How to keep your business proposal from investors’ rubbish bins


by Dr David Demetrius

Why do so many promising ventures never get the capital they need? In my experience, it is, in the vast majority of cases, due to the business plan not having made a good enough case for investment. I have over the years received many plans from firms seeking investment funds and well over 90% of them ended up in the bin before I got to the second page.

So what does a good business plan entail? Here is what I would be looking for.

It should start with an executive summary, preferably of a single page, but certainly not more than two. This summary needs to grab the potential investor’s attention in the first five lines. Don’t start with background waffle. Make it immediately clear what the products or services of the business are or are planned to be. Make the executive summary exactly that: a summary of the whole document including highlights of the market opportunity and the team and ending with a clear statement of what you are looking for and what you are offering in return. For example, “We are seeking an investment of 100.000 Euros in return for equity in the company and an expected return of 3-5x multiple in 3-5 years”.

After the executive summary, you can go into more detail on the venture. Excluding appendices, this should run to about 15 to 20 pages. You need to describe the products or services in some detail, but try not to get bogged down in technical jargon which at best will bore the investor and at worst will totally put him off. Of more importance is to show clearly what the market opportunity is and what competition exists or could appear in the near future.

You also need to give profiles of the team, their skills and their experience, and indicate what finances they are themselves investing in the venture. Be honest and point out what gaps there are in the team’s background and skills. Hopefully the investor will be able to help fill these gaps.

What investors will be very interested in is what they are likely to see as a return on their investment. For that you need to have detailed financial projections. However, there is no point in burying 30 pages of financial spreadsheets into the main body of the document. By all means have lots of detailed tables as an appendix, but in the main body simply have a page or two showing the key performance indicators (KPIs), such as graphs of projected cashflow, profitability and revenue growth. Then make it easy for the investors to find the detailed backup to this information, If they so wish, by guiding them to the relevant pages in the appendix.

It is also important that the summary pages on financials includes some “What if?” analysis (preferably displayed graphically). For example, it can be very reassuring to investors if they can see that, even if actual revenues achieved are only 80% of your projections, the company will nevertheless not run out of cash. This should not be achieved by simply asking for an overly high injection of funds, but rather by indicating savings in expenditure such as administration costs that would be made in the event of lower sales. Similarly show the optimistic growth figures for the venture if revenues significantly exceed your projections.

How far ahead should you forecast? For startups, it may be no more than saying “I expect to have annual sales of x million within 3 years, based on these factors…” (although with a substantial “What if?” analysis). For existing businesses looking for growth, I would recommend three years with monthly figures, but in some industries a five-year forecast can be realistic. (In the oil industry, even 25 year plans are common). Basically you should only project revenue and costs as far forward as you can reasonably see. Don’t simply take ‘month 1’ and add x% per month to it for 36 months ahead. Any potential investor will realise that you have no real idea what is going to happen. Think it through carefully. For example, will there be months of the year when revenue will be lower due to holiday periods?

I am not saying that following my advice in this blog will definitely get you the investment you seek, but I am fairly confident that ignoring these pointers will not improve your chances!

Dr David Demetrius is Founder and President of the Emadin Group, the one-stop shop for business & trade acceleration into – and out of – Europe ( He has over 25 years’ experience in the management, growth and sale of businesses of all sizes, across industries and is a director of several European companies. From 2000 to 2007, David was the Chairman for Continental Europe of the Institute of Directors and a member of the governing Council of the Institute in the UK. He is also an honorary life member of the European Foundation for Management Development.