How to write a startup business plan for investors and lenders

By Buzz Accounting · 13 July 2026

Founders usually write a business plan to raise money. The same plan, with its forecast updated each month, is also a tool for running the business after the money arrives, and funders can tell whether the numbers come from a model the founders use or from a spreadsheet built for the meeting.

What equity investors and lenders look for

An equity investor and a lender look for different things in the same document.

An equity investor makes money if the company is later sold or listed for a large sum. They want to know whether the business could grow large enough to return their whole fund, so they give most weight to the market, how the business will grow and the team. A lender is repaid from your monthly cash. They want to know whether the business can keep up fixed repayments if sales fall short, so they give most weight to the downside forecast and the timing of cash.

Write one plan, with the financial section built so either reader can find their answer without you rewriting it.

The sections of a business plan

The problem and your solution — in plain language, the problem you solve and who has it, in no more than two sentences.
The market — who your customers are and how many of them exist. Work it out from the number of customers you can identify and a realistic price. Funders give more weight to a figure built this way than to a small percentage of an industry total.
The model — how you make money, what a customer is worth and what it costs to win one. The worked example below shows the calculations.
Traction — evidence that customers want the product, such as early sales, a waiting list, pilots or letters of intent. A small number of real sales carries more weight with funders than a large forecast.
The team — why you are the right people to build the business, and which skills are missing. Name the roles you plan to hire for.
The financials and the use of funds — a monthly forecast, and what the money you are asking for will pay for.

The four numbers a funder checks first

The forecast should be monthly and should answer four questions: what a customer is worth, what it costs to win a customer, how long the cash will last, and what the money you are asking for will pay for.

Worked example: what a customer is worth and what one costs to win

The figures in this example are illustrative. Take a software startup with two founders that sells to businesses, has traded for fifteen months and has 180 paying customers:

Average revenue per customer: £40 a month.
Gross margin after hosting, payment fees and support: 82%, so £32.80 a month of gross profit per customer.
Monthly churn, the share of customers who cancel each month: 3%. Average customer lifetime is 1 ÷ 0.03 = 33 months.
Lifetime value (LTV): £32.80 × 33 = £1,082.
Sales and marketing spend last quarter was £20,400 and won 60 new customers, so the customer acquisition cost (CAC) is £20,400 ÷ 60 = £340.

Two ratios come from these figures. LTV to CAC is £1,082 ÷ £340 = 3.2 to 1. CAC payback is £340 ÷ £32.80 = 10.4 months, which is how long a new customer's gross profit takes to cover the cost of winning them. The longer the payback period, the more cash growth uses, so this figure drives how much you need to raise, and the plan should state it.

Every figure in the example comes from past results. Churn comes from the customer records, acquisition cost from last quarter's spend and gross margin from hosting invoices. Funders give more weight to a forecast built on figures tested in this way than to one built on assumptions.

Worked example: what a £32,000 hire costs the company

A forecast needs the full cost of each employee, including employer's National Insurance and pension contributions as well as salary. For a £32,000 salary in 2026/27:

Employer's National Insurance at 15% on earnings above the £5,000 secondary threshold: (£32,000 − £5,000) × 15% = £4,050.
Employer pension at the 3% auto-enrolment minimum on qualifying earnings, which run from £6,240 to £50,270: (£32,000 − £6,240) × 3% = £772.80.
Total cost to the company: £36,822.80, or 1.15× the salary.

If the company qualifies for the Employment Allowance, the first £10,500 of employer's National Insurance in the tax year is covered. For a first hire that covers the whole £4,050, so the cost to the company is £32,772.80. Forecast both figures, because the allowance is not available to a company whose only employee paid above £5,000 a year is a director. A company run by one director usually becomes eligible with its first hire and loses eligibility if that employee leaves. Our post on the first hire and payroll covers payroll for a first employee.

Worked example: net burn, runway and how much to raise

For the same company, monthly operating costs of £24,000 against monthly revenue of £7,200 (180 customers × £40) give a net burn of £16,800, which is the amount by which cash falls each month. With £142,000 in the bank, runway (the number of months until the cash runs out) is £142,000 ÷ £16,800 = 8.5 months.

Runway sets the timetable for the raise. With 8.5 months left, this company needs to start raising now, and investors who can see that have more say over the terms. In this example the company plans for 18 months of runway after the round closes, enough to reach its next milestone and raise again. Adding two engineers at £36,823 a year each, including employer's National Insurance and pension, takes monthly costs to about £30,100 and, if revenue stays flat, net burn to about £22,900. Eighteen months at that burn needs roughly £412,000, less any extra revenue the engineers' work brings in. Our runway and forecasting guide shows how to build the forecast behind these figures.

Setting out the use of funds

Say what each part of the money will pay for and what it should achieve. For example, £250,000 made up of two engineers for 18 months (£110,500 including employer's National Insurance and pension), £96,000 of paid marketing at a £340 acquisition cost to add roughly 280 customers, and £43,500 of contingency, taking monthly recurring revenue from £7,200 to £18,400.

Common mistakes in business plans

Sharp revenue growth with no stated cause. Show what will produce the growth, such as sales already in the pipeline, conversion rates you have measured, or a marketing channel that already works.
No figures for what a customer is worth or costs to win. If the plan does not state lifetime value and acquisition cost, a funder is likely to assume the figures are poor.
Confusing profit with cash. A company can make a profit and still run out of cash. Forecast cash on the dates customers pay their invoices, and include each quarter's VAT payment and the corporation tax payment as outflows in the cashflow forecast.
No downside case. Add a second forecast at 60% of the revenue you expect, showing what you would cut and when.
A market sized from the top down. A market size worked out as a percentage of a very large industry figure is hard for a funder to check.
Numbers that do not agree with the accounts. If last year's revenue in the plan does not match the filed accounts and your bookkeeping, a funder will doubt the forecast as well.

Matching the plan to the funder

Write the plan for the funder you are approaching. A Start Up Loan is a government-backed personal loan for business purposes of £500 to £25,000, at a fixed 7.5% a year, repayable over one to five years, with up to 12 months of free mentoring. Each eligible owner applies separately, so a business with two founders can take out two loans. The application asks for a business plan and a cashflow forecast.

Angel investors in the UK often invest under the Seed Enterprise Investment Scheme (SEIS) or the Enterprise Investment Scheme (EIS), which give them income tax relief, so a plan aimed at angels should show that the company qualifies. Our post on SEIS and EIS for founders sets out the limits and conditions. Grants, revenue-based finance and asset finance are covered in alternative funding beyond bank loans.

Keep the bookkeeping up to date while you raise. Investors ask for accounts and forecasts throughout due diligence, and a company whose records are current can produce them within a day.

Your checklist for this week

Calculate your customer acquisition cost for last quarter: all sales and marketing spend divided by the number of new customers won, using the amounts actually spent.
Work out monthly churn and convert it into an average customer lifetime (1 ÷ monthly churn rate), then multiply by monthly gross profit per customer to get lifetime value.
Divide lifetime value by acquisition cost. Explain in the plan how you expect that ratio to change as you spend more on winning customers.
Work out CAC payback in months and state it in the plan, because it supports the amount you are asking for.
Add employer costs to every salary: 15% employer's National Insurance above £5,000 plus 3% pension on qualifying earnings, and check whether the £10,500 Employment Allowance applies to you.
Divide cash by net burn for your runway today, then work out the cash needed to reach your next milestone after the round closes. The difference between that figure and the cash you have is the amount to raise.
Check that the plan's past figures match your filed accounts before you send the plan to a funder.

Where we help

We build startup forecasts and cashflow models from your actual figures, keep them up to date in Buzz OS, the platform Buzz built to run your accounts with you, include the full cost of each hire, and check your figures before an investor or lender reviews them in due diligence. Our funding page explains where to go for loans, grants and investors. Business Pulse builds your budget and 12-month cash flow forecast from a £750 + VAT set-up, and our pricing page lists our other fees. Get started.

Common questions

How long should a startup business plan be?

Ten to fifteen pages of text plus a financial model, with a two-page executive summary that can be read on its own, because many readers will read only the summary. Include specific figures, such as a market size built from customers you can identify, the acquisition cost from last quarter's spend and a monthly cashflow forecast, and leave out general market commentary. Lenders often want the plan and cashflow forecast in a set format, so check what the funder asks for before you start.

What financial statements does a business plan need?

A monthly profit and loss forecast and a monthly cashflow forecast for the first 24 months, annual figures to year three, and an opening balance sheet if the business already trades. Funders look hardest at the cashflow forecast, because a business can be profitable and still run out of cash. Forecast cash on the dates customers pay, and include the tax payments: VAT each quarter, PAYE each month, and corporation tax nine months and one day after the year end. Include a downside case at around 60% of forecast revenue showing what you would cut and when.

What is a good ratio of lifetime value to customer acquisition cost (LTV to CAC)?

Three to one is the benchmark commonly used for early-stage software, and the usual benchmark for the payback period on acquisition cost is under 12 months. Calculate lifetime value as gross profit per customer per month multiplied by expected lifetime, where lifetime is 1 divided by your monthly churn rate: at 3% monthly churn and £32.80 of monthly gross profit, that is 33 months and £1,082. Divide by a customer acquisition cost of £340 and the ratio is 3.2 to 1. Base both figures on gross profit and on last quarter's actual acquisition spend, because investors will recalculate them from your own numbers.

How much does an employee cost a startup in 2026/27?

About 1.15 times salary before the Employment Allowance. On a £32,000 salary, employer's National Insurance is 15% on earnings above the £5,000 secondary threshold, which is £4,050, and the minimum auto-enrolment employer pension contribution is 3% of qualifying earnings between £6,240 and £50,270, which is £772.80. That totals £36,822.80. If your company qualifies for the Employment Allowance, the first £10,500 of employer's National Insurance for the year is covered, bringing the cost to £32,772.80. The allowance is not available to a company whose only employee paid above £5,000 a year is a director.

Can I get funding for a startup with no trading history?

Yes, and the plan carries more weight because there are no past results to assess. A Start Up Loan is £500 to £25,000 per person at a fixed 7.5% a year over one to five years, with up to 12 months of free mentoring, and each eligible owner can apply separately. It is a personal loan used for business purposes, so it is assessed on your personal credit record and whether you can afford the repayments, and the application asks for a business plan and a cashflow forecast. Angel investment under the Seed Enterprise Investment Scheme (SEIS) is the other common route, and for a company with no trading history angels judge mainly the team and the market.