8. Business plan in a nutsell
Your business plan slide is quite simple: it is an extract of your P&L page from your excel spreadsheet. Let's see in a nutshell how to build your business plan so you can create your slide.
Your business plan is a projection of your numbers for the next 3 to 5 years. It is a tool to show investors how you could grow and be profitable but also as a dashboard for you to monitor your progress and your goals. You’re just telling the same story as in the previous slides but with numbers this time.
What should it look like?
Your best ally is excel: simple but effective. Try to make it look nice though, use a bit of color, clean tables and graphs to highlight key aspects of your numbers. 📊
Get to the point with a short document, no one wants to read 40 pages of numbers and graphs.😴
Be careful about the words you use if you want to accommodate investors: avoid jargon and speak with words everyone can understand, try to not use so many acronyms specific to your field or if you do maybe throw in a glossary in the appendix.
How can I organise all of my numbers? What do investors want to see?
Page 1: Profit & Losses
This one is going to take some time, reflection and calculation so put your brain on:
It should include the number of customers (or clients) in the next 3 to 5 years along with the predicted lost ones (churn rate) and how much revenue they generate.
For example if we had 3 subscription formulas with PantStation our template would look like this:
Obviously your customer number should be growing 🌱 over the year, try to assess mindfully what your typical yearly growth should be. If you have several types of customers/clients (like for example with a subscription business model with several offers) you should go into detail about it.
Next you should be able to calculate your Gross Margin which is (Total Revenue – Cost of Goods Sold).
Once you have your gross margin you are going down to your EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). To do so you’ll have to compute your fixed expenses: salaries, softwares, partners, agencies, equipment, rents, phones, insurances, travel, legal, general fees… of course this list is not comprehensive, it can go on and on depending on your business type.
Keep in mind that your EBITDA should not be above 30% (only few industries are above and they are goldmines: it means that for a 100€ sold you still have 30€ in bank after paying everything - including salaries).
Page 2: Human Resources
In this page you should plan out the next 3 to 5 years in terms of HR. Investors have to get an idea of how you want your team to grow and the investments that come with it.
What they expect to see is :
The total number of employees by categories (General & administrative expenses, sales team, marketing team, customer success team, IT team)
The total wages (including taxes and commissions)
The predicted yearly increase in salary
Page 3: Marketing Strategy
It’s the page dedicated to everything that has to do with customer acquisition:
the channels used, conversions rates, customer acquisition costs, churn rates..
Page 4: Cashflow 💵
Your actual cash + Ebitda + fundraising + non dilutive should give you your total monthly cash flow. You are now ready to do a beautiful graph that should look a little bit like the one below (it's usually called the J curve as it looks like this letter). It should help you to find out exactly how much money you need from investors but we’ll talk about that in a dedicated article (coming soon).
In your slide, you only need to extract your number for your P&L page in your excel and put them in a nice table. If investors are interested in your company they will most likely ask for your whole business plan (so your excel) to see how it works in more details.
Keep in mind that everything you write in your BP has to be your reality for the next 6 months. During your roadshow you need to show investors that you are strictly following your business plan. Also building your BP for the next 5 years allows you to show your vision as an entrepreneur: Is your company going to make 50M? 10M? 2M? Depending on that vision you won’t be looking for the same investors so it will help you narrow down your options and focus on the right ones.