Business plans are one of the biggest challenges entrepreneurs face when pitching their ideas to investors.
Similar to a CV document for an idea, the plan consists of multiple important pages that describe WHY it's worth for investors to get into it from the ground floor.
However, even if the plan is perfect, there's still an extra step.
You, as the entrepreneur, might have already dealt with financial sheets, branding guides, and more. The timelines and elevator pitches should PERFECTLY encapsulate your idea or the state of your business right now.
But when you go to send it over to investors, suddenly you end up BAMFed that you haven't prepared ANYTHING to serve as your cover letter.
But how do you even start writing a business plan cover letter?
What should it look like? Is it even important? Well, we're here to tell you ...it is.
You're about to submit your business plan to a lender or an investor and what you include as an initial introduction can make or break your pitch.
So... you're at the right place.
We're here to answer your questions.
Let's get started.
What is a business plan cover letter?
A business plan is an introduction to a pitch presented to an investor or a lender. Usually in the form of an email or attached next to the business plan, the cover letter gives an overview of what the business plan is about and helps the lender/investor understand the purpose of the pitch better.
The cover letter can have a vast impact on the perception of the receiver towards the whole business plan.
Some investors are quick to judge and can even accept/deny business plans solely on their initial impression of the cover letter.
In fact, not including a cover letter with your business plan can put a bad initial impression on a tenured investor.
That being said, let's talk about the three different forms a cover letter can take.
An Email
A Cover Letter for a Business plan is most commonly send out as a direct email to the investor/lender that is to receive the business plan.
Usually, the company mediating the investment process sends the business plans to investors and include any personalized notes from the founder in the email body.
However, when the interaction (pitch) between the founder and investor is facilitated only between the two parties, the email in which the business plan is attached serves as a better
An Email Attachment
The second form that an email cover letter usually takes is as an email attachment.
Usually a PDF with the resounding name, the cover letter is sent in the email to the lender/investor as a separate file, but one that is different from the business plan.
This is one of the most common ways cover letters are sent out, although it shouldn't be the pursued choice.
A Printed Letter
The third and final form in which a business plan cover letter is exchanged between a founder/entrepreneur and a lender/investor is via a printed letter.
This printed letter is usually submitted alongside the business plan.
Foundations, Grants and Others
It should be noted that NOT ALL the time business plan cover letters are written to serve as a facilitator of the communication between a foudner and a lender.
Sometimes, business plans are written for specific foundations, grants or third-party contests and even for college classes.
If it's the case that you should write a cover letter under a specific occasion different than the one above, you should first note any other requirements for the specificity of the content, prior to starting to write the letter itself.
The Style of the Cover Letter
Before starting the writing process you should also have a clear understanding of the style in which you are to write.
A lot of entrepreneurs consider authenticity to be the best key for gaining trust, but you should also consider the voice and tone of the letter you are about to send out to investors.
Here are a few tips to remember when writing your letter.
Be as authentic as possible, but also keep a hyper-formal tone of voice
Use short, concise and clear sentences
Structure your formatting in paragraphs of no more than two or three sentences to improve your readability
Make sure your pitch is front and center throughout the course of the letter
Be anecdotal and emotional, but don't ruin your authenticity with overconfident phrases
Make sure they are appreciated and their impact for your business is made obvious within the email
Once you have a basic understanding of what you want to write about, it's time to start writing your business plan cover letter.
How to Write a Business Plan Cover Letter
A business plan cover letter usually has a simple and concise structure.
Let's start with the basics.
Address the Person/Group
To write your letter you should first start with the appropriate address to the party that will be on the receiving end of your letter.
The opening line of your email cover letter should be clear and concise. It should grab the attention of the investor and help them understand that you mean business.
Add The Introduction
Once you've addressed your investor, it's time to introduce them to the purpose of the letter.
Make sure to include three key pieces of information in your introductory sentence.
Who you are
What you are looking for in terms of investment
How this investment will help your business
Add Background Information and Credentials
Write your second paragraph as a response to the questions they might have for you.
Be confident in your approach.
Share details about why you've chosen them as the right investor for your business.
Having information about them, their expertise and the overall idea of why they would be the perfect candidate should be included in this paragraph.
Make sure to also include a line or two sharing your experience and background information on your project without seeming too confident or self-centric.
Both pieces of information should be intertwined in a short and creative paragraph that serves the purpose of setting the stage for what's to come in the letter moving forward.
Explain the Inspiration of your Pitch
Next, it's time to get to the meat of the matter.
In this paragraph, you should focus on the inspiration behind your business, idea, or pitch.
These few lines should focus on the impact your business might have for other people, the world or your specific community.
Thing about the following items when thinking about what you should write as a whole.
What is the general purpose of your business plan and pitch?
What is the inspiration or idea behind seeking an investment?
What is the main way in which the investment will lead to growth?
Next it's time to share your pitch.
Showcase your Pitch in a Short Paragraph
Ok. Now it's time to introduce the actual purpose of this letter.
It's time to share the investor why you are sending the cover letter and what's the purpose of your business plan as a whole.
Your pitch should be the most on-point portion of the whole cover letter.
It should contain the exact numbers of what you are asking about and include information about the exact results you are trying to achieve.
Continue with an Acknowledgement of their Contribution
You've already introduced them to your pitch and have mentioned the reason that makes them perfect for this project.
However, make sure to reiterate the opportunity of the partnership via a short paragraph that acknowledges your investor.
Add a Plea Paragraph
Last, but not least, before concluding the letter you should ask the investor for any additional information you need before you start the process.
The Conclusion
Finally, reiterate on your excitement and the potential opportunity that your pitch or business has for the investor or lender of the business.
Make sure to address them properly and conclude your letter with any additional closing remarks.
Include a warm, but not over-the-top conclusion message, such as "Regards" and include your personal information and name.
The cover letter is pretty much done at this point.
Use Tools to Check the Writing and Style of your Letter
Now, before you hit the send button, it's best to show it to friends, peers and coworkers to ensure that you have a second-eye opinion.
But even before having a second set of eyes to check the letter, it might be good to run it through grammar and style tools to ensure your content is up to par with the general standards.
Here's how you can ensure that your writing style is consistent.
Using Grammarly
The first tool we are going to use is Grammarly.
LogIn to Grammarly or create an account.
Once you are in the app, click on the button to create a new document.
You will be greeted with a new blank page.
Copy-paste the contents of your letter in the app.
The momeny you copy-paste your information, a new screen will appear that will help you choose the purpose of this document.
Select the options based on the tone you and purpose you want to achieve and click continue.
Once you do, you will be able to go through the letter and make any changes based on the suggestions of Grammarly.
We recommend using the premium version, although it's a personal choice.
Using HemingwayApp
The second tool we are going to use is HemingwayApp.
It will help you ensure the proper readability and contents of your cover letter.
Once you are in the app, simply copy-paste your document and you'll immediately be given additional suggestions on how to improve your content.
Do note that for business purposes some sentences will be more difficult to read in general, so do use the app based on your own personal judgement on what to change and what should stay the same.
Once you do, your letter should be ready to sent out.
You can use a third-party app to ensure the proper formatting.
Business Plan Cover Letter Tips
Once your cover letter is done, make sure to re-read it a couple of times and ensure it best serves the purpose.
Do note: If the cover letter is meant for the bank, you might want to contact a legal professional to help you out with that.
At the end of the writing process, you should have a coherent and concise letter, which you can include in your email when sending over your PDF business plan to investors.
If your business plan is hosted on a third-party service, you might want to include a link to that in the letter itself, instead of at the end as an attachment.
A tactic some business owners do is they include the cover letter as a PDF attachment and include the link to the business plan in the cover letter itself.
This ensures that your lender or investor will have the chance to check out your initial introduction, before diving into your business plan.
Printed Business Plans
More often, than not, business plans are given out and presented in a printed form.
Usually, businesses ensure that their cover page is up to par with the latest design standards and that they include a simple introduction in it.
However, if you want to stand out, you might want to include a separate sheet of paper with a cover letter into your business plan.
This will help ensure that the personal touch is kept notice of by the investors.
Ultimately, you want to use all the possible options for differentiation to be able to take the center stage in the mind of the investor.
Email Business Plans
When you are sending your Business Plan as an Email PDF attachment, the cover letter will be the make-it-or-break-it factor of how your business plan will be perceived by the investor.
You will be judged on your email profile, email signature and every line that is written out in the letter prior to the business plan itself.
Of course, you shouldn't let that stress you out. Quite the opposite. Use it as an opportunity to be even more authentic.
We hope our guide has helped you write an awesome cover letter.
When should you seek investments in your business?
In uncertain times, a business can always benefit from a new investment round.
Most SaaS businesses are built on the basis of a push towards investments.
And having a plan will certainly help you introduce your potential investors to what you want to achieve.
However, you shouldn't forget that ultimately, it's your business that you are giving away bit by bit.
So be cautious when seeking such opportunities.
Before we go, I wanted to ask you this simple question.
What's the current state of your business? Are you simply pitching a lender? What's your idea? Without giving out too much, share it in the comments below and let's get the positive train going.
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The name’s Houston Golden. I’m the Founder & CEO of BAMF ― a company I’ve grown from $0 (yes, really) to well over $4M in revenue over a span of 3 years. How did I do it? Well, it’s quite simple, really. I’ve helped hundreds of business owners and executives get major traction (because when they win, we win). I tell you how on this blog. Growth hacking is a state of mind. Follow along as I explore and expose the unknown growth strategies and tactics that will change the way you think about marketing.
