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How to Write a Business Plan Cover Letter
by Al Stewart
A business plan is a blueprint for a fledgling enterprise that is usually written in the hopes of attracting investors. In many cases, it includes a cover letter designed to stir interest in the venture and answer the most obvious questions. Include a highly accessible description of the concept and the type of return on investment a venture capitalist might expect. Offer a brief overview of current market conditions and key competitors. Identify the niche the business will address and the resources at its disposal. The letter is usually no more than two pages long and is designed to entice investors into reading the business plan.
Write a letter that will serve as a vital component of the venture's start-up strategy. Assume the reader knows almost nothing about the business being launched. Maintain a professional tone, but remember it is essentially a promotional tool. Entice interest by highlighting the profit potential of the business plan and the assets that will make it a reality. Keep in mind that the letter is likely to be the first contact bankers and investors will have with your business plan.
Build a case for the new business by offering a brief overview for the category you plan to enter and the opportunity you've identified. Include a summary of sales and demographic data that support your case. If the business is tied to a product, for example, note trends in dollar volume and the number of units sold in recent years. Explain factors likely to affect supply and demand. Include long-term projections.
Promote the product or service that is central to your business plan. Explain why it is worthy of attention without divulging proprietary details. Offer evidence that the business you plan to start will be a highly efficient operation with a strong likelihood of financial success. Avoid hyperbole, and stick to hard data. Let the reader draw his own conclusions. Remember that you are addressing a highly skeptical audience that receives numerous business plans.
Outline the logistics of your operation and offer a preview of your marketing plans. Investors want to feel confident that the business will have exposure and recognition. Include a summary of advertising initiatives that are planned and other marketing details. Also, confirm that the business has the needed infrastructure to meet demand.
Review the letter with the utmost care and get a second opinion from someone you trust. Ask if it is too lengthy or if it meanders. Look for areas where you can provide additional information to strengthen your case. Make certain the cover letter is worthy of your business plan and conveys its importance.
- To protect your idea, ask readers to sign a non-disclosure agreement before allowing them to read your cover letter and business plan.
- Use bullet points to make specific points about the business.
- Do not make unsubstantiated claims about competitors. Use hard data.
- Don't use the cover letter to solicit an investment. The only call to action should be a request to read the entire business plan.
Category: Business plan