This is what the perfect business plan looks like

Every startup needs it and only a few know what it should look like. These are the ultimate tricks.

What does the perfect business plan look like? The answer: There is no such thing as the perfect business plan! The core purpose of a business plan is to convince an investor. And: bank, venture capital fund, business angel - every investor type ticks differently. Above all, a business plan must be appropriate for the addressee and take into account the specifics of the investor in question.

Above all, a business plan must be tailored to the needs of the target group and take into account the specific characteristics of each investor.

Dr. Julius Tennert

The bank as investor

A bank provides loans to founders, for which they have to pay interest to the bank. When a bank provides money for a start-up, the risk is usually distributed asymmetrically from the bank's point of view. If the start-up is successful, the founders receive most of the profits from the risky venture, while the bank receives only the interest from the loan as a "profit share". If the start-up is not successful, the bank loses most of the money invested. From the bank's point of view, therefore, small interest gains are offset by a large risk of loss. A bank is therefore primarily interested in minimizing its risk of loss. It will therefore only be willing to finance a startup if the founders can demonstrate that the risk of the business model is low and that the venture will quickly generate stable income that can be used to cover interest and repayments.

Conclusion: Business plans with a focus on banks as lenders

A bank will primarily assess the risks of a business model and look at the short-term financial planning. For the bank, it is particularly important that a start-up can generate sales quickly so that enough liquidity is available within a very short time to service interest and repayments. Where a start-up might stand in ten or fifteen years is of little relevance to the bank.

The venture capital fund as investor

A venture capital fund provides founders with equity capital, in return for which the fund receives a stake in the company. The venture capital fund thus shares both risk and opportunity with the founders. In contrast to a bank, a venture capital fund anticipates from the outset that a large proportion of start-ups will fail. A rule of thumb in the venture capital scene is: "One out of ten". The venture capital fund therefore expects that about nine out of ten start-ups will fail. The one remaining start-up must then be so successful that all other losses are offset and the fund can still make a profit overall. A venture capital fund achieves the profit primarily through the sale of its investment at some point in the future. As a rule, a venture capital fund remains involved in a start-up for five to eight years. Venture capital funds therefore primarily look for start-ups that show the greatest possible growth potential within this period.

Conclusion: Business plans with a focus on venture capital funds as equity investors

A venture capital fund will primarily assess the opportunities of a business model and closely evaluate the target market as well as the growth strategy of a start-up. Since a venture capital fund does not expect regular interest or principal payments, the short-term profitability of the start-up is not an investment criterion for the fund. Much more important is the potential of the company and thus the possible value of the investment in five or eight years. For this, it is above all relevant how big the start-up can become and how well it can assert itself against competitors. If a venture capital fund recognizes great growth potential in a market, business model or strategy, the fund is also prepared to take high risks.

The business angel as investor

Since business angels are mostly private individuals, the form of financing depends on the individual motivation of the business angel. Financing can be provided by equity or a loan, or in a mixed form (mezzanine capital). The business angel thus has the investment criteria of both a bank and a venture capital fund. In addition, many business angels invest irregularly and have a very small investment portfolio. In a small portfolio, diversification is low, and individual high losses have a strong impact. Business angels therefore have a high loss aversion, analogous to banks, regardless of whether they provide their investment in the form of a loan or in the form of equity. However, since business angels usually choose financing in order to profit from a start-up's long-term development, they primarily look for start-ups with a balanced risk-reward ratio.

Conclusion: Business plans with focus on business angels as loan or equity providers

A business angel will primarily assess the risk-reward profile of a business idea. Since the business angel has a less diversified portfolio, diversification into different development options of the start-up is particularly valuable for him. Which alternative markets, target groups or business models can be pursued with the venture and which growth options are conceivable. The option of reaching break-even in the medium term and building up a solid medium-sized company if the very big growth does not work out is therefore also very attractive for the business angel.