plan . Similar to the executive summary, your Lean Plan will help keep the necessary information about your business concise and easy to review. This makes it perfect for presenting to investors, but removes the limitations of a traditional business plan format. 

Aside from being easy to review, it’s also much easier to update, expand on necessary section and actually use outside of being a presentational document. Think of it as a tool for gleaning valuable insight into your company, its potential for success, and the areas where you may want to fine-tune your business model. Things that any investor will want to know and confirm that you know as well.

What should go into your investor-ready business plan?

Before you send over your executive summary and financials, make sure you’ve already completed your full Lean Plan. It will share some common topics with your executive summary, but it should go into more detail—and it should still be fairly brief. Here’s what you need to include in your Lean Plan:

• The problem or need that you’re solving for your customers
• Your product or service—how you’re solving the problem
• The target market size and demographics
• Your sales channels
• A basic marketing plan (the results of your market research)
• Competitor analysis and your competitive advantage
• Real financial projections including a full cash flow forecast
• Key milestones in your business to date and a timeline of expected milestones to come
• Key team members , business owners, and advisers championing your success

For more on how to write your Lean Plan, check out our introduction to Lean Planning .

Key elements to focus on with your investor ready business plan 

It’s true that the angel investors or venture capitalists that you pitch to may never read your whole plan, even if it is a Lean Plan. However, anyone interested in handing you thousands or even millions of dollars will want to do due diligence before they invest in your venture. They’ll be especially interested in your strategic roadmap , your business model , and a solid financial plan . You can cover all of these elements with the following sections.

Executive summary

The executive summary you share the first time you reach out to an investor should be short—one to two pages. It doesn’t include any unnecessary details, but it should support and outline the financial forecast you present. In short, this should provide a summary of your business model, your strategy and what research led you to that specific structure.

Make sure your executive summary covers:

• Who you are—your name, your business name, your contact information
• What you offer and the problem your business solves
• Your target market
• How much startup funding you’re seeking
• The size or scale of your business
• Any remaining critical details that investors definitely need to know

A full financial forecast

No matter who you pitch to, investors will want to know if you’ve thought through the financial feasibility of your business. You can explain this using your financial forecasts within your full financial plan. 

Your full financial forecast should include a projected profit and loss statement , a projected cash flow statement , and a projected balance sheet .

The easiest and most accurate way to do this is to build the financials from the bottom up, starting with identifying your share of the market. First, figure out your TAM, SAM, and SOM . That is, your total addressable market (TAM), then what percent of that market you are going to go after, or your segmented addressable market (SAM), and your realistic share of the market (SOM).

Make sure you answer the following questions with your financial forecasts

• What’s the average lifetime value of your customers?
• How much is it going to cost you to get them (acquisition costs)?

If you’re seeking investment, you’ll have to prove that you’ve had some initial traction. So, as you build out your forecasts, use your actuals to help model what you expect to see for the next few years. Even if you don’t have robust financial results, you can still develop extensive forecasts and explain how you’ll continue to review and refine them as your business launches and grows.

How to develop your pitch presentation 

When you first reach out to an investor, plan to share solid financials and an impressive executive summary that piques their interest. They will ask you for whatever additional information they’re interested in. When your Lean Plan is finished and your executive summary and financials are ready to send, prepare your pitch deck and presentation. Here are a few things to keep in mind before you start the conversation with potential investors.

Do your homework

You’ve likely conducted plenty of research around your available market, potential competitors and the customers you intend to serve. But, before you pitch your business, you’ll also want to research who you’re pitching to. You want to be sure that you know who you’re speaking to and have a sense of who they’ve funded before and what they really want to get out of your presentation. 

The key here is that by the time an investor says “yes” to the pitch meeting, you’ve already done all your homework, have a thorough plan in place, and you’re prepared for whatever investors want to know. 

Craft a story

Your pitch will include many of the same elements as your Lean Plan, but don’t just read your executive summary to investors when you have them in the room. Use storytelling to your advantage, craft a tale around who your customers are, and how your solution serves them better than anything currently available. 

You can even focus on your company mission, culture or anything else that sets your business apart and helps reinforce the viability. If you can, make this part of your investor research to be sure you know what elements of your business they care more about.

Practice your pitch 

Keep in mind that just like your Lean Plan, your pitch should be brief. Brevity and knowing how to answer specific questions only comes from practicing what you intend to cover and how you’ll use your pitch deck as a resource. 

Practice your pitch on your family and friends so you get comfortable with the delivery. Ask them to ask you questions about things they’re not clear on so you can start to anticipate and prepare for the hardest questions investors will ask. Here’s a guide to pitching to help you get started.

Keep your business pitch lean

When you’re ready to seek funding for your startup, resist the urge to send over a 200-page business plan to a potential investor. Keep in mind that investors get piles of pitches just like yours every day. Make it as easy as possible for them to digest who you are and the opportunity your business presents. Just make sure that when you get that callback, you have a strong financial plan, and a well-thought-out Lean Plan in your back pocket, so you’re not scrambling.

Editor’s note: A version of this article by Palo Alto Software CEO, Sabrina Parsons, originally ran on the MyCorporation blog . This article was originally published in 2013 and updated for 2021.

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Bailey Koharchick

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What Do Investors Really Want From a Business?

Candice Landau

9 min. read

Updated April 19, 2024

Question: Should I send out market research surveys prior to approaching an investor? Also, how safe is it to pitch my business idea to an investor?

Underlying these two questions is another question and the crux of what this person is asking, “what do investors want?” Are they looking for new ideas so that they can create businesses of their own or are they looking for you to prove your idea will work? What do I have to show them to get funding?

Once we’ve answered the first question we will move onto the second two.

• Getting into the mind of an investor

Hundreds of episodes of Shark Tank and Dragon’s Den have taught us that if you do not know your business inside-out and if you don’t come across as capable of running your business without the ongoing guidance of your backers, you’re not going to stand much of a chance.

Investors are just as the title suggests – investors. They’re the deep-pockets with the connections that we turn to when we want helping launching and growing our business. They’re the PR and the security. They’re the step ladder. They are not there to run your business unless that’s part of the agreement.

That’s what you’re supposed to be doing and what your partners and employees are supposed to help with.

While every investor will have their own requirements and be looking for something that aligns with their personal interests and pursuits, there are a number of things you should consider if you want to stand a chance at getting funded.

1. The right industry

“What’s comfortable to me is familiarity.” – Marc Jacobs

According to business development consultant, Wyn Lydecker, both investors and venture capitalists are looking to invest in businesses and industries that they can understand. For this reason it’s best to target your pitch and to build relationships with those people that are interested in your industry.

Often, investors will advise or sit on a number of boards. As such, they have little time to learn a new industry and to make contacts within that industry. A simple online search should reveal your investors interests as well as the portfolio of companies that he/she has invested in.

2. You and your team

“It really takes likable superstars to get the attention of the masses.” – Jennifer Wyatt

If your investor is a match with your industry, believe it or not, the next most important thing is  you and your team . To illustrate this point, there’s no better story than that of Reddit. In 2004, Alexis Ohanian and Steve Huffman launched Reddit. They were funded by Y Combinator and originally approached by Paul Graham. When Alexis and Steve first pitched their idea—MyMobileMenu, a restaurant takeout app—to the Y Combinator team, they were rejected.

Heading home a day after the pitch, Alexis got a call from Paul. He said, “We made a mistake. We don’t like your idea, but we like you guys.” He told Alexis that they needed to build the front page of the internet. Three weeks later Reddit was born and a year later, sold for millions to Condé Naste.

If you’re the type of person they can see themselves working with, you’ve won half the battle.

For venture capitalist  Paul Suster , it’s not just the individual; the “management team” is essential.

“I’m personally 70 percent management, 30 percent product […] If I feel a priori that the CEO can’t cut it I’m highly unlikely to invest. Because management is so important, I always tell people to make the bio slide the first in your deck. If you have good experience then the VC will be leaning forward for the rest of the presentation.”

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3. Market share and a competitive advantage

“We don’t have a monopoly. We have market share. There’s a difference.” – Steve Ballmer

Now, what’s the next thing on the table? Your idea. Or rather, whether or not your idea is has a large market share and is competitive within that market . Starups.co, a company founded with the intention of connecting entrepreneurs and investors, advises business owners on what will attract an investors attention. Market size is one of those things. If your idea is only worth a million dollars to them, they won’t feel bad about turning it down. However, if you have the potential to make tens or hundreds of millions (even billions), passing on your idea would be foolish.

However, a large market is not enough. You’ve also got to have a competitive advantage within that market. What will make it hard for others to rise above you? What is your “unfair advantage” or the thing that no one can compete with? What makes you a game-changer? Make no mistake, you will need to have a business model or a business plan that shows just where you sit in relation to your competitors. Understanding them is a good starting point.

4. Traction

“No way of thinking or doing, however ancient, can be trusted without proof.” – Henry David Thoreau

Another great way to pique an investor’s interest is to have a bit of traction as it demonstrates your ability to see your ideas through and it gives investors a glimpse of where you may be headed. If investors see that with just a little bit of money you can do what you’ve done, they might start wondering what you’re capable of with a whole lot more at your disposal.

For investors, traction minimizes risk. It’s a chance to see how you perform and what you’re capable of. To demonstrate traction you might recruit a good management team, start making sales, build an advisory board or secure strategic partnerships.

Without at least a little traction, you’re unlikely to get very far with an investor.

5. Cash flow and a financial plan

“Never spend your money before you have it.” – Thomas Jefferson

Money . It’s not hard to see why this one’s important because really, this is at the heart of every investment. If your business is without the potential to make money, it is not a business. Ideally, you’ll be approaching an investor with a business plan that has your financials worked through.

The most important part of the business plan is arguably the cash flow plan—how much money is coming into your business and how much money is going out. You will need to show that you can cover your own expenses without having to turn to the investor for a check.

Seeing a good return on their investment is key and your financial projections on the business plan are there to give them an idea of how long it will take for you to make a profit and for them to recoup their investment. This is where the “exit strategy” comes in. An exit strategy is not your plan for when the business fails, but rather, your strategy for returning money to investors. This may include planning for an IPO, a strategic acquisition or for management buyout.

This is one area that you can expect investors to seriously evaluate, so be thorough when planning.

• In summary, investors are looking for these five things:
• An industry they are familiar with
• A management team they believe in
• An idea with a large market and a competitive advantage
• A company with momentum or traction
• An idea that will generate cash flow
• Should I do market research before pitching?

In order to run a successful business, you will need to have a good understanding of your customers, your industry and your competitors. Investigating the data behind the products or services that are on the market will help you reduce business risks; identify new opportunities and trends, as well as spot any areas where you might have problems.

Prior to approaching an investor, you will need to ensure you’ve got an excellent understanding of your business. If you haven’t performed any market research, how will you know whether you’ve got a good share of the market and a competitive advantage within that market? These are two things that investors will be looking for when they review your pitch or your business plan.

• Will investors steal my idea?

Based on what you’ve read above, you should now have an accurate picture of what a typical investor is looking for. As you can see, ‘ideas’ are not high on the list. In fact, if you are planning on pitching an investor or handing over your business plan, you’re not actually going to be able to hide your idea. If you do manage to skirt around the issue of exactly what you’re offering, you’re unlikely to get funding.

Naturally, if you’ve got an idea with patent potential, you don’t have to give the exact details, but you do have to make clear what the product or offering does. Investors are busy people and don’t have time to play games. If you’re going to require them to sign a confidentiality agreement before they can even get your plan, they’ll probably move on to someone else.

Additional Reading: 10 reasons not to get investor funding

If you’re still worried about theft, there are a few things you can do to minimize your risk:

• If possible get to know the investor you’re interested in. Do you trust them? It may be best to opt to work with someone you know if you are really worried about theft.
• Send only a portion of your business plan. Exclude any patents that you have filed for and let the emphasis be on your executive summary .
• Investigate your investor’s portfolio. Are they involved in similar projects that share the same market/technologies as you? If this is the case, you may want to think about approaching another investor.
• Include a confidentiality notice on the cover of your business plan (don’t require they sign an agreement before getting the plan)

And remember:

“Good ideas are common—what’s uncommon are people who’ll work hard enough to bring them about.” – Ashleigh Brilliant

Create a business plan that maximizes your chances of securing funding

Candice Landau is a marketing consultant with a background in web design and copywriting. She specializes in content strategy, copywriting, website design, and digital marketing for a wide-range of clients including digital marketing agencies and nonprofits.

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The 5 Things Investors Really Care About When Reviewing Your Business Plan

A business plan is an essential tool for startups and, when executed correctly, it serves two key purposes:

• It provides goals and a roadmap for you to follow in order to build a successful company.
• It provides the format and information lenders and investors need to determine whether or not to provide funding to you.

When preparing your business plan for investors , you must keep this audience’s unique needs in mind. Below, you’ll learn what these needs are and what investors will scrutinize most when reviewing your plan.

Investors will generally take equity in your company, or they will give you a loan that must be repaid. In either case, their primary goal is to get a return on their investment. For loans, they want to have great confidence that you’ll be able to repay the loan and interest. For equity investments , they want to see real growth potential and a reasonable possibility of your exiting at a significant multiple.

For those unaware of the phrases “exiting” and “significant multiple,” please allow me to explain.

By “exiting,” I’m referring to an event in which the equity investor will be paid. The most likely exit event is for you to eventually sell your company. Another positive exit event is taking your company public; while this is very favorable to investors, the likelihood of this happening is extremely low.

Next, a “multiple” is the return on the investment that investors will receive. For example, let’s say a venture capitalist invested $5 million in your business and, upon exit, received a $50 million check for their equity stake. In this case, the investor would have received a 10X multiple or return on investment. Equity investors generally want to see a five- to 10-time multiple. While this seems very high, it’s because they understand that many of their investments will not materialize at all.

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Below are five of the most critical things investors look for in your business plan to determine if they think you will give them the return on investment they desire:, financial needs and projections.

Investors need to know how much money you are seeking, the proposed uses of the funds and your financial projections .

Your financial projections should show your expected sales, expenses and profits over the next five years. Investors want to see significant growth and profits but need to feel confident about your assumptions.

For example, while it’s easy to assume that your sales will grow 500% per year, investors will want you to provide rationale behind this and other assumptions. Did your last company grow at 500% per year? Are there other companies in the market that are growing at this rate?

The more research you can do to bolster your assumptions, the more credibility they will have in the eyes of investors, which will make them more likely to believe in your business and fund your company.

Related: How to Create a Fundable Business Plan

Investors want to see that you’ve achieved traction. Traction is similar to the term “proof of concept.” It is getting users or, ideally, paying customers for your product or service. By gaining traction, you reduce risk for yourself and for investors.

For instance, consider two companies developing mobile apps . One just has the idea to create the app. The other has already built the app (i.e., they’ve proven they could successfully code and complete the app), they’ve acquired 10,000 users (i.e., they’ve proven they could market the app and that customers really want it) and 1,000 users are currently paying for a premium subscription of the app (i.e., they’ve proven they can monetize their business). As you can see, the latter company has already removed multiple risk factors to the investor and is thus much more likely to receive funding.

In the executive summary at the start of your business plan, you want to clearly describe what you do and explain any traction that you’ve accomplished thus far to get investors interested right away.

Note that if you are a true startup, it may be hard to show traction in terms of paying customers. However, you could show a prototype or research you’ve done proving customer interest in your product. Sometimes you need to get creative in showing traction!

Unique success factors

Documenting your unique success factors is critical to winning over investors, which is why any comprehensive business plan should include a section on this. Your unique success factors are those things that make your company more likely to succeed.

Traction, as just mentioned, is clearly a unique success factor. Other factors are past accomplishments of your management team. They can also be market research you’ve uncovered showing that market trends are moving in a direction that benefits your company over your competition. Another success factor could be a marketing partnership you’ve formed that’s sure to bring in a steady flow of customers.

Think through why your company is uniquely qualified to succeed in your given field, and stress this in your executive summary and throughout your business plan, as it’s imperative investors see and understand this.

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Marketing plan.

The marketing section of your business plan discusses the four Ps, which include:

• P roduct or service
• P lace, or distribution strategy, which is how customers will buy from you (e.g., via your website, storefront, direct mail, distributors, etc.)
• P romotions, which is how you will attract new customers

Within the promotions section, you need to explain to investors the cost of attracting a new customer, the expected lifetime value of your customer and whether or not there’s room to scale.

Regarding the cost of attracting customers, hopefully you have real figures to work with. If not, you can apply realistic assumptions. For example, you might assume that via pay-per-click advertising, it will cost you $2 per click, and one out of every 100 clicks will become a client. Thus, your customer acquisition cost (CAS) will be $200.

Next, you might be able to show that your average customer pays $100 for your product and buys 10 times over the first year at a 50% profit margin. This would mean that your average customer gives you a profit of $500.

Finally, you want to show the market is big enough to support your growth. Ideally, you can prove with market research that your target market includes, let’s say, 5 million customers.

In summary, you would be showing it costs you $200 to obtain a customer worth $500, and there are 5 million potential customers out there; this would prove to investors that you have a sizable and profitable opportunity.

The final thing investors really care about in your business plan is research. Research will appear in multiple sections of your plan, and the goal of it is to bolster the argument that your company is worth investing in. As demonstrated above, the right research will support your financial projections, unique success factors and other key sections.

Here is the key research you need to conduct:

• In your industry analysis section, you must provide research on the size of your market and trends
• In your customer analysis section, you should document how many target customers exist and their wants and needs
• Your competitors. Show their strengths and weaknesses, and conduct research to support your financial assumptions

Key takeaways on preparing your business plan for investors

Investors want confidence that investing in your business will give them a solid return on investment. It is your job as the founder of your company to make sure your business plan achieves this. Be sure to conduct your research, and pay special attention to your financial needs and projections, traction, unique success factors and marketing plan, and finding investors to write you a check will become much easier.

Originally published July 25, 2021.

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What do Investors Look for in a Business Plan?

• October 1, 2021

Being a small business owner is a goal for millions throughout the world. But, while there are millions of would-be business owners, there are only a handful who are able to totally finance their dreams of becoming an entrepreneur . Even those that do may find themselves trapped when it comes to scaling up to keep up with their competition and the demands of the market. Bank financing including microloans, traditional lending, and possibly borrowing from family and friends are all viable options. Another option that should be considered when it comes to financing your business is developing a partnership with an investor.

What are investors looking for?

When seeking funding from an investor, it’s important to understand what they’re looking for. First and foremost, they’re going to want to see an investor business plan . No investor worth their salt will invest a dime into your business without first seeing a well-written business plan that maps out your goals, and more importantly, how they’re going to recoup their investment – with interest. Even if you have a relationship with an investor, it still pays to find out what it is that makes them tick and ultimately, what it’s going to take to get them to fund your idea.

Things Your Investor Business Plan Must Have

When it comes to investing in new business opportunities, investors can be extreme sticklers and your business plan has to be strong. There are several sections your plan will need to have including:

The Executive Summary

The Executive Summary is your first impression and can make or break the investment opportunity. You’re not going to get a second chance to make a first impression so be sure your executive summary is done right.

The Management Team

Remember, your investor is not just investing in you should they decide to infuse capital into your idea, they’re also investing in your management team. With that, it’s important that you put together comprehensive, balanced management team biographies as you look to build off of the momentum from the executive summary. You’ll want to include things like background experiences that align with the business you’re building, roles they’ll play, and the impact you believe their presence brings to the venture.

Investors are definitely going to want to see sound, realistic financials . When it comes to this area, the more details, the better. Profit and loss, cash flow projections, revenue forecast, and a clear understanding of where the funds you’re seeking will be spent should all be included in this section of your investor business plan.

Description of your business model

The who they’re getting into business with was answered in your management team section. In this section, give the investors a description of your business model. What makes it unique, what are your plans to remain competitive, how will you price it and maintain relevance as the market evolves? All these are questions that your business model section should effectively address.

A strong narrative

Every business has a story, and this section offers you the chance to tell yours. Tell them how it all started, where it stands right now, and most important of all, be sure to tell the investors where you see this incredible idea of yours heading!

Market Research

Market research is where you begin to bring the case you’ve made thus far home. Sound market research that supports your vision and the numbers you’ve presented will impress even the most skeptical investors and put you in a position to score much needed funding.

Investment Structure and Terms of Repayment

No matter how great your idea sounds in your head or on paper, investors are going to want to see how they’ll recoup their funds. They’ll also want to know if they have a say in the direction of the company aside from the capital infusion. Will they have voting rights? What are the actual terms of repayment including length and the interest they stand to gain? Finally, at the end of their investment term, what is the exit strategy, and is there an opportunity to re-invest? All of these important items should be covered in this part of your plan.

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What Do Investors Look For In A Business Plan?

When looking for investment opportunities, investors, especially when it comes to early-stage startups in the technology sectors, beyond other potential metrics, primarily look for how big the potential market might be through what’s known as the TAM, SAM, and SOM frameworks.

Table of Contents

Understanding how venture capitalists think

A venture capitalist is an investor that provides capital to start-ups that have high growth potential. In other words, for a potentially high return, the investor endows the company with equity for a stake within it.

It is important to highlight that not all investors and venture capitalists look for the same things or focus on the same aspects of a business .

In general, most investors look for interesting opportunities that would represent a good long-term investment.

How might those opportunities look like? It is crucial at this stage you get acquainted with the market you’ll be operating.

This means you’ll need to understand three key concepts: TAM, SAM, and SOM:

From there, you might want to understand the size of the Serviceable Addressable Market. And what your Serviceable Obtainable Market will be.

Once you have defined the SOM, you can make a five-year projection of the expected sales (assuming you don’t have revenues yet).

Based on that projection, you will be able to apply a 3-5X multiplier on the revenues based on the market and  business model  you identified. 

Quick case study

• Imagine you are evaluating how much your marketplace idea is worth.
• You operate in a market where the TAM is $10 Billion. 
• That your SOM is 0.5% of that market in the year 5th. 
• This means at the year five; you will have a volume of transactions on your marketplace of about $10 million. 
• As a  marketplace , you might make money through transactions fee.
• Assuming a transaction fee of 3%, you will have a turnover of $300K in year 5th. 
• Considering that a marketplace business model is highly scalable and that the TAM is pretty big, you might want to apply a high multiple, let’s say 5X, on the revenues. 
• This means that in the 5th year, your company will be worth $1.5 million. 

Therefore, if the business angel invests: 

• 10% = $150.000
• 20% = $300.000
• 30% = $450.000

Keep in mind the example above is just a simple case study.

The estimates will depend on what assumptions you’ll start with from evaluating your company.

So how big is the TAM? How much of that market can you service in 3-5 years? How will you make money? And so on.

Also, the ability to convince the business angel might depend on how good you will be at communicating your idea, the so-called pitch.

And suppose you’re looking for a business angel, venture capitalist, or investor. In that case, that means you might need a strategic figure able to help you scale your business as quickly as possible.

Case Studies

• TAM: Let’s imagine the value of the global virtual reality entertainment market is $80 billion.
• SAM: Let’s imagine the market for your VR theme park, targeting thrill-seekers in North America, is $5 billion.
• SOM: Let’s imagine that in the first year, you aim to attract 2% of North American thrill-seekers, which would be $100 million.
• TAM: Let’s imagine the value of the global personal transportation market is $3 trillion.
• SAM: Let’s imagine the market for your flying car rental service, targeting early adopters in major European cities, is $500 million.
• SOM: Let’s imagine that in the first year, you aim to serve 0.5% of early adopters in European cities, which would be $2.5 million.
• TAM: Let’s imagine the value of the interstellar tourism market is $1 trillion in the distant future.
• SAM: Let’s imagine the market for your space tourism trips, targeting adventure enthusiasts worldwide, is $10 billion.
• SOM: Let’s imagine that over the first decade, you aim to attract 0.1% of adventure enthusiasts, which would be $1 billion.
• TAM: Let’s imagine the value of the global AI assistant market is $150 billion.
• SAM: Let’s imagine the market for your AI-powered personal assistant robot, targeting busy professionals in the Asia-Pacific region, is $5 billion.
• SOM: Let’s imagine that in the first year, you aim to assist 1% of busy professionals in Asia-Pacific, which would be $50 million.
• TAM: Let’s imagine the value of the global luxury travel market is $2.6 trillion.
• SAM: Let’s imagine the market for your underwater luxury hotel, targeting high-net-worth individuals who seek unique experiences, is $100 million.
• SOM: Let’s imagine that in the first year, you aim to attract 0.1% of high-net-worth individuals, which would be $100 million.
• TAM: Let’s imagine the value of the global gaming industry is $159 billion.
• SAM: Let’s imagine the market for your time-travel adventure game, targeting gamers of all ages worldwide, is $5 billion.
• SOM: Let’s imagine that in the first year, you aim to engage 2% of gamers worldwide, which would be $100 million.
• TAM: Let’s imagine the value of the global healthcare technology market will be $450 billion.
• SAM: Let’s imagine the market for your AI-enhanced healthcare platform, targeting healthcare providers in the United States, will be $20 billion.
• SOM: Let’s imagine that in the first year, you aim to capture 2% of the U.S. healthcare provider market, which would be $400 million.
• TAM: Let’s imagine the value of the global renewable energy market will be $3.5 trillion in the next decade.
• SAM: Let’s imagine the market for your innovative sustainable energy solution, targeting commercial and industrial clients in Europe, will be $500 billion.
• SOM: Let’s imagine that in the first three years, you aim to serve 1% of the European commercial and industrial clients, which would be $5 billion.
• TAM: Let’s imagine the value of the global personal finance software market will be $60 billion.
• SAM: Let’s imagine the market for your AI-driven personal finance app, targeting millennials and young professionals in North America, will be $5 billion.
• SOM: Let’s imagine that in the first year, you aim to acquire 4% of the North American millennial and young professional market, which would be $200 million.
• TAM: Let’s imagine the value of the global transportation industry will be $8 trillion in the next decade.
• SAM: Let’s imagine the market for your eco-friendly urban transportation service, targeting environmentally conscious commuters in major Asian cities, will be $1 billion.
• SOM: Let’s imagine that in the first two years, you aim to serve 2% of environmentally conscious commuters in Asian cities, which would be $20 million.
• TAM: Let’s imagine the value of the global fitness and wellness market will be $1.2 trillion.
• SAM: Let’s imagine the market for your virtual fitness coach app, targeting fitness enthusiasts and health-conscious individuals in South America, will be $50 million.
• SOM: Let’s imagine that in the first year, you aim to engage 3% of South American fitness enthusiasts, which would be $1.5 million.
• TAM: Let’s imagine the value of the global agriculture technology market will be $200 billion in the next decade.
• SAM: Let’s imagine the market for your advanced agricultural technology, targeting large-scale farming operations in North America, will be $15 billion.
• SOM: Let’s imagine that in the first five years, you aim to serve 10% of North American large-scale farming operations, which would be $1.5 billion.

Key Takeaways

• Understanding Venture Capitalists: Venture capitalists invest in high-growth potential startups, providing capital in exchange for equity stakes in the company.
• Investor Focus: Different investors have varying investment criteria and focus, with some looking for long-term strategic opportunities, while others seek growth opportunities for potential exits.
• Key Concepts: TAM, SAM, and SOM: Investors assess the market size through the Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM) frameworks.
• Total Addressable Market (TAM): The TAM represents the total potential market size for a product or service, indicating the maximum revenue opportunity in a given market.
• Serviceable Addressable Market (SAM): The SAM is a subset of the TAM, considering the specific market segments a company can effectively target and reach.
• Serviceable Obtainable Market (SOM): The SOM is an even smaller portion of the SAM, representing the achievable market share a company can capture within a specific timeframe.
• Projection and Valuation: Once the SOM is defined, projections for expected sales over a certain period are made to calculate the company’s potential valuation. Multiples are applied to projected revenues based on market and business model assessments.
• Case Study: An example is given of a marketplace idea with a TAM of $10 billion and a projected SOM of 0.5% in the 5th year, leading to a company valuation of $1.5 million with a 5X revenue multiple.
• Communication and Pitch: The ability to communicate the idea effectively in a pitch is crucial to attract investors and convince them of the business potential.
• Strategic Figure: To scale the business rapidly, startups may seek strategic figures such as business angels, venture capitalists, or investors who can provide expertise and guidance.

Related Market Development Frameworks

TAM, SAM, and SOM

Niche Targeting

Market Validation

Market Orientation

Market-Expansion Strategy

Stages of Digital Transformation

Platform Business Model Strategy

Business Platform Theory

Business Scaling

Strategy Lever Framework

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How to Write a Business Plan for Angel Investors

If you are starting a new business or expanding a current business, angel investors will be an important source if you are seeking funding. Angel investors are individuals or accredited investors who invest their own money in businesses they believe have a high potential for success.

Do Angel Investors Need a Business Plan?

The vast majority of angel investors will want to see a business plan before they invest any money in your business. A business plan is a document that outlines the goals and objectives of your business, as well as how you plan on achieving them.

While you may be tempted to skip this step, it is important to remember that angel investors are not just looking for interesting businesses;  they are also looking for businesses with a compelling business plan and a team that can execute on it.

Writing a Winning Business Plan for an Angel Investment

To attract angel investors , you will need to write a solid business plan that outlines your company’s potential for growth and profitability. The following sections should be included in your business plan:

Executive Summary

The executive summary is the most important part of your business plan, as it is the first thing that angel investors will read. This section should give a brief overview of your business, including your company’s mission statement, products or services offered, target market, and how you plan on making money.

Company Overview

This section should provide more detailed information about your company, including your company history, business model, and any unique selling points that make your business stand out from the competition.

Industry Analysis

In this section, you will need to provide an overview of the industry you are in, as well as how your business fits into the industry. You will also need to discuss any trends affecting the industry, and how you plan on taking advantage of them.

Customer Analysis

To attract angel investors, you will need to show that you have a clear understanding of who your target customers are and what needs they have that your products or services will meet. In this section, you should outline your key customer segments and their core needs and define the size of your target market.

Competitive Analysis

In this section, you will need to provide an overview of your competition and how your business plans to differentiate itself from them. You should also discuss any competitive advantages you have, such as a unique selling proposition or a first-mover advantage.

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Marketing Plan

Your marketing plan should outline how you plan on reaching your target market and promoting your products or services. This section should include information on your marketing strategy, advertising and promotional budget, and sales forecast.

Operations Plan

This section of your business plan will outline how your business will be operated on a day-to-day basis. It should include information on your manufacturing process, distribution channels, inventory management, and warehousing.

Management Team

In this section, you will need to provide an overview of your management team and their qualifications. You should also discuss how your team is structured and how they plan on working together to achieve your business goals. Many angel investors will want to see that you have a strong and experienced management team in place before they invest.

Financial Plan

The financial section of your business plan is one of the most important parts, as it will show angel investors how you plan on making money and how much return they can expect on their angel investment. This section should include your income statement, balance sheet, and cash flow statement.

The appendix of your business plan should include any additional information that you think would be helpful for angel investors to know, such as market research reports or detailed financial projections.

By following these tips on how to write a complete business plan, you can increase your chances of attracting the funding you need to start or grow your business from angel investors or angel groups.

What Do Angel Investors Get In Return?

One of the most common questions entrepreneurs have when seeking angel investment is: “What do angel investors get in return?”

In general, angel investors expect a higher return on their investment than they would receive from traditional investments in stocks and bonds. By getting a percentage of equity in your company, a percentage of future profits, or a combination of both, they can possibly earn larger returns, which are commensurate with the increased risk of investing in a nascent, non-liquid company.

Angel investors also typically get preferential treatment when it comes to items like board seats and veto rights. This means that they may have some say in how the company is run and can veto decisions with which they don’t agree.

For these reasons, it’s important to make sure that your business plan is compelling and shows how you plan on generating a large return on investment for your angel investors.

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What Investors Want To See in Financial Statements

Here’s What Investors Want To Know About Your Business

Customer Acquisition Cost

Customer churn rates, accounts receivable turnover, break-even point, personal investment, frequently asked questions (faqs).

There are key performance indicators that investors and lenders will want to see in a company's financial statements before they will invest or loan to the business. Investors will be looking at these key metrics, so work with your controller services to track and improve them. Business financial statements are like a financial report card showing how well your business is doing.

Key Takeaways

• Financial statements reveal information about a company, including its net profit or the revenue remaining after paying all expenses.
• Sales and revenue growth are critical to a company's financial performance and determining if sales have increased or decreased.
• Investors want to see healthy profit margins, which represent the percentage of profit earned on each dollar of revenue.
• Companies need adequate cash flow to run their daily operations, making free cash flow a key metric for lenders and investors.

Financial statements will reveal a company's net profit , The net profit is the money that a business has left over after paying all expenses. "Are you making money?" is often the first question asked, but it's only a starting point. Unsustainable profits are bad, and losses can be good if you're on track to profitability as you scale up. But as many business owners do not often have a clear understanding of their net profit, this is a good place to start.

You may have an objectively amazing product or service, but the real question is, are people willing to buy it? If you establish a track record of sales before seeking investment, investors don't take on the risk of not knowing the answer to that question. Investors also care about sales growth . Are you showing an upward trend, or did the initial excitement fizzle out?

Sales are meaningless if you aren't making money. Investors also want to see your profit margins both overall and at the individual product level.

They'll also compare your margins against industry standards and their other available investment opportunities. Higher margins generally lead to a better return for investors.

If you have low margins, you'll need to demonstrate a plan for improving them. For early-stage businesses, demonstrating how economies of scale will reduce costs as you grow is usually the answer.

It's critical to compare a company's financial statements to companies within the same industry to show how well the company is performing against its peers. For example, banks should be compared to those in the financial sector, while technology companies with those in the tech sector.

In business, cash is king. A solid five-year plan does you no good if all your employees will walk out if you can't make payroll next week.

Investors view of cash in the bank as a sign that you can deal with unexpected problems and capitalize on new opportunities. Free cash flow , the amount of cash that's left after you meet your expenses each period, is a sign of sustainable operations. If you have both, investors won't have to worry that you could go under at any time.

Customer acquisition cost tells how much you have to spend to get one new customer. It's calculated by dividing your marketing spend by your number of new customers. For a fledgling business, this can sometimes be a very large number. For businesses that are mostly established, this amount can be blended and reduced by repeat and referred customers, who are likely easier to acquire.

Acquisition cost is important because a product that's profitable from a material and labor standpoint may not actually be profitable if you have trouble getting people to buy it. This problem can occur with super-niche areas where it's hard to spread the word about your product or in hyper-competitive areas where advertising competition is fierce.

As with other measures, your ability to find economies of scale or otherwise lower the cost can be more important than the actual number.

Investors want to see a company's growth potential and its level of financial stability. Investors also use financial statements to determine whether the CEO and management team have a consistent track record of generating sales, revenue, and profit over multiple quarters and years.

Coupled with the acquisition cost is your churn rate. Once you get customers, can you keep them? A low churn rate can compensate for a high acquisition cost, and it's often an indicator of less risk for investors if you have steady repeat business. Of course, high churn rates may be the norm in sectors with long purchase cycles and/or heavy competition.

Debt scares investors for two reasons. One is simply that if you go out of business, debt holders get their money back before equity holders have a chance to claim what's left.

The second, and more important, is that debt payments eat up your cash. High debt payments can hinder your ability to meet payroll and other expenses during slow periods. They may also mean you have less cash available to help you handle a sudden surge in orders or an emergency equipment replacement.

One of the most common debt measures is the quick debt ratio —current assets (excluding inventory) divided by current liabilities. A quick ratio of 1 indicates that you can exactly meet your obligations, and the higher it is above that, the more flexibility you have.

Accounts receivables turnover shows how long it takes you to collect money from customers. This tells investors two important things.

First, are you willing to do what's necessary to make sure you get paid? Many new business owners feel bad asking for money and end up never getting paid. An investor looking for a return doesn't want to work with someone who isn't good at tracking down customer payments.

Second, how stable are your customers? A slow turnover combined with a large percentage of write-offs could indicate that many of your customers don't have financially sound operations. This adds risk to your business model, and investors will want to see an increased return to compensate.

Investors accept short-term losses, but they want to see a profit and a return on their investment sooner rather than later. Your break-even point says what is needed to make this happen.

Often, the break-even point is a specific sales target that will cover your expenses and get you to profitability. You may also build on other assumptions, such as economies of scale, improved production efficiency, or reduced marketing expenses, as long as you can explain them in a way that's acceptable to investors.

You deserve sweat equity for the hard work it took to get your business running, but many investors will want to see that you've made a financial equity investment as well. If you have money at stake, investors believe that you'll do what it takes to protect it. If you're not at risk of losing financial capital, investors may fear that you'll view them as a blank checkbook and burn through cash without enough focus on protecting their investments.

You can discuss the specific ratios that apply in each category of analysis with your controller services. Even if you're not ready to seek investment, finding ways to improve can help the overall health of your business.

What are some things you look for in financial statements as an investor?

When analyzing financial statements, investors should consider reviewing a company's net profit, sales and revenue growth, debt level, profit margin , and free cash flow.

How are financial statements helpful in making investment decisions?

Financial statements reveal critical pieces of information about a company's ability to generate revenue from its sales. Financial statements also show how well a company is managed by controlling costs and using its debt properly to expand or reinvest back into the company to generate profit.

What happens when an investor is misled by financial statements?

Companies may mislead investors by misrepresenting their financial performance by inflating revenue and earnings or understating costs to hide problems or reduce their taxable income. If a company has accounting errors that lead to restating lower earnings, shareholders can lose money when the stock price plunges.

How do investors use financial statements?

Investors use financial statements to determine the financial viability of a company by analyzing its revenue, profit, expenses, and debt. However, it's important that investors compare a company's financial statements with other companies within the same industry to determine how well the company is performing against its peers or competitors.

Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!

U.S. Small Business Administration, Ascent. " Calculate & Analyze Your Financial Ratios ," Pages 3, 5.

U.S. Securities and Exchange Commission. " Beginners' Guide to Financial Statements ."

U.S. Small Business Administration. " Worksheet – Marketing 101: A Guide to Winning Customers ," Pages 6-7.

U.S. Securities and Exchange Commission. " Bankruptcy: What Happens When Public Companies Go Bankrupt ."

Minority Business Development Agency. " Financial Strength and Ratio Analysis ."

How to Write an Online Business Plan in 2024

Written by Vanessa Petersen on July 26, 2023 Blog , Sell Online .

You’ve committed to turning your ecommerce or online business idea into something real. You want your small business to produce revenue and change the course of your life, but what’s your first step in realizing your dream? Developing a plan. If you’re not sure about how to write an online business plan, you’ve come to the right place.

One of the most essential tasks involved in starting any kind of business is to write a business plan. An online business plan won’t look that different from a traditional business plan and will include many of the same elements.

In this post, we’ll show you how to write an online business plan, including all the components and sections. We’ll also walk through how WooCommerce can help you put your plan to action and achieve your business goals.

Why write a business plan? 

Starting your own business is a great experience and something that will shape your life, fill you with self-confidence and independence, and inspire other people around you. A new business is also a serious endeavor that will take time, money, sweat, lots of decisions, and a degree of risk.

A traditional business plan template helps you document and keep track of your business goals, challenges, opportunities, and all the steps and processes involved with making your idea work. It will help you conduct thorough market research and set you up for success.

When you write a business plan, it can confirm that you’ve found the best online business to start , or provide clarity about the need to pivot.

It details all the things you will need to do in order to successfully launch and grow your business, and may include revenue projections, timelines for specific goals, concept art for products, and architectural drawings for any brick and mortar aspects of your business. 

Business plans help create a structure for your company’s development and keep you grounded in reality, focused, and not distracted by less important matters. 

If you have more than one person helping run the business, the business plan also keeps everyone unified around the same set of goals and objectives. 

Another reason to write a business plan is for situations where you are presenting your idea to someone else and asking them to invest. In that scenario, your business plan is also a sort of sales document. It makes the argument for why your business idea is so good and well-considered that an investor should want to be a part of it. 

But even if you’re self-funding your entire business — which is more common with online businesses — you still want to write the plan for the reasons given earlier.

The benefits of running an online business

Starting an online business or ecommerce store offers many of the same great benefits as any other business, but without as much risk. If you’re thinking of starting a business, here’s why an online one is a great option:

It has low startup costs

Without a storefront, you eliminate so many costs of running a business. With all the bills that come with having property — like rent, parking, furnishings and decor, etc. — there’s a much higher investment required to start a brick-and-mortar-based business. Online businesses still have startup costs, but they are much lower. 

It gives you freedom over your schedule

With an online business, you have more freedom to set your own hours, because you don’t always have to be open during the usual times. You can build your business to suit the lifestyle you want. Rearrange your time to get things done in the fastest possible way and take time off when you need it. 

You can start small

Once you have a location, it’s yours, and you have to make it work. With an online business, you can start very small, offering just a few products or even just a single service. You can more easily test the waters without making huge commitments with inventory, and other physical investments.

You can more easily pivot

If your online or ecommerce business doesn’t do as well as you expected, it’s easier to pivot and adapt to something new because you haven’t committed so much to making your original idea work. There are many business success stories where the business owner adjusted their idea after gaining some experience, and then it took off. It’s a lot easier to do that when you aren’t tied to a physical location.

But, there’s one thing online businesses have in common with every other type of business: You need a robust business plan to help guide your idea from concept to a successful reality that makes money and fulfills your dreams and goals. 

So, let’s get into business planning. 

How do I write my own online business plan?

Most formal business plans and business plan templates include seven sections, plus an executive summary. You’ll need to keep in mind who you’re writing your business plan for. If you are taking this to potential investors or will be seeking a business loan, your business plan needs to sell the idea of your business as a great investment opportunity and communicate the skills, expertise, and commitment you personally bring to the table. 

Here are the key sections of a traditional business plan format:

• Executive summary
• Company description
• Market analysis
• Organization and management
• Service and product line
• Sales and marketing plans
• Financial projections
• Funding request (if working with investors or partners)

Here’s a brief look at each step of creating an online business plan:

Draft an executive summary

In the executive summary, the first section of almost every business plan template, you’ll present your vision and focus on building excitement. If the business plan is a sales document, the executive summary is the lead. It gets the reader engaged and excited to hear more. 

Your executive summary should achieve two goals:

• Deliver the basic facts about your business
• Motivate the reader to keep going and get them excited about your idea

What facts should you include? Whatever helps the reader understand your business idea. Describe the industry and niche. Mention the target market. Briefly state the needs or problems your products and services will be solving. Touch on the potential for growth in terms of revenue and customers. 

For motivation, describe your mission statement and company values. What will set you apart from the competition? What is your value proposition as a business owner? What makes you different? Again — keep this brief. You’ll elaborate later. 

It might be a good move to write all the other sections first, then finish with the executive summary so it will be the most concise and best version of how you describe your business.

Write a company description

Here, you’ll give a brief overview of your company. What are your strengths, skills, and areas of expertise as a business owner that will position you for success? If you have a compelling story behind why you’re starting your business, you can include that too.

Conduct a SWOT analysis 

If you’re not sure where to start, consider doing a SWOT analysis , which is a diagram outlining your strengths, weaknesses, opportunities, and threats. 

It’s a common part of many business plans and will help paint a realistic picture of what your business can achieve, and what stands in the way. You won’t include all of this in the company description, but your strengths and opportunities may fit here. 

Create a mission and vision statement

The company description is also the place to create a mission statement and a vision statement. What’s the difference between these? 

The vision is where you’re going, the mission is how you’ll get there. A vision statement paints a picture of a future reality for your customers and perhaps the world at large, as a result of your company’s influence. A mission statement expresses how you will achieve that.

The company description can elaborate on your vision and mission beyond just a single sentence, and later you can fine-tune what you write into a succinct pair of statements. Feeling some writer’s block? See company description templates by industry for some inspiration.

Include any unique attributes

If your company will involve particular attributes such as manufacturing, supply chains, dropshipping, affiliates, coaching or advising, online courses, or other relevant particulars, include that in your company description, too. 

State your business location, industry, niche, and other details

Also, state the location of your business, even though it’s online. Name your industry and niche target market again, and describe the nature of your company. For example, is it an ecommerce business, a consulting firm, delivery service, wholesale, or ad-based website? These are just some of many types of online business structures. 

You may also want to include whether your business is in any special class of business that might position it for special loan or grant opportunities like women-owned businesses or veteran-owned businesses.

After reading your description, readers should have a good understanding of what your business is about, why it exists, and how it works. Here’s a detailed look at company descriptions , with an example.

Perform a market analysis

A market analysis uses industry research to assess the scope of your business’s target market and describe the current competition in your industry. It can help you estimate the potential for success and prepare for the challenges you may face when you launch your online business or ecommerce shop.

Doing this research, and including it your business plan, can also help you:

• Identify industry trends
• Pinpoint opportunities 
• Diminish risks and reduce costs
• Generate new ideas for products and services
• Learn from the failures and shortcomings of your competitors
• Find ways to stand out from your competitors
• Discover new markets
• Refine your marketing plans

Now let’s dig into the elements involved in a thorough market analysis.

Understand your audience

Here, you will explain in detail who your target customers are and why they want or need what you’ll be selling. What problems or needs does your product solve? What will motivate people to buy from you? And why can’t they get it somewhere else just as easily? An ecommerce business competes against other ecommerce businesses as well as brick-and-mortar stores and shopping malls. Stores with omnichannel strategies compete with both. Why would someone choose you?

Share your key customer demographics, psychographics, and interests. Who will you be serving? What drives them? 

What are their values? If your product, service, or personal brand will appeal to a customer segment that also shares particular values, that’s a strength, not a weakness, and you can use that to win them over. 

Perform customer segmentation

Break down different categories of target customers your business plans to serve. One category could be age. Another might be life situations such as retirees, parents, divorcees, or living with older relatives. You could create a segment of people with particular health conditions, or who live certain lifestyles. 

But you can also get way more specific than that. Runners are different from hikers, who are different from bikers, yoga enthusiasts, and gym enthusiasts. Different supplements, philosophies about food, motivations for eating various foods — all of these present near endless possibilities for more narrowly defining your customer segments, all under the broad category of ‘health.’ And you might serve multiple segments. 

The more customer segments you know, the more effectively you can market to them. In an online store, good product descriptions call out the various customer segments that product is designed for.

Also, give a sense of the potential size of your target market. How many people need what you’re selling? Show how this market is large enough to justify your business and drive revenue. You might do this by studying revenue reports from other companies in your industry. Or look at specific products related to yours and research their sales and revenue performance. 

You may also perform a survey of some kind, or an online quiz, and use that to express the needs your potential customers have that aren’t currently being met.

Perform a competitive analysis

Study your competition. What are they doing well? What areas are they underserving? Where are they underperforming? Make note of what other companies in your industry are struggling with or failing at so that you can deliver something more valuable and gain a competitive advantage.

It could be product quality, customer service, or selection. Maybe their ecommerce store is badly designed and hard to use. Perhaps there’s a huge industry serving the masses, but customers who have more particular tastes or needs aren’t being well-served by the big companies. Those customers might spend more on something that delivers what they really want. 

Maybe your key competition has been rocked by scandal. Maybe a company went out of business, was sold, or closed down due to retirement and there’s an opening in the market you want to leverage. 

The main point of the competitive analysis is to persuade investors that there’s an underserved market that your business plans to cater to. You must be able to promise something that no one else is currently delivering. Otherwise, why should your business exist? Put them at ease by demonstrating proper market research.

Refer to your SWOT analysis and present any potential threats from the competition here, too.

Outline management and organizational structure

Next, present your management and legal structure. Is your company an LLC, sole proprietorship, S corporation, partnership, or some other arrangement? Who’s in charge of what? If you have different departments, list out the leadership for each one. If relevant, you might even include some information about the expertise of your leaders concerning the areas under their charge and the tasks they’ll be performing.

Remember — if your business plan will be used to persuade investors to help fund your business idea, this sort of information will reassure them that your company has strong and competent leadership. 

If there’s a chain of command, use a diagram or other method for laying out who reports to whom. 

List your products and services

What are you selling? You’ll touch on this briefly in the earlier sections, but here is where you’ll expand on the details. If you have an array of similar products, such as food flavors or clothing variations, list as many as seem relevant. But focus on the spirit of the business plan — you’re simply communicating what your business is about, not listing every SKU in your projected inventory. 

Also, include information about your products such as quality, durability, expirations, patents, and whatever else will give a clear picture of what you’re selling.

For service businesses and memberships that may include multiple packages, bundles, or tiers, describe each of these so your readers get a sense of how you’ll appeal to different types of customers and price points. 

Develop a sales and marketing strategy

Having products is great, but how do you intend to sell them? How will people find your business? How will anyone know you exist? And once they know, what will motivate them to buy from you and not from your competition? What is your unique value proposition — the thing that sets you apart from your direct competitors?

You’ll need to develop an initial marketing plan to help promote your business, products, and services to your target customers.

And remember, competition isn’t limited just to other businesses. Sometimes, competition is against the customer’s time, or their budget, or mere indifference — the conflict between doing something and doing nothing. Your SWOT analysis should touch on several of these potential barriers to the success of your online business.

Your marketing plan will obviously change over time, but give your readers and potential investors a sense of how you plan to launch and grow your business. 

Discuss media channels you plan to use, such as pay-per-click (PPC) ads , social media , email marketing , affiliate marketing , direct mail, referrals, joint ventures, search engine optimization (SEO), webinars, influencer marketing , and live events. Describe the ones you actually plan to use, and explain the core strategy you’ll begin with and how you will measure success. 

Also, include a sense of your marketing budget. If you will have a dedicated marketing team, or actual sales professionals using a particular process or sales script, discuss that as well. 

For ecommerce businesses, include a discussion of how you plan to leverage platforms like WooCommerce, which features a host of extensions that can help manage your business , engage customers, save money, and promote growth .

Make financial projections

You’ve made a lot of claims in your business plan, but how will your investors be convinced of your future success? At some point, you have to show them the money. 

If this is a brand new business with no income, where will your finances come from for the first year? Give realistic financial projections for anticipated profits and losses, as well as growth expectations for the first five years. Include financial documents if you have them, including profit and loss statements, balance sheets, and cash flow statements. Include costs of employment, manufacturing, and other investments both one-time and ongoing.

Your financial projections should reference your:

• market analysis 
• anticipated sales volume 

Investors will feel more confident when they can see your business plan does not rely entirely on just one or two ‘wins.’ For example, if your entire plan hinges on selling on eBay or Amazon , what happens if Amazon suspends your store, changes the terms, or you struggle to get noticed there? 

If your plan depends on winning over a few Instagram influencers, what if they don’t come through? It’s really easy to say what you hope will happen. But actually making it happen is another thing. Business success happens more easily when you apply a multi-channel marketing and sales approach. 

Your financial projections will feel based in reality, when you can demonstrate some prior successes, either in other businesses you’ve already launched, test audiences, local sales you made, prior experience, or data from other businesses. 

Explain your funding request — if applicable

If you intend to ask investors to help fund your business idea, present your request in the final main section of your business plan. If you’ve already secured funding from other sources, include that here as well. An investor will feel better knowing they are not the only one who believes in the potential of your business. 

Will your funding request be for a one-time payment, monthly, annually, or at some other interval? How do you plan to repay their investment? Will you allow them to charge interest? How much ROI can you promise them? 

How WooCommerce can help

WooCommerce can help you build a scalable online business that supports your business plan. No matter what you’re selling, WooCommerce offers a suite of flexible tools that allows you to customize your store to meet your needs and goals. 

Here are just some of the benefits your business will enjoy when you choose to build your store with WooCommerce:

• Sell absolutely anything you can imagine . From physical items and digital downloads to subscriptions, memberships, bookings, courses, and affiliate products, WooCommerce provides everything you need. Want to run a wholesale store? You can do that, too!
• Harness the power of WordPress . Since WooCommerce is a plugin specifically for WordPress, you can take advantage of powerful features like the block editor and blogging capabilities. 
• Capture payments securely. Choose from a large number of payment gateways, from popular options like PayPal and Stripe, to more niche processors for specific locations and types of regulated products. And with tools like WooPayments , you can keep customers on-site, capture a variety of currencies, and even accept digital wallets like Apple Pay and Google Pay.
• Customize your shipping options. Offer free shipping, charge based on weight, set fixed prices, or calculate shipping costs based on real-time carrier rates. You can even use extensions like Table Rate Shipping to create complicated shipping rules based on conditions that you set. And with WooCommerce Shipping , you benefit from discounted shipping labels and the ability to print right from your dashboard. 
• Connect to your social media channels. Use extensions to sync your store with social media platforms like Facebook, Instagram, and Pinterest. You can even sell on those platforms alongside your store without having to update inventory and information manually.
• Integrate with marketing tools. Quickly connect your store to any number of marketing tools, from email platforms like MailPoet to CRMs like Jetpack CRM . You can also implement a number of marketing strategies, from abandoned cart emails to loyalty programs.
• Keep track of your numbers. Ecommerce accounting is a big part of running an online business. While you can easily view data in your dashboard, you can also sync with tools like QuickBooks to make your accountant’s life a little bit easier.
• Manage inventory. Update your inventory levels manually or connect to tools like Scanventory to sync with your warehouse. Running low or out of stock? Add a wishlist option so customers get an alert as soon as it’s available.

As you can see, WooCommerce is well-equipped to handle any type of online store and support you as you grow. Here are a few more reasons that WooCommerce should be your go-to choice for implementing the ecommerce side of your online business plan:

WooCommerce itself is free! Many extensions for WooCommerce can also be found for free in the WordPress.org plugins library or on the Woo Marketplace . If you need to start your website with a limited budget, but want to build on a platform that can grow to support a thriving, high-traffic store, WooCommerce is an excellent option.

You have full control over your store

Unlike other ecommerce solutions that are tied to the platform’s own web hosting, WooCommerce is designed to be used with WordPress along with any hosting provider of your choice. You are also free to use whatever payment processor you want without any additional fees from WooCommerce. You can also customize your site’s appearance and functionality more extensively than you can with other ecommerce platforms and with less (or no) coding knowledge.

Thousands of free and premium extensions

There are over 800 free and premium extensions for WooCommerce on WooCommerce.com alone and over 1,000 in the WordPress.org plugins library . There are also hundreds of independent developers and agencies that offer premium and custom extensions for WooCommerce so that you can customize your store with the exact features you need. 

Excellent support and large community of users

WooCommerce is used by over 3.9 million stores — 23% of all online stores worldwide . The support team is available to answer questions and the documentation library is extensive and thorough. There are also plenty of independent resources for learning how to use WordPress and WooCommerce.

Dedicate time and resources to put your online business plan in action

A successful business plan is one that empowers and guides the business owner to launch their online or ecommerce business, and possibly secure funding. But it only works if you use it.

One advantage of starting an ecommerce store or online business is that you aren’t as locked down by deadlines. With a physical location, once you start paying the rent, you better have your business plan ready to put into action. 

But the beauty of being online is that you have more flexibility on the front end. Despite having more wiggle room with your timelines, you still need to keep your momentum going forward. Staying on track with your business projects and goals is one of the keys to reaching profitability sooner and turning your business plan into reality. A few quick tips:

• Schedule your time. Block out hours and specific days to work on your business.
• Treat it like a job, not a hobby. Build on your momentum week after week.
• Always keep learning. Research your industry, competition, target audience, and potential customers. Learn marketing — you can never know too much.
• Try stuff! Take risks, make calls, create campaigns, write content.

Your business plan template should give you a concrete list of tasks and business objectives. Once you write a business plan, then you can implement it.

Frequently asked questions about writing an online business plan

What are the seven steps of a business plan.

The seven key elements of a business plan are the executive summary, company description, market analysis, organization and management, services and products, marketing plan, and financial projections. If you’re making a funding request, that would be an eighth section.

Where can I find business plan templates?

You can find a free business plan template online, for general business plans as well as for specific industries. However, since each business is different and your plan must be authentic and specific to your company — a business plan template can only get you so far. 

If you need design inspiration for your own custom business plan template or want to start with a pre-designed template that you can customize, you can purchase one for a relatively low cost through a stock resources site like Envato Market or Creative Market .

Do I need a business plan if I am already running an online business or ecommerce shop?

Business plans aren’t only for people who are launching new businesses. You can create a business plan at any time to help you maintain or change the direction of your store or just to get a better picture of the health of your business. Below are a few different types of business plans that you might want to consider for your established online business:

• Operational business plan. Outlines the structure of your business operations, staffing, and logistics.
• Feasibility plan. Feasibility plans are like mini business plans that cover new business ideas and outline steps for implementation.
• Growth business plan. This plan is for businesses that want to demonstrate opportunities and plans for growth to attract investors.
• Maturing business plan. This plan is for businesses looking to merge with or acquire other companies, significantly expand, or go public.
• Strategic business plan. Any time your business wants to shift strategies regarding products or marketing or any other major changes to your previous business plan, you’ll want to create a new strategic business plan to address your new goals and the steps involved in achieving them.

What software should I use for my online business plan?

Your business plan should include some images, graphs, and graphic elements in the layout, so you’ll want to at least use word processing software to put your business plan together. If you have access to Google Workspace, Microsoft 365, Canva, or Adobe Creative Cloud, you’ll have some other options that might lead to a more professional layout.

Here’s a list of free and paid software that can help you put together your online business plan outline:

What do investors want to see in a business plan?

The most important piece of information to show investors in your business plan is potential for profitability. Investors don’t want to throw money at a sinking ship, no matter how cool and exciting the business sounds. 

Most investors also want to make sure that they’ll see a decent return on their investment in a relatively short time period — probably around 5-7 years. How much of a return they’ll expect will depend on your industry and what kind of investor they are. 

Investors will also want to see that you clearly understand your business, your industry, and that you have concrete, actionable steps for achieving, maintaining, and growing profitability. They’ll want to make sure that the key people on your team also understand your business and the roles they play and they’ll want to see that each person has a good amount of experience in their field and the required skill sets to fulfill their job duties, if not go above and beyond. 

Any details you can include that highlight unique aspects of your business will also be important. Any area where you have a competitive edge, are offering a unique or proprietary solution, have established any celebrity endorsements, have the backing of other investors, or have secured special grants will be of special interest to investors.

Create your plan for success

Now that you understand what goes into creating a formal business plan, it’s time to write one! Take the time to think through and consider each aspect of the list included in this article, and you’ll be well on your way to finding success.

And WooCommerce is here to support your business every step of the way, with powerful and flexible tools that help your business grow. Start selling online today !

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