Angel investors and VCs see hundreds of business plans each year and the vast majority end up in the bin. Often that is business concepts are flawed, but sometimes even good ideas end up in the bin, just because the plan setting it out is rubbish.

The key to wowing investors is speaking their language. You must think about all the things they might need to know carefully, then research and analyse it until you are able to address everything clearly, consistently and convincingly. Don’t forget, every word and every figures is there for your angel so don’t let it become a story about your valiant journey to date of bringing your magnificent venture this far.

There are seven essential tasks you need to tackle to write a compelling business plan:

  1. What is the market demand?
How big a market does your business serve today, and how big will it be in the future? Demonstrate to your backer that there is a market for your product and that people will buy it at your price point. You can even do some test marketing to provide evidence that such a market exists.
  1. What does the competition look like?
Your backer isn’t naive – they know there are competitors, direct or indirect, so don’t omit them or dismiss them as hopeless or irrelevant. Show competitors respect in your business plan, set out how they position themselves and what they do well as well as exposing their weaknesses.
  1. What is your sustainable competitive advantage?
Within the context of the market you have already described, show how your offering has a competitive advantage. Is it lower cost? More user-friendly? More eco-friendly? Crucially, don’t forget to explain how this advantage can be sustained.
  1. What resources will you need?
You won’t be able to do all you set out to do in your plan by yourself, so be realistic about any employees, managers, advisers, premises, equipment, supplies, agents or distributors you will need in order to achieve the forecast growth rates in your sales volume forecasts.
  1. Are your forecasts credible?
Financial forecasts must be coherent, consistent and credible as they will be subject to forensic examination. They must reflect the market demand and competitive context you have set out, but also show you are thinking strategically.
  1. Is your vision laid out clearly?
You should be able to write a single sentence that makes it clear why someone should back your business. This sentence is the backbone of your plan, and everything else is to remind backers again and again of this compelling reason.
  1. Does the opportunity outweigh the risk?
Backers know that every investment has a degree of risk, so don’t be afraid to face up to specific elements of risk and then show why they are containable. You can make it clear that the risks can be outshone by countervailing opportunities, and illustrate, graphically if possible that the overall balance is favourable.

Do not, as so many business plans do, attempt to sweep risk under the carpet or your backer will find you out and walk away. View every statement in your business plan from the perspective of your angel or VC – your passion for the business should shine through, but it should be tempered with openness, realism and sound judgement.

By Vaughan Evans, author of The FT Essential Guide to Writing a Business Plan, published by FT Publishing