Faye McDonough

You’ve done the hard part. You’ve stared down that blank page, you’ve got your ideas on paper, and you’ve built a business plan that tells you and your business’ story. You’re rightly proud of it.

But – and it feels like a big but – you know you need to raise finance to deliver it. Before you send it to investors or lenders, there’s a crucial question: does it answer the questions they’ll actually ask?

I’ve reviewed too many business plans to count and it’s still a very big part of my day job but what still surprises me are the gaps. The parts I always have to fill in.

The big strategic thinking must be the tricky bit, right? Wrong! The entrepreneurs I work with are often brilliant strategists with compelling visions. But the gaps are always in the evidence – the detail, and the financial mechanics that prove they can deliver what they’re promising and achieve the execution which is often so critical to achieving an investor or lender’s return.

When it comes to raising money, evidence is essential alongside an acknowledgment that it won’t all go to plan and an idea of how you’ll handle that when it inevitably happens.

So, I’ve decided to capture the feedback I share most often (and when I say most often, I mean almost every time) on how to get this balance right in your business planning.

What Good Looks Like

First of all, if you’ve put together a business plan, well done! I know how much work and thought goes into it. That’s the real value in business plans: to get you thinking about all of the different scenarios for your business.

But before we go further, I need to address something that causes confusion.

When investors and lenders ask for a “business plan,” many people misunderstand what we actually need. I’ve received pitch decks, strategy documents, Excel project management tools, even videos – all called business plans. These can be brilliant for other purposes, but they don’t give me what I need to assess a loan or investment.

Whatever you share should always be tailored to your audience and the stage of your relationship. Sometimes you want to create interest to hear more – a teaser, if you like. That might be a pitch deck or a compelling one-pager. But when it comes to comprehensive assessment and due diligence, this is what I’d expect:

A formal document with executive summary, market analysis and competitive landscape, your business model and revenue streams, team and governance details, and financial projections and assumptions.

Crucially, this should be supported by your detailed financial model – your forecast profit and loss, balance sheet, and cash flow. You can include snapshots in your business plan, but you should always be prepared for a deep dive. This is the evidence, the detail, and the financial mechanics that show how your story will actually be achieved.

Both are needed to bring it all together.

A word on what to share and what not to share: sometimes I’m overwhelmed with information, and that’s even more difficult to work with. It’s impossible to find the common thread, and it always comes across as incoherent no matter how clear it is to you. Not the impression you want to create when management ability is such an important factor in investment success. Be selective in the materials you share. Make it easy for the reader to follow your logic.

When I see a strong plan, these are the elements that stand out:

• Bold financial targets grounded in practical reality
• Sound business models supported by management teams with deep experience and an entrepreneurial mindset
• Realistic execution roadmaps

Matching the right funder to your needs matters too.

Different funders have different criteria. In social impact investment, some focus on impact and offer grants or patient capital. Others specifically seek organisations ready for commercial-style repayable loans with predictable cash flows. Research their requirements thoroughly before approaching them.

For example, some funds seek organisations that will become “financially sustainable with minimal income contribution from grants or donations.” If you’re still heavily grant-dependent, be honest about that and seek funders whose criteria you actually meet.

Your reflection: What do you think makes a strong business plan? What elements give you confidence when reviewing someone else’s work? How could you include those elements in your plan?

The Gaps That Matter

But even in well-crafted plans, there are predictable gaps. I see these patterns repeatedly, across sectors and business models and in approaches for different finance solutions. If I’m reviewing your plan, these are the areas I’ll be digging into:

Evidence-based Assumptions

While ambition is excellent, I often receive projections showing 200%+ growth in a single year, often in new revenue streams. This always raises concerns and the big question – is this really possible? It’s important to expect a degree of cynicism towards your plans and think about how you can build confidence in the assumptions you’ve made, particularly around sales.

This matters because untested assumptions are the number one reason businesses struggle. If you’re basing your plan on revenue sources you’ve never generated before, at face value that’s extremely high risk. Show me evidence.

Proof of concept: Can you show evidence of successfully scaling at smaller levels first, even if it’s from pilot projects or previous work? What customer successes have you had that tell you this is achievable?

Market validation: What’s the total addressable market for your services? Have you benchmarked competitor or sector data for demand, market, and price? What do customer interviews or market research tell you about appetite and demand?

Pipeline and conversion rates: Do you have examples of opportunities from your pipeline? The conversion rate assumptions in particular always need backing. What is this based on? Do you have any evidence to support this from recent work? Can you break that down into quarterly milestones? What needs to happen each month to stay on track?

Understanding your competition: It’s always worth giving this some thought. How will established players react when you gain traction? Industry dynamics vary enormously. Some sectors are collaborative, others are cut-throat. Understanding which you’re operating in helps you plan defensively and be prepared for the unexpected. If your sector is open to collaboration, how could you make the most of this?

Plans often focus on strategy but miss operational evidence. Consider including:

• Brief case studies: Show the real impact of your work. Not lengthy narratives, just factual, data-based evidence that what you do works and customers value it.
• Staff retention and development strategy: This is crucial for sustainability. What happens if key people become bottlenecks? How do you scale expertise and maintain quality?
• Governance oversight: How does your board or advisory group oversee financial strategy?
• Community or beneficiary voice: For social enterprises particularly, how does your strategic direction incorporate the people you serve?

Your reflection: Which of these areas do you find most challenging to address in your own business planning? Where do you turn for market validation evidence?

Financial Systems Foundation

Before approaching investors and lenders, ensure your monthly or quarterly management accounts are accurate and reliable. If you’re concerned about accuracy, that suggests you’re not quite ready for scrutiny yet, and that’s ok. It just means focusing on systems first.

Integrated Financial Models

Right, now we’re onto the big one!

Ideally, you’ll have a minimum three-year integrated profit and loss, balance sheet and cash flow which is the financial partner to your business plans. The level of detail required will always depend on the size of investment or loan you are requesting i.e., the larger the loan, the more detail you’ll need to provide.

I’d expect to see how your profit and loss, balance sheet, and cash flow all connect. These should all link logically and be easy for the reader to understand.

Remove the guesswork. If you’re requesting a loan, I need to see that the business can afford to repay interest costs and capital. When you put it that way, it’s immediately clear how important that is. Calculate how much the loan will cost you and work out if you have enough cash to cover it. Where are the pinch points? What levers can you pull to smooth that out? 

Be clear about your ask. I’ve seen plans without a clear understanding of the funding they need or successful investment still leading to a cash shortfall. Explain exactly how you calculated your requirement. Walk me through the logic: “We need £X for equipment, £Y for working capital, £Z for marketing, totalling £257K” and always make sure this is consistent throughout all of your documents. Often a request for half a million can turn into a million by the end of a plan!

Work out your Return On Investment. Can you explain how additional investment translates to sustainable revenue? For example, “£10K investment allows us to serve X additional customers, generating £Y revenue with £Z margin to then service debt of £X per month”. And always ask yourself the question, does the additional revenue and margin justify the cost of repaying a loan? It should do! And if it doesn’t, ask yourself why. 

Cashflow forecasting is probably the single most important area. Viable businesses fail because they don’t plan for the gap between delivering work and getting paid. Show monthly cash flow projections including:

• When money comes in (and what happens if customers pay late)
• When expenses go out
• How much cash you need in the bank to operate smoothly
• How you’ll repay the loan

Scenario Planning

Once you have a model you are happy with, you can play around with it. What are your best-case, worst-case, and most-likely scenarios? What’s your contingency plan if your optimistic projections don’t materialise?

A sensitivity analysis is always useful to add. Basically, you amend your forecasts to account for things that could change. That’s an exercise I would always do, so it’s good for you to trial this yourself, see the outcomes and reflect on how you might mitigate risk in these different areas:

Revenue risks:

• Conversion is 15% lower than projected?
• Deal sizes are 20% smaller?

Timing risks:

• Customers pay a month later than expected?
• You need to hire that key person six months earlier?

Cost risks:

• Costs are unexpectedly 5% higher?

Running these scenarios helps you identify which assumptions matter most and where you need contingency plans.

Your reflection: How do you typically test your assumptions about market response or conversion rates? What’s your approach to scenario planning?

Why This Work Matters

I don’t want anyone to be put off doing this work well. I know how intense it can be. I’ve just built a 10-year integrated financial model myself, and it was exhausting (amongst the moments of joy when it all came together and my balance sheets balanced!) But you know what? I know our business a damn sight better now because of it.

That’s the real value in all of this. Yes, investors and lenders need to see financial sustainability and realistic growth projections backed by evidence. But more importantly, you need to truly understand your own business. Working through these questions forces you to confront assumptions, test your thinking, and build genuine confidence in what you’re proposing.

The traditional (and glossy!) narrative around entrepreneurship focuses on having a good cause, an exciting idea, or an amazing team. Those are all genuinely important. But the businesses that succeed are the ones where the team can clearly articulate how they’ll turn that vision into financial reality. It’s the boring stuff I know but it’s the stuff that makes the difference.

This work is demanding. But when you can answer these questions confidently, you’re ready for scrutiny and ready to build something sustainable.

Questions for Your Own Reflection

As you work on your plan, consider these questions:

1. Which of the gaps mentioned above would be hardest for you to address in your own business planning?
2. How do you balance ambitious targets with realistic planning?
3. What evidence do you have that customers will pay what you think they will?
4. If you had to restart your business plan from scratch today, what would you do differently?
5. Where do you turn for market validation evidence?

What About You?

I’d love to hear your experiences. How has your experience been with business plan feedback? What surprised you most? Which of these areas do you think entrepreneurs most commonly overlook?

For those of you who review plans regularly, what do the best business plans you see have in common?

Feel free to reach out if you’d like to discuss business planning or work through any of these areas together.

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Related reading: If you’re still at the “staring at a blank page” stage, read my earlier article on getting your business plan started at https://www.fayemcdonough.com/stop-staring-at-the-blank-page

Picture capturing those many business plans reviewed by Alexander Grey on Unsplash