Build a Business Plan That Works

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1. Feature: Template Tuesday: Build a Business Plan That Works (4 min)

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Most business plans fail before anyone reaches page two. Not necessarily because the business is weak, but because the plan speaks in one voice to four very different audiences. A lender, an SBA underwriter, a venture capital associate, and a private equity deal team all read with different priorities. They judge risk differently. They trust different signals. A plan works when it respects the needs of its reviewer; it fails when it treats them all the same.

A business plan is a communication tool, not a trophy. Its purpose is not to impress everyone in general. Its purpose is to persuade a specific decision maker to say yes to a specific decision. Smart founders pause before writing and ask two simple questions. What do I want this plan to accomplish. Who must approve it. Those answers keep you out of the trap of writing for a hypothetical audience and help you write for the real one.

Banks and SBA lenders want proof of repayment and stability. Venture capital firms want evidence of a product in need, traction, market size, and a team that can scale. Private equity and private debt funds want durable cash flow, predictable margins, and a business that can withstand stress. You can use one overall structure for your plan. The difference is what you choose to emphasize.

This article shows you how to build one strong base plan, then tailor it for all major capital sources. It explains what to include, what to avoid, and how to adapt your core document without turning it into a full-time job.

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Before You Start: Purpose and Reader

A business plan does not begin with a template. It begins with intention. The smartest founders identify the decision they want before they type a single line.

Define your purpose in one sentence.

“This plan supports a $750,000 SBA 7(a) loan request for expansion.”
“This plan supports a $3 million Series A raise.”
“This plan supports a recapitalization proposal for private equity.”

Then identify the reviewer who matters most.

A local bank loan officer skims for repayment strength and downside protection.
An SBA underwriter looks for management experience and appropriate use of funds.
A VC associate wants product, market size, traction, and a path to meaningful scale.
A PE deal team wants historical financials, revenue quality, customer concentration, and an exit path.

Once you know the purpose and the reviewer, content decisions become easier.

The Executive Summary

The executive summary decides whether the reviewer keeps reading. It must be simple, concrete, and written in plain English.

Start with a one-sentence description of what the business does and whom it serves. State the customer problem, your solution, and who pays you. Write it so a smart relative outside your industry could understand it immediately.

Then shape the rest based on your audience.

For a bank:
Lead with revenue, profitability, cash flow strength, and your ability to service new debt.

A single line on coverage communicates maturity. For example:
“Current EBITDA is $1.1 million; projected debt service coverage ratio is 1.6x.”
Add a brief note on collateral. It relaxes the reviewer early.

For an SBA underwriter:
Include everything a bank wants, plus two items:
Owner and management experience in the industry.
Clear explanation of how the loan will stabilize or expand operations.

SBA reviewers weigh these items heavily because they map to program requirements.

For a VC:
Move traction and market size to the top.
Mention concrete indicators: revenue run rate, retention, active customers, or signed pilots.
VC readers want proof that customers want your product and that the market is large enough to support venture-level returns.

For PE and private debt:
Highlight revenue quality, margin history, customer diversification, and predictability.
These investors care less about story and more about durability. They want to see how the business behaved over three to five years, including difficult periods.

A strong executive summary earns the next thirty minutes of reading. A weak one ends the review before it begins.

Business and Market Overview

This section shows whether you understand the environment your business operates in.

Explain how the company began and what specific customer problem it solves. Define your target market clearly enough that the reviewer can picture a buyer, not just a category label. Include a practical, honest estimate of market size. Precision is not the goal. Credibility is.

Adjust emphasis based on your audience.

For lenders:
Show stability. Recurring demand, reorder patterns, seasonality management, and long-term contracts all reduce risk. If you have performed well through a downturn, mention it.

For investors:
Show opportunity. Describe your initial wedge—your first ideal segment—then show the adjacent markets you can enter as you scale. Investors want evidence that your ceiling is significantly higher than your current revenue.

Address competitors directly and without spin. Name the three to five competitors that your customers actually consider. Explain why customers choose you and why they stay. This is a credibility test. Reviewers know when founders dodge the conversation.

Micro-example: A roofing company might list two local competitors and note that its average warranty claim rate is half the industry level. That tells a lender far more about competitive position than any marketing slogan.

Products, Services, and Revenue Model

Your goal in this section is clarity. The reviewer must know exactly what you sell, why customers buy it, and how revenue is earned and recognized.

For lenders:
Stress predictability. Subscriptions, maintenance contracts, and multi-year agreements reduce perceived risk. If revenue is seasonal, show how you manage cash flow during slower months.

For investors:
Stress margins and scalability. Provide gross margin, contribution margin, and basic unit economics such as revenue per customer and retention. Investors reward leverage: evidence that revenue can grow without costs scaling one for one.

Explain your fulfillment or delivery workflow in a few short steps. It reassures the reviewer that the operation is controlled and repeatable.

Micro-example: A commercial cleaning business might write: “Ninety percent of customers are on annual contracts. Work is scheduled weekly. Billing occurs monthly. Customer retention is 82 percent year over year.” That single paragraph answers most of the lender’s questions.

Marketing and Sales

Reviewers care less about the creativity of your marketing and far more about the repeatability of your system.

List your main marketing channels and explain how leads enter your pipeline. Then outline your sales process: lead, qualification, proposal, close, onboarding.

For lenders:
Emphasize reliability. Referrals, partnerships, and repeat customers are strong signals. Lenders want a business that can continue operating even if marketing spend drops for a few months.

For investors:
Emphasize scalability. Provide customer acquisition cost, customer lifetime value, and payback period where possible. Even early estimates help. Investors and investment committees weigh these numbers heavily.

Show three to five operating metrics you track consistently: leads per month, conversion rate, churn, average sale size, or recurring revenue. These metrics show discipline and operational awareness.

Micro-example: A software company that knows its payback period is six months immediately stands out. It shows a VC that additional capital can produce more customers on predictable terms.

Team and Leadership

A capable team reduces downside risk and increases upside potential.

Describe each key person through three points: role, primary responsibilities, and relevant experience. Avoid biography. Focus on why each person is qualified to run their part of the business.

If you have gaps, acknowledge them and outline your plan to fill them. Investors value transparency. Lenders value clear lines of responsibility.

Financial Summary

Trust is either earned or lost in this section.

Provide three years of historical financials if available, plus current year-to-date. Use consistent formatting. Do not create a custom layout that forces the reviewer to relearn accounting.

Provide a three-year projection with clear assumptions. For lenders, highlight cash flow, coverage ratios, and liquidity. For investors, highlight margin expansion, unit economics, and the relationship between new capital and new revenue.

Explain your assumptions simply and plainly. Assumptions reveal the founder’s judgment more than any chart.

Funding Needs and Use of Funds

This section answers the most important question: “What exactly will you do with the money?”

Break the amount down into clear categories.

For banks and SBA lenders:
Match the categories lenders use internally.
Equipment, inventory, working capital, hiring, leasehold improvements, refinancing of eligible debt. A clear breakdown increases reviewer comfort.

For investors:
Show leverage. Connect every dollar of investment to a growth lever such as lead generation, sales team expansion, capacity increases, or product improvements that shorten the sales cycle.

For PE and private debt:
Add capital structure details: expected leverage ratios, interest coverage, and covenant headroom. These reviewers must defend your numbers to their committees. Give them the material they need.

Risks and Milestones

This section tests whether you think like an owner.

List three to five meaningful risks and how you monitor and mitigate them. Include both operational and financial risks. Reviewers respect founders who understand where the business is vulnerable.

Then list twelve to twenty-four month milestones. These become the scoreboard lenders and investors use to track progress. You should under-promise and over-deliver.

Special Guidance for Venture Capital

VC conversations start with a pitch deck and a conversation, not with a long plan. A written plan becomes valuable once interest is established. It gives your internal champion material for the investment memo they will write about you.

Emphasize traction, market size, unit economics, and team. Provide a short roadmap showing what you will build next and why. Keep product detail to the essentials. Investors are backing the growth machine, not the feature list.

Special Guidance for Private Equity and Private Debt

These firms judge businesses by cash flow durability and risk tolerance.

Provide multi-year historical financials with enough detail to show trends. Break out revenue by segment, margin behavior over time, and customer concentration. Include downside and sensitivity cases. These analyses give deal teams the confidence to defend your business to their committees.

Bringing It All Together

A business plan is not a one-size document. It is a tool for persuasion. When you tailor it to a specific purpose and a specific reviewer, it becomes powerful. Reviewer expectations differ, but their core question does not. They want to believe you understand your business, that you understand your numbers, and that you can be trusted with their capital.

You do not need Wall Street polish to deliver that answer. You need plain language, honest assumptions, and command of your own operation. Treat your business plan as a working document. Update it as you learn. Use it to make decisions. When you do that, every conversation becomes easier and every opportunity becomes larger.

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Whether you upgrade to Premium or not, thank you for reading The Co. Letter along with nearly 150,000 other business owners. Happy Holidays to you and your family!

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