Your Guide to Writing a Business Plan

how to write a business plan for an investment bank

If you’re starting a new business, then you need an effective plan. Not only does this enable you to plan your company, but it also gives potential clients an insight into how your business works. A business plan is also vital if you want to attract investors or secure a loan from the bank. Drafting a business plan is a complex process, but it doesn’t have to be. This guide will ensure you create a definite plan to impress investors and clients. 

When creating your business plan, there are some essential elements you must include. The Executive Summary provides a description of your business, and what you hope to achieve. People usually write at least one page, but leave their Executive Summary until last.

You’ll also need to detail what your business offers and define your target audience. This makes it easier for people to see whether your company has a chance of succeeding. The opportunity section is also an excellent way for you to see what competitors offer and how you can create a USP to stand out from the competition. 

Appealing to Investors

Every business that wants growth and prosperity must ensure they promote themselves to potential investors. Business plans aren’t just about what the business is, but who is part of it too. Detail your current team members and explain what they bring to the company. Investors want to know they’re making a wise investment.

Your current finances and financial forecast are also essential aspects of your business plan. Look at your products, how much you’re selling them for and what kind of profit margin you expect to gain. It’s also vital you detail your outgoings and look at how various economic situations could affect your finances. 

Writing a Winning Executive Summary

There are problems in every market, and a successful business solves that problem. If you can show how you’ll be able to offer solutions in your business plan, you’ll appeal to investors. Choose your target audience based on research and ensure you show your research. There are many ways to conduct market research including defining SOMs, SAMs and TAMs. 

TAM stands for Total Available Market and comprises everyone you want your product to reach. Your Segmented Addressable Market (SAM) is a specific portion of the market you’ll target. This is important because it shows you’re able to direct your product at the right people and not just everyone. Your SOM (Share of the Market) is what you feel you’ll gain with your product.  

How to Determine Pricing

Pricing your product is one of the most challenging things you’ll have to do. There are many things to consider, such as how much it’s worth and making sure you don’t charge unrealistically. Many new businesses believe undercharging is the best way to go, but doing this can undermine your company’s authority and cause fewer people to be interested in investing.

Market-based pricing involves looking at your competitors and evaluating their prices. Which company has the most customers? How does their pricing match others? These are all vital aspects you should consider. Remember, customers expect quality and a fair price, so make sure you combine the two. 

Future Goals

Investors and banks want to know that you’ve considered what the future will hold for your company. When you write your business plan, be sure to take into account how you see the company growing, what you’ll do to ensure it thrives and that you understand the potential risks. Banks and investors want to know that you can build a business and are aware of the obstacles you’ll have to overcome.

Starting your own business doesn’t have to be difficult. If you ensure you produce a robust business plan, it can be an exciting process. Your business is part of your future, so start by outlining your goals and look forward to seeing results. 


how to write a business plan for an investment bank

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Writing a Business Plan

how to write a business plan for an investment bank

While it may be tempting to put off, creating a business plan is an essential part of starting your own business. Plans and proposals should be put in a clear format making it easy for potential investors to understand. Because every company has a different goal and product or service to offer, there are business plan templates readily available to help you get on the right track. Many of these templates can be adapted for any company. In general, a business plan writing guide will recommend that the following sections be incorporated into your plan.

Executive Summary

The executive summary is the first section that business plans open with, but is often the last section to actually be written as it’s the most difficult to write. The executive summary is a summary of the overall plan that highlights the key points and gives the reader an idea of what lies ahead in the document. It should include areas such as the business opportunity, target market, marketing and sales strategy, competition, the summary of the financial plan, staff members and a summary of how the plan will be implemented. This section needs to be extremely clear, concise and engaging as you don’t want the reader to push your hard work aside.

Company Description

The company description follows the executive summary and should cover all the details about the company itself. For example, if you are writing a business plan for an internet café, you would want to include the name of the company, where the café would be located, who the main team members involved are and why, how large the company is, who the target market for the internet cafe is, what type of business structure the café is, such as LLC, sole proprietorship, partnership, or corporation, what the internet café business mission and vision statements are, and what the business’s short-term objectives are.

Services and Products

This is the exciting part of the plan where you get to explain what new and improved services or products you are offering. On top of describing the product or service itself, include in the plan what is currently in the market in this area, what problems there are in this area and how your product is the solution. For example, in a business plan for a food truck, perhaps there are numerous other food trucks in the area, but they are all fast –food style and unhealthy so, you want to introduce fast food that serves only organic and fresh ingredients every day. This is where you can also list your price points and future products or services you anticipate.

Market Analysis

The market analysis section will take time to write and research as a lot of effort and research need to go into it. Here is where you have the opportunity to describe what trends are showing up, what the growth rate in this sector looks like, what the current size of this industry is and who your target audience is. A cleaning business plan, for example, may include how this sector has been growing by 10% every year due to an increase in large businesses being built in the city.

Organization and Management

Marketing and sales are the part of the business plan where you explain how you will attract and retain clients. How are you reaching your target customers and what incentives do you offer that will keep them coming back? For a dry cleaner business plan, perhaps if they refer customers, they will get 10% off their next visit. In addition, you may want to explain what needs to be done in order for the business to be profitable. This is a great way of showing that you are conscious about what clear steps need to be taken to make a business successful.

Financial Projections & Appendix

The financial business plan section can be a tricky one to write as it is based on projections. Usually what is included is the short-term projection, which is a year broken down by month and should include start-up permits, equipment, and licenses that are required. This is followed by a three-year projection broken down by year and many often write a five-year projection, but this does not need to be included in the business plan.

The appendix is the last section and contains all the supporting documents and/or required material. This often includes resumes of those involved in the company, letters of reference, product pictures and credit histories. Keep in mind that your business plan is always in development and should be adjusted regularly as your business grows and changes.


how to write a business plan for an investment bank

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How To Write a Business Plan for Investment Bank in 9 Steps: Checklist

How To Write a Business Plan for Investment Bank in 9 Steps: Checklist

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Are you looking to start your own investment bank? It's an exciting venture that requires careful planning and strategic decision-making. In this blog post, we will guide you through the process of writing a business plan for an investment bank in 9 essential steps . But first, let's take a look at the latest statistics and growth trends in this industry.

The investment banking industry has been experiencing steady growth over the past few years. According to market research , the global investment banking market size was valued at $78.3 billion in 2020 and is projected to reach $108 billion by 2027. This indicates a compound annual growth rate (CAGR) of 4.6% from 2021 to 2027. The growing demand for financial services and the rise of corporate restructuring activities are major factors contributing to this growth.

Now that we have a glimpse of the industry's potential, let's dive into the step-by-step process of writing a business plan for your investment bank. These steps will help you lay a solid foundation and position your bank for success in a competitive market.

  • Conduct market research: Understand the current market landscape and identify potential opportunities for your investment bank.
  • Identify target market and potential clients: Determine the specific audience you want to cater to and define your ideal client profile.
  • Assess competition and industry trends: Analyze your competitors and stay updated on the latest trends in investment banking to stay ahead of the game.
  • Determine and define services and product offerings: Clearly define the range of services and products your investment bank will offer to meet the needs of your clients.
  • Develop a strategic business model: Create a roadmap for your investment bank's operations, including revenue streams, cost structure, and value proposition.
  • Establish a legal structure and obtain necessary licenses: Ensure compliance with all legal and regulatory requirements by choosing the appropriate legal structure and obtaining the necessary licenses and permits.
  • Determine staffing and recruitment strategy: Plan your staffing needs and define your recruitment strategy to build a talented and dedicated team.
  • Create a comprehensive financial projection: Develop a detailed financial projection that includes revenue forecasts, expense estimates, and cash flow analysis.
  • Define marketing and sales strategy: Outline your marketing and sales approach to attract clients and promote your investment bank's services effectively.

By following these steps, you will be well-prepared to write a comprehensive business plan for your investment bank. Stay tuned for the detailed guide on each of these steps in our upcoming blog posts.

Conduct Market Research

Market research is a crucial step in the process of writing a business plan for an investment bank. It provides valuable insights into the current market conditions, industry trends, and customer preferences. By conducting thorough market research, you can gather essential information that will help you make informed decisions and develop a successful business strategy.

Here are some important aspects to consider when conducting market research:

  • Industry Analysis: Analyze the investment banking industry to understand its overall structure, key players, and market trends. Identify any emerging opportunities or challenges that may impact your business.
  • Target Market: Identify your target market based on specific criteria such as company size, industry sector, geographical location, and financial needs. Determine the market demand for investment banking services within your target market.
  • Customer Preferences: Understand the preferences and requirements of your potential clients. Conduct surveys, interviews, or focus groups to gather valuable insights about their expectations from an investment bank.
  • Competitor Analysis: Assess the strengths and weaknesses of your competitors in the investment banking industry. Identify their unique selling points and areas where you can differentiate your services and gain a competitive advantage.
  • Market Size and Growth: Determine the overall market size for investment banking services and analyze the potential growth rate. This information will help you estimate your market share and develop realistic financial projections.

Tips for Conducting Market Research:

  • Utilize both primary and secondary research methods to gather relevant data.
  • Use online resources, industry reports, and financial publications for secondary research.
  • Engage with potential clients and industry experts to gain insights into market trends and demands.
  • Consider hiring a professional market research firm if your budget allows.
  • Analyze the results of your market research and incorporate them into your business plan.

Identify Target Market And Potential Clients

Identifying the target market and potential clients is a crucial step in developing a successful business plan for an investment bank. This step allows you to understand who your services will cater to and how you can effectively reach them.

1. Conduct market research: Start by conducting thorough market research to gain insights into the financial industry and the specific needs of your target market. Look at industry reports, market trends, and customer preferences to identify potential gaps or opportunities.

2. Define your niche: Determine the specific niche or area of expertise within the financial services industry that your investment bank will focus on. This could be a particular industry sector, geographical location, or specialized financial products.

3. Segment your target market: Divide the market into specific segments based on demographic, geographic, psychographic, and behavioral characteristics. This segmentation will help you define customer profiles and tailor your services to their unique needs.

4. Determine ideal clients: Identify the characteristics of your ideal clients within each market segment. Consider factors such as their financial goals, investment preferences, company size, and potential for long-term business relationships.

5. Evaluate competition: Research and analyze your competitors to understand their target markets and the services they offer. This analysis will help you identify gaps in the market that your investment bank can fill and differentiate your services from the competition.

  • Consider conducting surveys or focus groups to gather feedback from potential clients and understand their needs and expectations.
  • Utilize market segmentation tools and techniques to identify untapped customer groups and tailor your marketing efforts accordingly.
  • Stay updated with industry news and trends to identify emerging opportunities and potential shifts in customer preferences.

By identifying your target market and potential clients, you can develop a business plan that aligns with their needs and positions your investment bank as the preferred choice in the market. This step lays the foundation for the next stages of your business plan, such as defining your services, creating a marketing strategy, and projecting financials.

Assess Competition And Industry Trends

Assessing the competition and industry trends is a crucial step in developing a business plan for an investment bank. By conducting a thorough analysis of the competitive landscape, you can gain valuable insights into the market dynamics and identify potential opportunities and challenges.

To assess the competition, start by identifying the key players in the investment banking industry. Look at both local and global banks that offer similar services and target a similar client base. Analyze their strengths, weaknesses, and market positioning. This will help you understand what sets your bank apart and how you can differentiate yourself.

Industry trends play a significant role in shaping the future of investment banking. Stay up-to-date with the latest developments, regulatory changes, and emerging technologies that are impacting the industry. This will help you anticipate shifts in customer preferences and adapt your business strategy accordingly.

  • Tip 1: Use online resources, industry publications, and analyst reports to gather information on market trends and competitor analysis.
  • Tip 2: Attend conferences and networking events to connect with industry experts and gain firsthand insights into the latest trends and innovations.
  • Tip 3: Leverage social media platforms and online communities to engage with industry professionals and stay informed about industry discussions and news.

Determine And Define Services And Product Offerings

When writing a business plan for an investment bank, it is crucial to determine and define the services and product offerings that your bank will provide. This step is essential in order to clearly communicate to potential investors and clients what your bank brings to the table and how it differentiates itself from competitors.

To start, conduct a thorough analysis of the market to identify the specific financial services that are in demand and that align with your bank's expertise and target market. This analysis will help you identify the unique value proposition that your bank can offer.

Once you have identified the services that your bank will provide, define them in detail in your business plan. Outline the specific features and benefits of each service and how they can meet the needs of your target market. Additionally, explain how these services will be delivered and any unique approaches or methodologies that your bank will employ.

It is important to consider that as an investment bank, your services and product offerings should be comprehensive and tailored to the specific needs of your clients. This may include capital raising services, securities trading, financial advisory, corporate finance, and asset management. The ability to offer a full range of financial solutions is often a key differentiator for investment banks.

Tips for determining and defining services and product offerings:

  • Conduct market research to identify the specific financial services that are in demand.
  • Clearly outline the features and benefits of each service in detail.
  • Tailor your services to meet the specific needs of your target market.
  • Consider offering a comprehensive range of financial solutions to differentiate your bank.

By determining and defining your services and product offerings, you can effectively position your investment bank in the market and attract clients who are in need of the specialized financial solutions that your bank provides.

Develop A Strategic Business Model

In order to build a successful investment bank, it is essential to develop a strategic business model that outlines how the bank will operate and achieve its goals. This model will serve as the foundation for the bank's operations and will guide decision-making processes.

1. Define your value proposition: Start by identifying the unique value that your investment bank will bring to the market. Determine what sets your bank apart from competitors and how you will differentiate yourself in terms of the services and products you offer. This will help you attract clients and build a strong customer base.

2. Assess the market demand: Analyze the market to understand the demand for the services your bank aims to provide. Identify potential clients and target markets, and determine how your bank can meet their specific financial needs. This will help you narrow down your focus and tailor your services accordingly.

3. Identify revenue streams: Determine how your bank will generate revenue. Explore different revenue streams, such as fees for financial advisory services, commissions from securities trading, or management fees for asset management. Understand the profitability of each revenue stream and prioritize them based on their potential impact on your business.

4. Build partnerships: Consider forming strategic partnerships with other financial institutions or service providers. Collaborating with established players in the industry can give your bank access to valuable resources, expertise, and a wider network of potential clients. Look for opportunities to create mutually beneficial partnerships that can enhance your bank's offerings.

  • Regularly review and update your strategic business model to adapt to changing market conditions and evolving client needs.
  • Consider conducting surveys or focus groups to gather feedback from potential clients and validate your business model.
  • Keep a close eye on industry trends and technological advancements that may impact your business model, and be proactive in embracing innovation.

By developing a strategic business model, you will have a clear roadmap for your investment bank's success. It will help you make informed decisions, allocate resources effectively, and position your bank as a trusted and reliable financial partner in the market.

Establish A Legal Structure And Obtain Necessary Licenses

Once you have conducted market research, identified your target market, and defined your services and product offerings, it is crucial to establish a strong legal structure for your investment bank. This will not only ensure compliance with regulatory requirements, but also safeguard your business and its stakeholders. Here are the key steps to follow:

  • Determine the legal structure: Choose the most appropriate legal structure for your investment bank, such as a sole proprietorship, partnership, corporation, or limited liability company (LLC). Research and consult with legal professionals to understand the benefits and limitations of each structure.
  • Register your business: Register your investment bank with the relevant governmental authorities, such as the Secretary of State or Companies House, depending on your jurisdiction. This will provide legal recognition to your business.
  • Obtain necessary licenses and permits: Research the licensing requirements specific to investment banking in your jurisdiction. This may include licenses from financial regulatory bodies such as the Securities and Exchange Commission (SEC) or Financial Conduct Authority (FCA). Ensure you meet all the criteria and submit the required documentation accurately and in a timely manner.

Tips for Establishing a Legal Structure and Obtaining Licenses

  • Seek professional advice: Consult with legal and financial professionals who specialize in investment banking to ensure compliance with regulations and to maximize legal protection for your business.
  • Stay updated with regulations: Regularly monitor changes in financial regulations and licensing requirements to ensure your investment bank remains compliant with all legal obligations.
  • Maintain accurate records: Keep all legal documents, licenses, permits, and registration certificates organized and accessible. This will help streamline compliance processes and avoid any issues in the future.
  • Build strong relationships: Establish connections with regulatory authorities and stay in touch with industry associations. This will help you stay informed about any updates in the regulatory landscape and foster goodwill within the industry.

By establishing a strong legal structure and obtaining the necessary licenses, you are demonstrating your commitment to operating your investment bank ethically and within the boundaries of the law. This will not only instill confidence in potential clients and investors, but also serve as a solid foundation for your bank's long-term success.

Determine Staffing And Recruitment Strategy

When developing a staffing and recruitment strategy for your investment bank, it is crucial to consider the specific needs of your business and the skills required to deliver your services effectively. Below are some key steps to help you determine your staffing and recruitment strategy:

  • Identify key positions: Start by identifying the key positions required for running your investment bank, such as investment bankers, financial analysts, traders, compliance officers, and administrative staff. Determine the number of employees needed for each position based on your business plan.
  • Define job descriptions and requirements: Clearly define job descriptions and requirements for each position. This should include the necessary qualifications, skills, and experience required for candidates to be successful in their roles. Be thorough and specific to attract the best talent.
  • Develop a recruitment plan: Outline your recruitment plan, including the channels and methods you will use to attract potential candidates. Consider leveraging online job boards, professional networks, and industry-specific recruitment agencies to widen your talent pool.
  • Establish an interview and selection process: Develop an interview and selection process to evaluate candidates thoroughly. This may involve multiple stages, such as initial screenings, technical assessments, and in-depth interviews. Ensure that the process is fair, consistent, and aligned with your business goals.
  • Consider cultural fit: In addition to technical skills, cultural fit is important for creating a cohesive and productive team. Ensure that you assess candidates' alignment with your company values, work ethics, and communication styles during the selection process.
  • Competitive compensation and benefits: Determine competitive compensation packages to attract and retain top talent. Research industry standards and consider offering additional benefits, such as performance bonuses, healthcare coverage, and professional development opportunities.

Tips for Staffing and Recruitment

  • Consider networking events and industry conferences to connect with potential candidates.
  • Create a positive employer brand by showcasing your organization's unique culture and values.
  • Offer internship programs to attract young talent and provide them with valuable industry experience.
  • Tap into professional associations and online forums to connect with experienced professionals and build relationships.
  • Regularly review your staffing needs and recruitment strategy to adapt to changes in the market and industry.

Create A Comprehensive Financial Projection

Creating a comprehensive financial projection is a crucial step in writing a business plan for an investment bank . It allows you to forecast and estimate the financial performance of your bank over a specific period, usually three to five years. A well-prepared financial projection demonstrates to potential investors and lenders that you have a clear understanding of your bank's revenue, expenses, and profitability.

Here are some important elements to consider when creating a comprehensive financial projection:

  • Revenue Projections: Estimate the potential revenue streams for your investment bank. This may include fees from capital raising, securities trading, financial advisory, corporate finance, and asset management services. Analyze market trends and past data to make realistic revenue projections.
  • Expense Projections: Forecast the various expenses involved in running your investment bank, such as employee salaries, marketing costs, office rent, technology infrastructure, and regulatory compliance expenses. Consider both fixed and variable costs and ensure that your expenses align with industry standards.
  • Profitability Analysis: Analyze the projected revenue and expenses to determine the profitability of your investment bank. Calculate key financial metrics such as gross margin, operating margin, and net profit margin. This analysis will help you understand the financial viability of your business model.
  • Cash Flow Projections: Create a cash flow projection to track the inflow and outflow of cash in your investment bank. This will help you anticipate potential cash shortages and plan accordingly. Consider factors such as accounts receivable, accounts payable, loan repayments, and investment returns.
  • Sensitivity Analysis: Perform a sensitivity analysis to assess the impact of various scenarios on your financial projections. This will help you identify potential risks and make contingency plans. Consider factors such as changes in interest rates, market fluctuations, and regulatory changes.
  • Funding Requirements: Determine the funding requirements of your investment bank based on your financial projections. This includes identifying the initial capital investment required, as well as any additional funding needed for future growth and expansion.

Tips for Creating a Comprehensive Financial Projection:

  • Ensure that your financial projections are realistic and based on solid market research and industry knowledge.
  • Use conservative assumptions when estimating revenue and growth rates to avoid overestimating your bank's performance.
  • Seek advice from financial professionals or consultants to validate your financial projections.
  • Regularly review and update your financial projections as your investment bank evolves and market conditions change.
  • Include a break-even analysis to determine the point at which your investment bank will start generating profits.

By creating a comprehensive financial projection, you can demonstrate the financial viability and potential profitability of your investment bank. This will instill confidence in potential investors and lenders, increasing your chances of securing the necessary funding to turn your business idea into a reality.

Define Marketing And Sales Strategy

Once you have determined your target market, identified potential clients, and assessed your competition, it is crucial to define a marketing and sales strategy that will effectively reach and attract your target audience.

Firstly, you need to clearly outline your unique selling proposition (USP) – what sets your investment bank apart from the competition and why clients should choose your services. This will form the foundation of your marketing and sales messaging, helping you differentiate yourself in a crowded market.

Identify the most effective marketing channels to reach your target market. This could include traditional methods such as print advertising, industry events, and networking, as well as digital channels like social media, content marketing, and search engine optimization. Determine which channels are most relevant to your audience and allocate resources accordingly.

Next, develop a comprehensive marketing plan outlining specific tactics and initiatives to promote your services. This plan should include a mix of online and offline strategies tailored to your target market, ensuring consistency in messaging and brand identity across all channels.

In addition to marketing, it is crucial to establish an effective sales strategy to convert leads into clients. This involves defining your target audience's buying journey and creating a sales process that guides potential clients through each stage. Determine the specific actions, resources, and tools your sales team will need to effectively engage and convert leads into loyal customers.

Regularly track and measure the success of your marketing and sales efforts. Monitor key performance indicators (KPIs) such as lead generation, conversion rates, and customer retention to identify areas for improvement and make data-driven adjustments to your strategy.

  • Invest in professional branding and design to establish a strong and memorable brand image.
  • Consider partnering with industry influencers or thought leaders to enhance your credibility and reach a wider audience.
  • Offer valuable content through blog posts, whitepapers, and webinars to position your investment bank as a trusted authority in the field.
  • Ensure your marketing and sales teams are well-trained and equipped with the necessary tools and resources to effectively communicate your value proposition.

By defining a well-thought-out marketing and sales strategy, you will increase your chances of attracting and retaining clients, setting your investment bank on the path to success.

In conclusion, writing a business plan for an investment bank requires careful consideration and thorough research. By following the nine steps outlined in this checklist, entrepreneurs can create a comprehensive and well-defined plan that will attract potential investors and set their business up for success. Conducting market research, identifying target markets, assessing competition, and defining services and product offerings are all essential aspects of developing a strong business plan for an investment bank. Additionally, establishing a legal structure, determining staffing strategy, creating financial projections, and defining marketing and sales strategies are crucial steps in ensuring the bank's long-term viability and profitability. By carefully following these steps, entrepreneurs can position their investment bank to thrive in the competitive financial industry.

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Investment Bank Business Plan and SWOT Analysis

Investment Bank Business Plan, Marketing Plan, How To Guide, and Funding Directory

The Investment Bank Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Investment Bank business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

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Investment banks are a highly important part of the capital market. These companies are able to source investments, underwrite their securities, and bring shares to the general public. Additionally, and over the last 30 years – many investment banks have gone on to provide a number of other services outside of securities underwriting. These companies have become one-stop shops for many businesses that are looking to raise capital, seller business, acquire business, and engage in specialized financing activities. Many investment banks are now completely integrated with their commercial banking counterparts. As such, these businesses are always able to remain profitable and cash flow positive at all times. While there is no standard textbook definition for an investment bank as many companies call themselves, most commonly the companies are that are considered true investment banks engage thoroughly in securities underwriting. These businesses are able to charge anywhere from 3% to 10% of the overall offering.

Any major financial institution or investment bank needs a business plan. This document should include a three-year to five-year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, business ratios page, and lending rush ratios page. Many investment banks focus heavily on the income that is derived not only from securities underwriting but also asset management as well. Asset management has become one of the most major aspects for most investment banks as it generates highly recurring streams of revenue from the monthly fees that are debited from a customer’s account. Within the business plan as well, a full discussion regarding the target market should be included. This includes a number of businesses in the target market, their annual revenues, distribution of industries covered, and other relevant information relating to the businesses that the investment bank we working with from the onset of operations as well as through a five-year time..

An investment bank marketing plan is also essential to having this business become successful. Most importantly, many investment banks work with marketing firms that have a specialized expertise in financial firms given that certain disclosures must be made as part of their overall marketing campaign. Most investment banks have their attorneys thoroughly review any materials that are distributed to the general public given that certain disclosures must be made in accordance with regulations and laws. A presence on the Internet is now mandated for pretty much every financial firm that wants to be successful given that most companies will first search online to see the operating history of an investment bank for they choose to do business with them.

An investment bank SWOT analysis is frequently developed as well. This analysis focuses on the strengths, weaknesses, opportunities, and threats that are common within this industry. As it relates the strengths, most investment banks are always able to remain profitable as companies are to continue to need capital in order to expand their operations. As these banks work with a number of different industries – many of whom are immune from negative economic changes – their ability to remain profitable in all economic climates is very stable. For weaknesses, this is a highly regulated industry and any investment bank is going to need to have a substantial number of compliance officers in place to make sure that are operating within the letter of the law at all times. Pertaining to opportunities, many financial firms will look to hire associate bankers, acquire third-party investment banking firms, and develop new service lines in order to boost their revenues on a year-to-year basis. For threats, many investment banks face ongoing changes in regulatory matters. This trend is not expected to change anytime soon and it can be expected that having to deal with complex regulatory issues will be something that an investment bank needs to deal with in perpetuity.


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How to Write a Winning Business Plan

  • Stanley R. Rich
  • David E. Gumpert

The business plan admits the entrepreneur to the investment process. Without a plan furnished in advance, many investor groups won’t even grant an interview. And the plan must be outstanding if it is to win investment funds. Too many entrepreneurs, though, continue to believe that if they build a better mousetrap, the world will beat […]

The Idea in Brief

You’ve got a great idea for a new product or service—how can you persuade investors to support it? Flashy PowerPoint slides aren’t enough; you need a winning business plan. A compelling plan accurately reflects the viewpoints of your three key constituencies: the market , potential investors , and the producer (the entrepreneur or inventor of the new offering).

But too many plans are written solely from the perspective of the producer. The problem is that, unless you’ve got your own capital to finance your venture, the only way you’ll get the funding you need is to satisfy the market’s and investors’ needs.

Here’s how to grab their attention.

The Idea in Practice

Emphasize Market Needs

To make a convincing case that a substantial market exists, establish market interest and document your claims.

Establish market interest. Provide evidence that customers are intrigued by your claims about the benefits of the new product or service:

  • Let some customers use a product prototype; then get written evaluations.
  • Offer the product to a few potential customers at a deep discount if they pay part of the production cost. This lets you determine whether potential buyers even exist.
  • Use “reference installations”—statements from initial users, sales reps, distributors, and would-be customers who have seen the product demonstrated.

Document your claims. You’ve established market interest. Now use data to support your assertions about potential growth rates of sales and profits.

  • Specify the number of potential customers, the size of their businesses, and the size that is most appropriate to your offering. Remember: Bigger isn’t necessarily better; e.g., saving $10,000 per year in chemical use may mean a lot to a modest company but not to a Du Pont.
  • Show the nature of the industry; e.g., franchised weight-loss clinics might grow fast, but they can decline rapidly when competition stiffens. State how you will continually innovate to survive.
  • Project realistic growth rates at which customers will accept—and buy—your offering. From there, assemble a credible sales plan and project plant and staffing needs.

Address Investor Needs

Cashing out. Show when and how investors may liquidate their holdings. Venture capital firms usually want to cash out in three to seven years; professional investors look for a large capital appreciation.

Making sound projections. Give realistic, five-year forecasts of profitability. Don’t skimp on the numbers, get overly optimistic about them, or blanket your plan with a smog of figures covering every possible variation.

The price. To figure out how much to invest in your offering, investors calculate your company’s value on the basis of results expected five years after they invest. They’ll want a 35 to 40% return for mature companies—up to 60% for less mature ventures. To make a convincing case for a rich return, get a product in the hands of representative customers—and demonstrate substantial market interest.

The business plan admits the entrepreneur to the investment process. Without a plan furnished in advance, many investor groups won’t even grant an interview. And the plan must be outstanding if it is to win investment funds.

Too many entrepreneurs, though, continue to believe that if they build a better mousetrap, the world will beat a path to their door. A good mousetrap is important, but it’s only part of meeting the challenge. Also important is satisfying the needs of marketers and investors. Marketers want to see evidence of customer interest and a viable market. Investors want to know when they can cash out and how good the financial projections are. Drawing on their own experiences and those of the Massachusetts Institute of Technology Enterprise Forum, the authors show entrepreneurs how to write convincing and winning business plans.

A comprehensive, carefully thought-out business plan is essential to the success of entrepreneurs and corporate managers. Whether you are starting up a new business, seeking additional capital for existing product lines, or proposing a new activity in a corporate division, you will never face a more challenging writing assignment than the preparation of a business plan.

Only a well-conceived and well-packaged plan can win the necessary investment and support for your idea. It must describe the company or proposed project accurately and attractively. Even though its subject is a moving target, the plan must detail the company’s or the project’s present status, current needs, and expected future. You must present and justify ongoing and changing resource requirements, marketing decisions, financial projections, production demands, and personnel needs in logical and convincing fashion.

Because they struggle so hard to assemble, organize, describe, and document so much, it is not surprising that managers sometimes overlook the fundamentals. We have found that the most important one is the accurate reflection of the viewpoints of three constituencies.

1. The market, including both existing and prospective clients, customers, and users of the planned product or service.

2. The investors, whether of financial or other resources.

3. The producer, whether the entrepreneur or the inventor.

Too many business plans are written solely from the viewpoint of the third constituency—the producer. They describe the underlying technology or creativity of the proposed product or service in glowing terms and at great length. They neglect the constituencies that give the venture its financial viability—the market and the investor.

Take the case of five executives seeking financing to establish their own engineering consulting firm. In their business plan, they listed a dozen types of specialized engineering services and estimated their annual sales and profit growth at 20%. But the executives did not determine which of the proposed dozen services their potential clients really needed and which would be most profitable. By neglecting to examine these issues closely, they ignored the possibility that the marketplace might want some services not among the dozen listed.

Moreover, they failed to indicate the price of new shares or the percentage available to investors. Dealing with the investor’s perspective was important because—for a new venture, at least—backers seek a return of 40% to 60% on their capital, compounded annually. The expected sales and profit growth rates of 20% could not provide the necessary return unless the founders gave up a substantial share of the company.

In fact, the executives had only considered their own perspective—including the new company’s services, organization, and projected results. Because they had not convincingly demonstrated why potential customers would buy the services or how investors would make an adequate return (or when and how they could cash out), their business plan lacked the credibility necessary for raising the investment funds needed.

We have had experience in both evaluating business plans and organizing and observing presentations and investor responses at sessions of the MIT Enterprise Forum. We believe that business plans must deal convincingly with marketing and investor considerations. This reading identifies and evaluates those considerations and explains how business plans can be written to satisfy them.

The MIT Enterprise Forum

Organized under the auspices of the Massachusetts Institute of Technology Alumni Association in 1978, the MIT Enterprise Forum offers businesses at a critical stage of development an opportunity to obtain counsel from a panel of experts on steps to take to achieve their goals.

In monthly evening sessions the forum evaluates the business plans of companies accepted for presentation during 60- to 90-minute segments in which no holds are barred. The format allows each presenter 20 minutes to summarize a business plan orally. Each panelist reviews the written business plan in advance of the sessions. Then each of four panelists—who are venture capitalists, bankers, marketing specialists, successful entrepreneurs, MIT professors, or other experts—spends five to ten minutes assessing the strengths and weaknesses of the plan and the enterprise and suggesting improvements.

In some cases, the panelists suggest a completely new direction. In others, they advise more effective implementation of existing policies. Their comments range over the spectrum of business issues.

Sessions are open to the public and usually draw about 300 people, most of them financiers, business executives, accountants, lawyers, consultants, and others with special interest in emerging companies. Following the panelists’ evaluations, audience members can ask questions and offer comments.

Presenters have the opportunity to respond to the evaluations and suggestions offered. They also receive written evaluations of the oral presentation from audience members. (The entrepreneur doesn’t make the written plan available to the audience.) These monthly sessions are held primarily for companies that have advanced beyond the start-up stage. They tend to be from one to ten years old and in need of expansion capital.

The MIT Enterprise Forum’s success at its home base in Cambridge, Massachusetts has led MIT alumni to establish forums in New York, Washington, Houston, Chicago, and Amsterdam, among other cities.

Emphasize the Market

Investors want to put their money into market-driven rather than technology-driven or service-driven companies. The potential of the product’s markets, sales, and profit is far more important than its attractiveness or technical features.

You can make a convincing case for the existence of a good market by demonstrating user benefit, identifying marketplace interest, and documenting market claims.

Show the User’s Benefit

It’s easy even for experts to overlook this basic notion. At an MIT Enterprise Forum session an entrepreneur spent the bulk of his 20-minute presentation period extolling the virtues of his company’s product—an instrument to control certain aspects of the production process in the textile industry. He concluded with some financial projections looking five years down the road.

The first panelist to react to the business plan—a partner in a venture capital firm—was completely negative about the company’s prospects for obtaining investment funds because, he stated, its market was in a depressed industry.

Another panelist asked, “How long does it take your product to pay for itself in decreased production costs?” The presenter immediately responded, “Six months.” The second panelist replied, “That’s the most important thing you’ve said tonight.”

The venture capitalist quickly reversed his original opinion. He said he would back a company in almost any industry if it could prove such an important user benefit—and emphasize it in its sales approach. After all, if it paid back the customer’s cost in six months, the product would after that time essentially “print money.”

The venture capitalist knew that instruments, machinery, and services that pay for themselves in less than one year are mandatory purchases for many potential customers. If this payback period is less than two years, it is a probable purchase; beyond three years, they do not back the product.

The MIT panel advised the entrepreneur to recast his business plan so that it emphasized the short payback period and played down the self-serving discussion about product innovation. The executive took the advice and rewrote the plan in easily understandable terms. His company is doing very well and has made the transition from a technology-driven to a market-driven company.

Find out the Market’s Interest

Calculating the user’s benefit is only the first step. An entrepreneur must also give evidence that customers are intrigued with the user’s benefit claims and that they like the product or service. The business plan must reflect clear positive responses of customer prospects to the question “Having heard our pitch, will you buy?” Without them, an investment usually won’t be made.

How can start-up businesses—some of which may have only a prototype product or an idea for a service—appropriately gauge market reaction? One executive of a smaller company had put together a prototype of a device that enables personal computers to handle telephone messages. He needed to demonstrate that customers would buy the product, but the company had exhausted its cash resources and was thus unable to build and sell the item in quantity.

The executives wondered how to get around the problem. The MIT panel offered two possible responses. First, the founders might allow a few customers to use the prototype and obtain written evaluations of the product and the extent of their interest when it became available.

Second, the founders might offer the product to a few potential customers at a substantial price discount if they paid part of the cost—say one-third—up front so that the company could build it. The company could not only find out whether potential buyers existed but also demonstrate the product to potential investors in real-life installations.

In the same way, an entrepreneur might offer a proposed new service at a discount to initial customers as a prototype if the customers agreed to serve as references in marketing the service to others.

For a new product, nothing succeeds as well as letters of support and appreciation from some significant potential customers, along with “reference installations.” You can use such third-party statements—from would-be customers to whom you have demonstrated the product, initial users, sales representatives, or distributors—to show that you have indeed discovered a sound market that needs your product or service.

You can obtain letters from users even if the product is only in prototype form. You can install it experimentally with a potential user to whom you will sell it at or below cost in return for information on its benefits and an agreement to talk to sales prospects or investors. In an appendix to the business plan or in a separate volume, you can include letters attesting to the value of the product from experimental customers.

Document Your Claims

Having established a market interest, you must use carefully analyzed data to support your assertions about the market and the growth rate of sales and profits. Too often, executives think “If we’re smart, we’ll be able to get about 10% of the market” and “Even if we only get 1% of such a huge market, we’ll be in good shape.”

Investors know that there’s no guarantee a new company will get any business, regardless of market size. Even if the company makes such claims based on fact—as borne out, for example, by evidence of customer interest—they can quickly crumble if the company does not carefully gather and analyze supporting data.

One example of this danger surfaced in a business plan that came before the MIT Enterprise Forum. An entrepreneur wanted to sell a service to small businesses. He reasoned that he could have 170,000 customers if he penetrated even 1% of the market of 17 million small enterprises in the United States. The panel pointed out that anywhere from 11 million to 14 million of such so-called small businesses were really sole proprietorships or part-time businesses. The total number of full-time small businesses with employees was actually between 3 million and 6 million and represented a real potential market far beneath the company’s original projections—and prospects.

Similarly, in a business plan relating to the sale of certain equipment to apple growers, you must have U.S. Department of Agriculture statistics to discover the number of growers who could use the equipment. If your equipment is useful only to growers with 50 acres or more, then you need to determine how many growers have farms of that size, that is, how many are minor producers with only an acre or two of apple trees.

A realistic business plan needs to specify the number of potential customers, the size of their businesses, and which size is most appropriate to the offered products or services. Sometimes bigger is not better. For example, a saving of $10,000 per year in chemical use may be significant to a modest company but unimportant to a Du Pont or a Monsanto.

Such marketing research should also show the nature of the industry. Few industries are more conservative than banking and public utilities. The number of potential customers is relatively small, and industry acceptance of new products or services is painfully slow, no matter how good the products and services have proven to be. Even so, most of the customers are well known and while they may act slowly, they have the buying power that makes the wait worthwhile.

At the other end of the industrial spectrum are extremely fast-growing and fast-changing operations such as franchised weight-loss clinics and computer software companies. Here the problem is reversed. While some companies have achieved multi-million-dollar sales in just a few years, they are vulnerable to declines of similar proportions from competitors. These companies must innovate constantly so that potential competitors will be discouraged from entering the marketplace.

You must convincingly project the rate of acceptance for the product or service—and the rate at which it is likely to be sold. From this marketing research data, you can begin assembling a credible sales plan and projecting your plant and staff needs.

Address Investors’ Needs

The marketing issues are tied to the satisfaction of investors. Once executives make a convincing case for their market penetration, they can make the financial projections that help determine whether investors will be interested in evaluating the venture and how much they will commit and at what price.

Before considering investors’ concerns in evaluating business plans, you will find it worth your while to gauge who your potential investors might be. Most of us know that for new and growing private companies, investors may be professional venture capitalists and wealthy individuals. For corporate ventures, they are the corporation itself. When a company offers shares to the public, individuals of all means become investors along with various institutions.

But one part of the investor constituency is often overlooked in the planning process—the founders of new and growing enterprises. By deciding to start and manage a business, they are committed to years of hard work and personal sacrifice. They must try to stand back and evaluate their own businesses in order to decide whether the opportunity for reward some years down the road truly justifies the risk early on.

When an entrepreneur looks at an idea objectively rather than through rose-colored glasses, the decision whether to invest may change. One entrepreneur who believed in the promise of his scientific-instruments company faced difficult marketing problems because the product was highly specialized and had, at best, few customers. Because of the entrepreneur’s heavy debt, the venture’s chance of eventual success and financial return was quite slim.

The panelists concluded that the entrepreneur would earn only as much financial return as he would have had holding a job during the next three to seven years. On the downside, he might wind up with much less in exchange for larger headaches. When he viewed the project in such dispassionate terms, the entrepreneur finally agreed and gave it up.

Investors’ primary considerations are:

Cashing out

Entrepreneurs frequently do not understand why investors have a short attention span. Many who see their ventures in terms of a lifetime commitment expect that anyone else who gets involved will feel the same. When investors evaluate a business plan, they consider not only whether to get in but also how and when to get out.

Because small, fast-growing companies have little cash available for dividends, the main way investors can profit is from the sale of their holdings, either when the company goes public or is sold to another business. (Large corporations that invest in new enterprises may not sell their holdings if they’re committed to integrating the venture into their organizations and realizing long-term gains from income.)

Venture capital firms usually wish to liquidate their investments in small companies in three to seven years so as to pay gains while they generate funds for investment in new ventures. The professional investor wants to cash out with a large capital appreciation.

Investors want to know that entrepreneurs have thought about how to comply with this desire. Do they expect to go public, sell the company, or buy the investors out in three to seven years? Will the proceeds provide investors with a return on invested capital commensurate with the investment risk—in the range of 35% to 60%, compounded and adjusted for inflation?

Business plans often do not show when and how investors may liquidate their holdings. For example, one entrepreneur’s software company sought $1.5 million to expand. But a panelist calculated that, to satisfy their goals, the investors “would need to own the entire company and then some.”

Making Sound Projections

Five-year forecasts of profitability help lay the groundwork for negotiating the amount investors will receive in return for their money. Investors see such financial forecasts as yardsticks against which to judge future performance.

Too often, entrepreneurs go to extremes with their numbers. In some cases, they don’t do enough work on their financials and rely on figures that are so skimpy or overoptimistic that anyone who has read more than a dozen business plans quickly sees through them.

In one MIT Enterprise Forum presentation, a management team proposing to manufacture and market scientific instruments forecast a net income after taxes of 25% of sales during the fourth and fifth years following investment. While a few industries such as computer software average such high profits, the scientific instruments business is so competitive, panelists noted, that expecting such margins is unrealistic.

In fact, the managers had grossly—and carelessly—understated some important costs. The panelists advised them to take their financial estimates back to the drawing board and before approaching investors to consult financial professionals.

Some entrepreneurs think that the financials are the business plan. They may cover the plan with a smog of numbers. Such “spreadsheet merchants,” with their pages of computer printouts covering every business variation possible and analyzing product sensitivity, completely turn off many investors.

Investors are wary even when financial projections are solidly based on realistic marketing data because fledgling companies nearly always fail to achieve their rosy profit forecasts. Officials of five major venture capital firms we surveyed said they are satisfied when new ventures reach 50% of their financial goals. They agreed that the negotiations that determine the percentage of the company purchased by the investment dollars are affected by this “projection discount factor.”

The Development Stage

All investors wish to reduce their risk. In evaluating the risk of a new and growing venture, they assess the status of the product and the management team. The farther along an enterprise is in each area, the lower the risk.

At one extreme is a single entrepreneur with an unproven idea. Unless the founder has a magnificent track record, such a venture has little chance of obtaining investment funds.

At the more desirable extreme is a venture that has an accepted product in a proven market and a competent and fully staffed management team. This business is most likely to win investment funds at the lowest costs.

Entrepreneurs who become aware of their status with investors and think it inadequate can improve it. Take the case of a young MIT engineering graduate who appeared at an MIT Enterprise Forum session with written schematics for the improvement of semiconductor-equipment production. He had documented interest by several producers and was looking for money to complete development and begin production.

The panelists advised him to concentrate first on making a prototype and assembling a management team with marketing and financial know-how to complement his product-development expertise. They explained that because he had never before started a company, he needed to show a great deal of visible progress in building his venture to allay investors’ concern about his inexperience.

Once investors understand a company qualitatively, they can begin to do some quantitative analysis. One customary way is to calculate the company’s value on the basis of the results expected in the fifth year following investment. Because risk and reward are closely related, investors believe companies with fully developed products and proven management teams should yield between 35% and 40% on their investment, while those with incomplete products and management teams are expected to bring in 60% annual compounded returns.

Investors calculate the potential worth of a company after five years to determine what percentage they must own to realize their return. Take the hypothetical case of a well-developed company expected to yield 35% annually. Investors would want to earn 4.5 times their original investment, before inflation, over a five-year period.

After allowing for the projection discount factor, investors may postulate that a company will have $20 million annual revenues after five years and a net profit of $1.5 million. Based on a conventional multiple for acquisitions of ten times earnings, the company would be worth $15 million in five years.

If the company wants $1 million of financing, it should grow to $4.5 million after five years to satisfy investors. To realize that return from a company worth $15 million, the investors would need to own a bit less than one-third. If inflation is expected to average 7.5% a year during the five-year period, however, investors would look for a value of $6.46 million as a reasonable return over five years, or 43% of the company.

For a less mature venture—from which investors would be seeking 60% annually, net of inflation—a $1 million investment would have to bring in close to $15 million in five years, with inflation figured at 7.5% annually. But few businesses can make a convincing case for such a rich return if they do not already have a product in the hands of some representative customers.

The final percentage of the company acquired by the investors is, of course, subject to some negotiation, depending on projected earnings and expected inflation.

Make It Happen

The only way to tend to your needs is to satisfy those of the market and the investors—unless you are wealthy enough to furnish your own capital to finance the venture and test out the pet product or service.

Of course, you must confront other issues before you can convince investors that the enterprise will succeed. For example, what proprietary aspects are there to the product or service? How will you provide quality control? Have you focused the venture toward a particular market segment, or are you trying to do too much? If this is answered in the context of the market and investors, the result will be more effective than if you deal with them in terms of your own wishes.

An example helps illustrate the potential conflicts. An entrepreneur at an MIT Enterprise Forum session projected R&D spending of about half of gross sales revenues for his specialty chemical venture. A panelist who had analyzed comparable organic chemical suppliers asked why the company’s R&D spending was so much higher than the industry average of 5% of gross revenues.

The entrepreneur explained that he wanted to continually develop new products in his field. While admitting his purpose was admirable, the panel unanimously advised him to bring his spending into line with the industry’s. The presenter ignored the advice; he failed to obtain the needed financing and eventually went out of business.

Once you accept the idea that you should satisfy the market and the investors, you face the challenge of organizing your data into a convincing document so that you can sell your venture to investors and customers. We have provided some presentation guidelines in the insert called “Packaging Is Important.”

Packaging Is Important

A business plan gives financiers their first impressions of a company and its principals.

Potential investors expect the plan to look good, but not too good; to be the right length; to clearly and cisely explain early on all aspects of the company’s business; and not to contain bad grammar and typographical or spelling errors.

Investors are looking for evidence that the principals treat their own property with care—and will likewise treat the investment carefully. In other words, form as well as content is important, and investors know that good form reflects good content and vice versa.

Among the format issues we think most important are the following:

The binding and printing must not be sloppy; neither should the presentation be too lavish. A stapled compilation of photocopied pages usually looks amateurish, while bookbinding with typeset pages may arouse concern about excessive and inappropriate spending. A plastic spiral binding holding together a pair of cover sheets of a single color provides both a neat appearance and sufficient strength to withstand the handling of a number of people without damage.

A business plan should be no more than 40 pages long. The first draft will likely exceed that, but editing should produce a final version that fits within the 40-page ideal. Adherence to this length forces entrepreneurs to sharpen their ideas and results in a document likely to hold investors’ attention.

Background details can be included in an additional volume. Entrepreneurs can make this material available to investors during the investigative period after the initial expression of interest.

The Cover and Title Page

The cover should bear the name of the company, its address and phone number, and the month and year in which the plan is issued. Surprisingly, a large number of business plans are submitted to potential investors without return addresses or phone numbers. An interested investor wants to be able to contact a company easily and to request further information or express an interest, either in the company or in some aspect of the plan.

Inside the front cover should be a well-designed title page on which the cover information is repeated and, in an upper or a lower corner, the legend “Copy number______” provided. Besides helping entrepreneurs keep track of plans in circulation, holding down the number of copies outstanding—usually to no more than 20—has a psychological advantage. After all, no investor likes to think that the prospective investment is shopworn.

The Executive Summary

The two pages immediately following the title page should concisely explain the company’s current status, its products or services, the benefits to customers, the financial forecasts, the venture’s objectives in three to seven years, the amount of financing needed, and how investors will benefit.

This is a tall order for a two-page summary, but it will either sell investors on reading the rest of the plan or convince them to forget the whole thing.

The Table of Contents

After the executive summary include a well-designed table of contents. List each of the business plan’s sections and mark the pages for each section.

Even though we might wish it were not so, writing effective business plans is as much an art as it is a science. The idea of a master document whose blanks executives can merely fill in—much in the way lawyers use sample wills or real estate agreements—is appealing but unrealistic.

Businesses differ in key marketing, production, and financial issues. Their plans must reflect such differences and must emphasize appropriate areas and deemphasize minor issues. Remember that investors view a plan as a distillation of the objectives and character of the business and its executives. A cookie-cutter, fill-in-the-blanks plan or, worse yet, a computer-generated package, will turn them off.

Write your business plans by looking outward to your key constituencies rather than by looking inward at what suits you best. You will save valuable time and energy this way and improve your chances of winning investors and customers.

how to write a business plan for an investment bank

  • SR Mr. Rich has helped found seven technologically based businesses, the most recent being Advanced Energy Dynamics Inc. of Natick, Massachusetts. He is also a cofounder and has been chairman of the MIT Enterprise forum, which assists emerging growth companies.
  • DG Mr. Gumpert is an associate editor of HBR, where he specializes in small business and marketing. He has written several HBR articles, the most recent of which was “The Heart of Entrepreneurship,” coauthored by Howard. H. Stevenson (March–April 1985). This article is adapted from Business Plans That Win $$$ : Lessons from the MIT Enterprise Forum, by Messrs. Rich and Gumpert (Harper & Row, 1985). The authors are also founders of Venture Resource Associates of Grantham, New Hampshire, which provides planning and strategic services to growing enterprises.

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Writing a Bank Business Plan

  • Written By Dave Lavinsky

Writing a Lean Business Plan for a Bank

When it comes to seeking funding from a bank or other financial institution, one of the most important things you can do is have a well-written business plan. This document will not only give potential lenders and investors an idea of your company’s current position and future goals but will also provide them with a clear understanding of the risks involved in lending you money or investing in your business.

What is a Business Plan?

A business plan is a document that provides a detailed description of a business, its products or services, its market, and its financial projections. It is used to secure funding from lenders or investors and to provide guidance for the business’s future operations.

Why Write a Business Plan

There are several reasons why you might want to write a plan for your business, even if you’re not looking for funding, they are:

  • To clarify your company’s purpose and direction
  • To better understand your industry and customers
  • To develop a realistic financial plan and accurate projections
  • To identify potential risks and opportunities
  • To track your company’s progress over time

An effective and well-written plan is helpful for potential investors and clarifies the plans you have for any future business partners.

Sources of Business Funding for Banks

There are many sources of business funding available to banks, including:

  • Equity financing: This is when you sell a portion of your business to investors in exchange for capital. This can be a good option if you need a large amount of money quickly, as it doesn’t require you to pay back the funds over time.
  • Debt financing: This is when you borrow money from a lender, such as a bank, in exchange for repayment plus interest. This type of financing can be helpful if you need to keep your cash flow low in the early stages of your business.
  • Grants: There are several different government and private grants available to businesses, which can often be used for start-up costs or expansion.
  • Venture capital: This is when you receive funding from a venture capitalist in exchange for a portion of your company’s equity. Venture capitalists typically invest their own personal savings in high-growth businesses with a lot of potential.

Resources to Write a Bank Business Plan

To write a bank business plan, you’ll need access to a variety of resources, including:

Sample Plans for Your Business

A good place to start is by looking at some sample plans for businesses in your industry. This will give you a good idea of the types of information to include in your own plan.

Business planning software

There are a number of software programs that can help you create professional-looking plans for your business.

Market Research

When writing a business plan for a bank, it’s important to include a section on your company’s market research. This will include detailed information about your industry, your market, and your competition.

Industry Analysis

In order to accurately describe your industry and the market for your products or services, you’ll need to conduct an industry analysis. This should include information about the size and growth of the industry, the key players in the industry, and any major trends or changes that are taking place.

Target Market Analysis

To effectively market your products or services, you need to understand who your target market is. This should include information about the demographics of your target customers (age, gender, income, etc.), psychographics (lifestyle preferences, interests, etc.), and geographic (location, region).

Competition Analysis

In order to differentiate your business from the competition, you’ll need to know what they’re offering and how they’re positioning themselves in the market. This should include a SWOT analysis (strengths, weaknesses, opportunities, threats) of your competitors.

Customer Segments

A customer segment is a group of customers who share common characteristics, such as age, income, location, or lifestyle preferences. When creating business plans for a bank, it’s important to identify and target your key customer segments. This will help you focus your marketing efforts and create products and services that appeal to your target market.

There are a variety of ways to segment customers, including:

  • Demographics: Age, gender, income, location, etc.
  • Psychographics: Lifestyle preferences, interests, etc.
  • Behavior: How they interact with your brand, what channels they use to purchase products or services, etc.
  • Usage: How often they purchase your product or service, how much they spend, etc.
  • Value: How much they’re willing to pay for your product or service, how much they value customer service, etc.

Once you’ve identified your customers, you can create buyer personas. These are fictional characters that represent your ideal customer within each segment. Creating buyer personas will help you better understand your target market and create more effective marketing campaigns.

Financial templates

If you’re not familiar with financial terminology or calculations, use a financial template to help you develop your business’s financial projections as well as including an income statement and balance sheets.

Accounting and Legal Advice 

It’s important to seek out accounting and legal advice from professionals who can help ensure that your business plan is accurate and complete.

Bank Business Plan Template

While there is no one-size-fits-all template for writing a business plan, there are some key elements that should be included. Here is a brief overview of what should be included:

Executive Summary

This is a high-level overview of your company, its products or services, and its financial situation. Be sure to include information on your target market, your competitive advantage, and your plans for growth.

Company Description

This section provides more detail on your company, including its history, structure, and management team. Be sure to include information on your company’s mission and vision, as well as its values and goals.

Products and Services

Here you will describe your company’s products or services in detail, including information on your target market and your competitive advantage.

Market Analysis

In this section, you will provide an overview of your market, including demographic information and information on current and future trends. This is also a good section to add the marketing plan you have developed to appeal to potential customers.

Sales and Marketing

This section will detail your sales and marketing strategy, including information on your pricing, your distribution channels, and your promotion plans.

Financial projections

This is perhaps the most important section of your business plan, as it will provide lenders and investors with an idea of your company’s financial health. Be sure to include detailed information on your past financial performance, as well as your projections for future revenue and expenses. This is also a good section to include your cash flow statements, income statements, and information about any bank accounts opened for your business.

This is where you will include any supporting documents, such as your financial statements, marketing materials, or product data sheets.

While this is not an exhaustive list of everything that should be included in your bank business plan, it covers the most important elements. By taking the time to write a well-thought-out and detailed business plan, you will increase your chances of securing the funding you need to grow your business.

Opening a bank is a detailed and complex process, but it can be enormously rewarding both professionally and financially. The best way to increase your chances of success is to write a business plan that outlines all aspects of opening and running a bank. This document should include market analysis, organizational structure, financial projections, and more. Our team has extensive experience helping entrepreneurs open banks. We have created a comprehensive business plan template that covers all the key points you need to consider when writing your own business plan. By following our template, you can be sure that you haven’t missed any essential elements in your planning process. Investing in professional help when writing your business plan gives you the best chance for success when opening a new bank.

Bank Business Plan Template FAQs

Do i need to use a business plan template.

There is no one-size-fits-all answer to this question. If you are seeking funding from a lender or investor, they may have specific requirements for the format and content of your business plan. In other cases, using a template can be helpful in ensuring that you include all of the important information in your plan.

Where can I find a business plan template?

There are a number of resources that offer business plan templates, including the Small Business Administration (SBA) and the U.S. Chamber of Commerce. Additionally, many software programs that offer business planning tools also include templates.

How long should my business plan be?

Again, there is no one-size-fits-all answer to this question. The length of your business plan will depend on the complexity of your business and the amount of detail you need to include. In general, however, most business plans range from 20 to 50 pages.

Do I need to hire a professional to help me write my business plan?

While you are not required to hire a professional to write your business plan, it may be helpful to do so. A professional can help you ensure that your plan is well-written and free of errors. Additionally, they can offer advice on how to best structure your plan and make it more likely to succeed.

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Business plan

How to write an effective business plan in 11 steps (with workbook)

February 02, 2023 | 14 minute read

Writing a business plan is a powerful way to position your small business for success as you set out to meet your goals. Research suggests that business founders who write one are 16% more likely to build businesses that are viable than those who don’t, and that entrepreneurs focused on high growth are 7% more likely to have written a business plan. HBR. July 14, 2017. Available online at" data-footnote="sevenpercent" aria-label="Footnote 1" data-options="{"interstitialType":"leaving-site","targetAction":"new-tab"}" class="spa-ui-layer-link spa-fn spa-ui-layer-interstitial"> Footnote [1] Even better, other research shows that owners who complete business plans are twice as likely to grow their business successfully or obtain capital compared to those who don’t. J Grad Med Educ. 2014 Mar;6(1):15-7. doi: 10.4300/JGME-D-13-00081.1. PMID: 24701304; PMCID: PMC3963774. Available online at:" data-footnote="twiceaslikely" aria-label="Footnote 2" data-options="{"interstitialType":"leaving-site","targetAction":"new-tab"}" class="spa-ui-layer-link spa-fn spa-ui-layer-interstitial"> Footnote [2]

The best time to write a business plan is typically after you have vetted and researched your business idea. (See: How to start a business in 15 steps .) If conditions change later, you can rewrite the plan, much like how your GPS reroutes you if there is traffic ahead. When you update your plan regularly, everyone on your team, including outside stakeholders such as investors, will know where you are headed.

What is a business plan?

Typically 15-20 pages long, a business plan is a document that explains what your business does, what you want to achieve in the business and the strategy you plan to use to get there. It details the opportunities you are going after, what resources you will need to achieve your goals and how you will define success.

Why are business plans important?

Business plans help you think through barriers and discover opportunities you may have recognized subconsciously but have not yet articulated. A business plan can also help you to attract potential lenders, investors and partners by providing them with evidence that your business has all of the ingredients necessary for success.

What questions should a business plan answer?

Your business plan should explain how your business will grow and succeed. A great plan will provide detailed answers to questions that a banker or investor will have before putting money into the business, such as:

  • What products/services do you provide?
  • Who is your target customer?
  • What are the benefits of your product and service for customers?
  • How much will you charge?
  • What is the size of the market?
  • What are your marketing plans?
  • How much competition does the business face in penetrating that market?
  • How much experience does the management team have in running businesses like it?
  • How do you plan to measure success?
  • What do you expect the business’s revenue, costs and profit to be for the first few years?
  • How much will it cost to achieve the goals stated in the business plan?
  • What is the long-term growth potential of the business? Is the business scalable?
  • How will you enable investors to reap the rewards of backing the business? Do you plan to sell the business to a bigger company eventually or take it public as your “exit strategy”?

How to write a business plan in 11 steps

This step-by-step outline will make it easier to write an effective business plan, even if you’re managing the day-to-day demands of starting a new business. Creating a table of contents that lists key sections of the plan, with page numbers, will make it easy for readers to flip to the sections that interest them most.

Use our editable workbook to capture notes and organize your thoughts as you review these critical steps. Note: To avoid losing your work, please remember to save this PDF to your desktop before you begin.

1. Executive summary

The executive summary is your opportunity to make a great first impression on investors and bankers. It should be just as engaging as the enthusiastic elevator pitch you might give if you bumped into a potential backer in an elevator.

In three to five paragraphs, you’ll want to explain what your business does, why it will succeed and where it will be in five years. The executive summary should include short descriptions of the following:

  • Business concept: What will your business do?
  • Goals and vision: What do you expect the business to achieve, both financially and for other key stakeholders, such as the community?
  • Product or service: What does your product or service do — and how is it different from those of competitors?
  • Target market: Who do you expect to buy your product or service?
  • Marketing strategy: How will you tell people about your product or service?
  • Current revenue and profits: If your business is pre-revenue, offer sales projections.
  • Projected revenue and profits: Provide a realistic look at the next year, as well as the next three years, ideally.
  • Financial resources needed: How much money do you need to borrow or raise to fund your plan?
  • Management team: Who are the company’s leaders and what relevant experience will they contribute?

2. Business overview

Here is where you provide a brief history of the business and describe the product(s) or service(s) it offers. Make sure you describe the problem you are attempting to solve, for whom you will solve it (your customers) and how you will solve it. Be sure to describe your business model (such as direct-to-consumer sales through an online store) so readers can envision how you will make sales. Also mention your business structure (such as a sole proprietorship, general partnership, limited partnership or corporation) and why it is advantageous for the business. And be sure to provide context on the state of your industry and where your business will fit into it.

3. Business goals and vision

Explain what you hope to achieve in the business (your vision), as well as its mission and value proposition. Most founders judge success by the size to which they grow the business, using measures such as revenue or number of employees. Your goals may not be solely financial. You may also wish to provide jobs or solve a societal problem. If that’s the case, mention those goals as well.

If you are seeking outside funding, explain why you need the money, how you will put it to work to grow the business and how you expect to achieve the goals you have set for the business. Also explain your exit strategy—that is, how you will enable investors to cash out, whether that means selling the business or taking it public.

4. Management and organization

Many investors say they bet on the team behind a business more than the business idea, trusting that talented and experienced people will be capable of bringing sound business concepts to life. With that in mind, make sure to provide short bios of the key members of your management team (including yourself) that emphasize the relevant experience each individual brings, along with their special talents and industry recognition. Many business plans include headshots of the management team with the bios.

Also describe more about how your organization will be structured. Your company may be a sole proprietorship, a limited liability company (LLC) or a corporation in one or more states.

If you will need to hire people for specific roles, this is the place to mention those plans. And if you will rely on outside consultants for certain roles — such as an outsourced CFO — be sure to make a note of it here. Outside backers want to know if you’ve anticipated the staffing you need.

5. Service or product line

A business will only succeed if it sells something people want or need to buy. As you describe the products or services you will offer, make sure to explain what benefits they will provide to your target customers, how they will differ from competing offerings and what the buying cycle will likely be, so it is clear that you can actually sell what you are offering. If you have plans to protect your intellectual property through a copyright or patent filing, be sure to mention that. Also explain any research and development work that is underway, to show investors the potential for additional revenue streams.

6. Market/industry analysis

Anyone interested in providing financial backing to your business will want to know how big your company can potentially grow, so they have an idea of what kind of returns they can expect. In this section, you’ll be able to convey that by explaining to whom you will be selling and how much opportunity there is to reach them. Key details to include are market size; a strengths, weaknesses, opportunities and threats (SWOT) analysis ; a competitive analysis; and customer segmentation. Make it clear how you developed any projections you’ve made by citing interviews or research.

Also describe the current state of the industry. Where is there room for improvement? Are most companies using antiquated processes and technology? If your business is a local one, what is the market in your area like? Do most of the restaurants where you plan to open your café serve mediocre food? What will you do better?

In this section, also list competitors, including their names, websites and social media handles. Describe each source of competition and how your business will address it.

7. Sales and marketing

Explain how you will spread the word to potential customers about what you sell. Will you be using paid online search advertising, social media promotions, traditional direct mail, print advertising in local publications, sponsorship of a local radio or TV show, your own YouTube content or some other method entirely? List all of the methods you will use.

Make sure readers know exactly what the path to a sale will be and why that approach will resonate with customers in your ideal target markets, as well as existing customer segments. If you have already begun using the methods you’ve outlined, include data on the results so readers know whether they have been effective.

8. Financials

In a new business, you may not have any past financial data or financial statements to include, but that doesn’t mean you have nothing to share. Preparing a budget and financial plan will help show investors or bankers that you have developed a clear understanding of the financial aspects of running your business. (The U.S. Small Business Administration (SBA) has prepared a budget template you can use; SCORE , a nonprofit organization that partners with the SBA, offers a financial planning template to help you look ahead.) For an existing business, you will want to include income statements, profit and loss statements, cash flow statements and balance sheets, ideally going back three years.

Make a list of the specific steps you plan to take to achieve the financial results you have outlined. The steps are generally the most detailed for the first year, given that you may need to revise your plan later as you gather feedback from the marketplace.

Include interactive spreadsheets that contain a detailed financial analysis showing how much it costs your business to produce the goods and services you provide, the profits you will generate, any planned investments and the taxes you will pay. See our Startup costs calculator to get started.

9. Financial projections

Creating a detailed sales forecast can help you get outside backers excited about supporting you. A sales forecast is typically a table or simple line graph that shows the projected sales of the company over time, usually for the next 12 months and as much as five years into the future. If you haven’t yet launched the company, turn to your market research to develop estimates. For more information, see “ How to create a sales forecast for your small business .”

10. Funding request

If you are seeking outside financing such as a loan or equity investment, your potential backers will want to know how much money you need and how you will spend it. Describe the amount you are trying to raise, how you arrived at that number and what type of funding you are seeking (such as debt, equity or a combination of both). If you are contributing some of your own funds, it is worth noting this, as it shows that you have “skin in the game.”

11. Appendix

This should include any information and supporting documents that will help investors and bankers gain a greater understanding of the potential of your business. Depending on your industry, you might include local permits, licenses, deeds and other legal documents; professional certifications and licenses; media clips; information on patents and other intellectual property; key customer contracts and purchase orders; and other relevant documents.

Some business owners find it helpful to develop a list of key concepts, such as the names of the company’s products and industry terms. This can be helpful if you do business in an industry that may not be familiar to the readers of the business plan.

Tips for creating an effective business plan

Use clear, simple language. It’ll be easier to win people over if your plan is easy to read. Steer clear of industry jargon, and if you must use any phrases the average adult won’t know, be sure to define them.

Emphasize what makes your business unique. Investors and bankers want to know how you will solve a problem or gap in the marketplace differently from anyone else. Make sure you’re conveying your differentiating factors.

Nail the details. An ideal business plan will be detailed and accurate. Make sure that any financial projections you make are realistic and grounded in solid market research. (If you need help in making your calculations, you can get free advice at SCORE.) Seasoned bankers and investors will quickly spot numbers that are overly optimistic.

Take time to polish it. Your final version of the plan should be neat and professional, with an attractive layout and copy that has been carefully proofread.

Include professional photos. High-quality shots of your product or place of business can help make it clear why your business stands out.

Updating an existing business plan

Some business owners in rapidly growing businesses update their business plan quarterly. Others do so every six months or every year. When you update your plan make sure you consider these three things:

1. Are your goals still current? As you’ve tested your concept, your goals may have changed. The plan should reflect this.

2. Have you revised any strategies in response to feedback from the marketplace? You may have found that your offerings resonated with a different customer segment than you expected or that your advertising plan didn’t work and you need to try a different approach. Given that investors will want to see a marketing and advertising plan that works, keeping this section current will ensure you are always ready to meet with one who shows interest.

3. Have your staffing needs changed? If you set ambitious goals, you may need help from team members or outside consultants you did not anticipate when you first started the business. Take stock now so you can plan accordingly.

Final thoughts

Most business owners don’t follow their business plans exactly. But writing one will get you off to a much better start than simply opening your doors and hoping for the best, and it will be easier to analyze any aspects of your business that aren’t working later so you can course-correct. Ultimately, it may be one of the best investments you can make in the future of your business.

Business plan FAQs

The biggest mistake you can make when writing a business plan is creating one before the idea has been properly researched and tested. Not every idea is meant to become a business. Other common mistakes include:

  • Not describing your management team in a way that is appealing to investors. Simply cutting and pasting someone’s professional bio into the management section won’t do the trick. You’ll want to highlight the credentials of each team member in a way that is relevant to this business.
  • Failing to include financial projections — or including overly optimistic ones. Investors look at a lot of business plans and can tell quickly whether your numbers are accurate or pie in the sky. Have a good small business accountant review your numbers to make sure they are realistic.
  • Lack of a clear exit strategy for investors. Investors will want to “cash out” eventually and will want to know how they can go about doing that.
  • Slapdash presentation. Make sure to fact-check any industry statistics you cite, and that any charts, graphs or images are carefully prepared and easy to read.

There are a variety of styles of business plans styles. Here are three major types:

Traditional business plan. This is a formal document for pitching to investors based on the outline in this article. If your business is a complicated one, the plan may exceed the typical length and stretch to as many as 50 pages.

One-page business plan. This is a simplified version of a formal business plan, designed to fit on one page. Typically, each section will be described in bullet points or in a chart format, rather than in the narrative style of an executive summary. It can be helpful as a summary document to give to investors — or for internal use. Another variation on the one-page theme is the “ business model canvas .”

Lean plan. This methodology for creating a business plan is ideal for a business that is evolving quickly. It is designed in a way that makes it easy to update on a regular basis. Lean business plans are usually about one page long. The SBA has provided an example of what this type of plan includes on its website.

Many elements of a business plan for a nonprofit are similar to those of a for-profit business. However, because the goal of a nonprofit is achieving its mission — rather than turning a profit—the business plan should emphasize its specific goals on that front and how it will achieve them. Many nonprofits set key performance indicators (KPIs) — numbers that they track to show they are “moving the needle” on their goals.

Nonprofits will generally emphasize their fundraising strategies in their business plans, rather than sales strategies. The funds they raise are the lifeblood of the programs they run.

A strategic plan is different from the type of business plan you’ve read about here in that it emphasizes the long-term goals of the business and how your business will achieve them over the long run. A strong business plan can function as both a business plan and a strategic plan.

A marketing plan is different from a business plan in that it is focused on four main areas of the business: product (what you are selling and how you will differentiate it), price (how much your products or services will cost and why), promotion (how you will get your ideal customer to notice and buy what you are selling) and place (where you will sell your products). A thorough business plan may cover these topics, doing double duty as both a business plan and a marketing plan.

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Investment Company Business Plan Template

Written by Dave Lavinsky

investment company business plan

Investment Company Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their investment companies. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an investment company business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your investment company as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.  

Why You Need a Business Plan

If you’re looking to start an investment company, or grow your existing investment company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your investment company in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.  

Sources of Funding for Investment Companies

With regards to funding, the main sources of funding for an investment company are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Investors, grants, personal investments, and bank loans are the most common funding paths for investment companies.

How to Write a Business Plan for an Investment Company

If you want to start an investment company or expand your current one, you need a business plan. Below we detail what you should include in each section of your own business plan:  

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of investment company you are operating and the status. For example, are you a startup, do you have an investment company that you would like to grow, or are you operating investment companies in multiple markets?

Next, provide an overview of each of the subsequent sections of your business plan. For example, give a brief overview of the investment company industry. Discuss the type of investment company you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of investment company you are operating.

For example, you might operate one of the following types of investment companies:

  • Closed-End Funds Investment Company : this type of investment company issues a fixed number of shares through a single IPO to raise capital for its initial investments.
  • Mutual Funds (Open-End Funds) Investment Company: this type of investment company is a diversified portfolio of pooled investor money that can issue an unlimited number of shares.
  • Unit Investment Trusts (UITs) Investment Company: this type of investment company offers a fixed portfolio, generally of stocks and bonds, as redeemable units to investors for a specific period of time.

In addition to explaining the type of investment company you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

  • When and why did you start the business?
  • What milestones have you achieved to date? Milestones could include the number of investments made, number of client positive reviews, reaching X amount of clients invested for, etc.
  • Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the investment industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the investment industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your business plan:

  • How big is the investment industry (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the market?
  • Who are the key suppliers in the market?
  • What trends are affecting the industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential market for your investment company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: companies or employees in specific industries, couples with double income, families with kids, small business owners, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of investment company you operate. Clearly, couples with families and double income would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.  

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other investment companies.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes robo investors and advisors, company 401Ks, etc. You need to mention such competition as well.

With regards to direct competition, you want to describe the other investment companies with which you compete. Most likely, your direct competitors will be investment companies located very close to your location.

investment competition

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

  • What types of clients do they serve?
  • What type of investment company are they and what certifications do they have?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you provide better investment strategies?
  • Will you provide services that your competitors don’t offer?
  • Will you provide better customer service?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an investment company, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to an investment company, will you provide insurance products, website and app accessibility, quarterly or annual investment reviews, and any other services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.

Place : Place refers to the location of your company. Document your location and mention how the location will impact your success. For example, is your investment company located in a busy retail district, a business district, a standalone office, etc. Discuss how your location might be the ideal location for your customers.

Promotions : The final part of your investment company marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

  • Advertising in local papers and magazines
  • Commercials and billboards
  • Reaching out to websites
  • Social media marketing
  • Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your investment company, including researching the stock market, keeping abreast of all investment industry knowledge, updating clients on any new activity, answering client phone calls and emails, networking to attract potential new clients.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to land your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your investment business to a new city.  

Management Team

To demonstrate your investment company’s ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in managing investment companies. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing an investment company or successfully advised clients who have achieved a successful net worth.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you take on one new client at a time or multiple new clients ? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your investment company, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an investment company:

  • Cost of investor licensing..
  • Cost of equipment and supplies
  • Payroll or salaries paid to staff
  • Business insurance
  • Taxes and permits
  • Legal expenses

business costs

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or list of clients that you have acquired.  

Putting together a business plan for your investment company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the investment industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful investment company.  

Investment Company Business Plan FAQs

What is the easiest way to complete my investment company business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Investment Company Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of investment company you are operating and the status; for example, are you a startup, do you have an investment company that you would like to grow, or are you operating a chain of investment companies?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Other Helpful Business Plan Articles & Templates

Business Plan Template & Guide For Small Businesses

The busi­ness plan

A de­tailed busi­ness plan is the first build­ing block for a suc­cess­ful com­pa­ny. It pro­vides in­put for de­ci­sions by the start­up team, en­sures trans­paren­cy, and is an es­sen­tial tool for in­still­ing con­fi­dence in in­vestors. This overview and our tem­plates will help you pre­pare your busi­ness plan quick­ly and con­ve­nient­ly.

how to write a business plan for an investment bank

What is a business plan?

Whether it's prior to the founding of a company or in a subsequent expansion phase, the business plan is the key document for corporate planning. It is used to analyze the current situation, define specific business objectives, and plan capital and financing requirements. The business plan should help you answer the following questions:

  • What is your mission, and what makes your company unique?
  • What are the core competencies?
  • What strategy will your company pursue?
  • What are the opportunities and risks on the market?
  • What are the short-term, mid-term, and long-term business goals?
  • What measures will you take to achieve these goals?

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What belongs in a business plan.

A convincing business plan should have a clear structure and include all the information necessary for the reader. Below are the items that your business plan should include in order to obtain the maximum effect:

Executive summary

The executive summary is a short, succinct outline of the main content of the business plan, limited to one or two pages. It should be as concise as possible and the content should get right to the point. The executive summary is a key component of the business plan and helps spark the reader's interest.

Company and strategy

In this section, you should present the company's current structure and the business environment. Key components of this section include the company's mission and its strategy.

Products and services

This section answers questions about the product portfolio:

  • What products and services does the company offer?
  • In which price segment are the products?
  • What will customer needs be in the future, and how can your company meet them?

Market and competitor analyses

Precise market knowledge is the key to a successful business idea. For this reason, detailed market research is an essential basis on which to make decisions and provides answers to the following important questions: How big is the market? What are the barriers to entry? What is the market missing that the company can provide? How strong and aggressive is the competition?

Marketing and production

In this section, you should show the marketing activities you intend to use to reach customers and impress them with your products. Also describe your value chain, from raw materials procurement to delivery.

Management and organization

Introduce the management team personally to potential investors and highlight the strengths of each member. This section should also include your management principles, personnel planning, and the wage policy you intend to apply.

Risk analyses

Show the reader the company's business and operational risks in an honest, objective manner. The analysis can be broken down into three phases:

  • Risk identification: Identifying risks and areas of conflict
  • Risk assessment: The probability of occurrence and the potential loss amount for individual risks
  • Risk management: Defining measures to avoid these risks, as well as for monitoring them

Financial planning

The financial plan is the key element of the business plan. Be transparent about the current financial situation, the future asset and income situation, as well as the financing needs of the company over the next two to five years. By this point at the latest, the reader will know if the business plan makes sense as a whole.

The most important components of the financial plan are as follows:

  • Balance sheet forecast
  • Income statement forecast
  • Cash flow statement forecast
  • Key figures
  • Liquidity plan
  • Capital expenditure plan
  • Financing concept
  • Budget controlling

Prepare your liquidity planning (XLS)  with our Excel template for more structure and a better overview.

Prepare your liquidity planning (XLS)  with our Excel template for more structure and a better overview.

Tips for your business plan

  • Keep the business plan short. Explain content with facts and figures.
  • Write simply, avoiding the use of technical terms where possible.
  • Select an attractive design and a logical, clear content structure.
  • Remember to include key documents such as resumes or detailed analyses with the plan.
  • Revise and update the business plan on a regular basis.

how to write a business plan for an investment bank

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