The 3 Cs of Business Plans

Crafting a business plan can be hard enough when the audience is internal.  When you are taking it outside, to raise funds – either equity investment or bank borrowing – it can seem so much worse.  Getting resources from others is about creating confidence.  Does the person with the money have confidence in you and your plan? 

The 3 Cs will help you present a strong case for why their money is better invested in your project.  The 3 Cs are:

  • Clarity
  • Credibility
  • Cash Flow


Clarity covers two aspects:

  • Have you demonstrated your own clarity of thought?
  • Have you presented your case in a form and structure that aids understanding?

Clarity of Thought underpins Credibility 8140668_mto create confidence in your potential funder.  The funder needs to believe that you understand your market adequately, that you understand how this particular project fits into your longer term vision and that you have the focus to stay the course.  Brevity and clarity go hand-in-hand.  Can you help the reader to understand your business sufficiently and sufficiently quickly before a simpler offer comes along? 

Clarity of Form concerns how you present your story.  Remember that your audience is unlikely to know your market as deeply as you.  Their expertise lies in investment and business risk, not in your field.  You need to help them navigate.  Use a simple, logical structure to guide the “educated lay-person” through your industry, your business and your project.  A couple of years ago, Guy Kawasaki offered a business plan template that covered the key headings along with useful guidance.  I blogged about it, here and it makes a great starting point.

Clarity of Form includes format.  Let’s keep it simple.  The heart of your business case is a Word (or other word-processor) document – not a PowerPoint presentation.  Not even one of those PowerPoint decks from Hell where the font size is sufficiently compressed to turn each slide into a page.  The document makes judicious use of the application’s formatting features: to create a title page; to have clear Section titles; to have page numbers and to embed appropriate tables and charts.  You don’t need to be a graphic designer but make sensible use of space (margins, headers/footers and page breaks for new “chapters”).  Use a legible and readable font, in a legible point-size and use colour (sparingly).  You should aim for an end product that is probably 15-20 pages of well-spaced, coherently written narrative that tells your story.  Now, print it out on good quality, 100 gsm paper and bind it suitably.

Yes, you’ll email it more often than not.  Undoubtedly, you will build a PowerPoint based on the contents, but the heart of your story is the Word document that prospective lenders or investors will hand around, print out and read themselves.  Consider this, especially for copies you will hand around in a face to face meeting:  we humans feel a stronger emotional impact from paper formats than from digital and paper weight and quality impact perceived credibility (both insights curated by the inimitable Roger Dooley).


A tidy, coherent, well-presented document helps your credibility.  Clarity of thought, well-articulated helps your credibility too.  What else?  What you say (in the narrative) and how you say it are critical.  You need to demonstrate that you know what you should know.  And, you should aim at a Goldilocks level of detail: not too much (boring the reader with irrelevant detail) and not too little (raising the suspicion that you have no greater detail to share). 

In my experience, this tends to fall apart in two places in particular: Competitors and Numbers.

Competitors:  Here’s a clue; anything remotely resembling “we have no competitors” is the wrong answer.  Even if you’ve just invented a teleport machine, you have competitors (Qantas, Skype, Cisco, Carnival Cruises, BMW).  Maybe it’s true that no-one does exactly what you do, but break out Michael Porter’s Five Forces and reconsider.  In particular, lenders or investors want to know that you understand your market, the players within it and how those players’ actions could impact the reader’s investment or loan.

10901212_mNumbers: you simply have to know them.  Inside out, back to front.  No excuses.  What you present, and explain, needs to be in sufficient detail that the reader (remember, an educated lay-person with a background in investment management and business risk) can understand how you make money, what the dynamics of your business are and where the financial risks lie.  Include (and if necessary explain) any metrics that are important to your industry (average room rate, room occupancy, consultant utilisation, transactions per day etc.). 

Numbers go wrong in two ways: either the reader is swamped in complex, irrelevant minutiae or – unforgivably – they are wrong.  Maybe a late change didn’t filter through the whole document.  Perhaps, the management team have been so immersed in the detail,they have missed the fact that – at the reader’s necessarily high level – it simply doesn’t make sense.

Numbers are the language that you and your investors / lenders have in common.  Make sure they work for you.

Cash Flow

It’s worth remembering through all of this that you are, ultimately, selling a cash flow. 

This comes back to the overall clarity and credibility of your forecast.  It also means that you should pay special attention to the cash position of your forecast.,  Even if you believe the goal of your project is market share or profit, at the end of the day there is only Old King Cash.

A bank is concerned that your forecasted cash flows are sufficient to repay the loan.  An equity investor may be more concerned that their exit is governed by the value of their stake based on those same forecasted cash flows.  Even an internal project review board wants to know that your projected cash flow represents the best use of their available resources.

Make sure that your end-game is the same as that of your audience.  If the reader is an equity investor, how and when will they get their exit?  How does that impact your business plan?  Does your project time-scale align with the lending period you are requesting?

Consider what measures will be important to your audience, for example interest cover or gearing and include those in your document. 

Include a table summarising Sensitivity Analyses that you have calculated by flexing important variables.  What is the impact on revenue, profit and cash if interest rates are 1% or 2% higher than you have assumed? What is the impact of achieving a product price 5% lower than you have forecast?  A six month delay in getting to market?  These numbers not only give an investor (hopefully) a degree of comfort, they also demonstrate that you understand the risks and dynamics within your business.

3 Cs Summarised

Clarity + Credibility + Cash Flow = Confidence

Business plans, especially those intended to support financing requests, inevitably go through many revisions.  Too often, they end up written by committee, with every vested interest clinging passionately to their particular paragraph.

Before you begin, step back and consider a) what is the goal, and b) what does the reader want and need to understand?

Remember, it may be better to first walk a mile in the reader’s shoes than being forced to ride the committee’s camel into every investor pitch.


About Andrew Munro

An independent business consultant, interim manager and writer, Andrew operates through his company, Burning Pine Ltd (
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