Illustrative example: This story uses a fictional business owner to explain common business-planning considerations.
The claim that stopped the reader
Dev spent a year building a mobile app for people who split rent with roommates.
He was proud of it. Then he sent his plan to an investor in Vancouver.
On page three, his plan said:
“We will grow users 10x in year two.”
The investor stopped reading and wrote back with one line:
“Where does 10x come from?”
Dev had no clear answer.
He had hope, and he had a hunch. But he had not written down how many users he would get from each channel, what each user would cost to win, or how long the money in the bank would last.
Show the thinking behind the forecast
Investors do not need you to be certain. They need you to show your thinking.
A good plan for investors explains:
- The opportunity, and why now
- The team, and why it can do this
- The capital needed, and what it will be used for
- The assumptions behind the growth story, in plain view
That last point is a common weakness in investor plans.
When assumptions are written down, an investor can argue with them, and that is a good sign. It means they are taking you seriously.
Test more than one outcome
Dev took a different path on his second attempt.
He built a forecast with a base case, a slower case and a stronger case, so the plan showed what happens when things go better or worse. The financial forecasting chapter explains how assumptions become a model.
Confused by a term such as “sources and uses”? Check the business plan glossary.
Then he worked on the plan itself, using guidance on investor and funding business plans, financial projections and modelling, and mobile app business plans.
The lesson was simple.
Investors don't back big numbers. They back numbers you can explain.
If your business needs a bank loan instead, see how Maya handled the toughest question in this story.
Dev is a made-up example. No plan can guarantee funding.