Writing a business plan cover letter is an important part of presenting your business plan to potential lenders and investors when seeking investment. It’s the first thing an interested investor will read, and it’s your chance to make a good first impression.
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In this article, we’ll see an overview of what a business plan cover letter is, why it’s important, and how to write it. We’ll also share a template, some examples, and useful tips you can use to write a formal cover letter for your own business plan and make it stand out.
What is a business plan cover letter?
A business plan cover letter is a formal document that accompanies your business plan and serves the purpose of introducing you and your business venture to potential investors or lenders. In other words, it’s a way for you to sell your business idea and show why you believe in it.
In the same way that a job seeker presents a cover letter alongside their resume to an employer in order to get hired, you need a cover letter to go alongside your business plan in order to secure funding or a business loan.
Why is a business plan cover letter important?
Through a cover letter, you show the investor why you are a good fit, what value your business can bring to them, and why they should invest in your company instead of your competitor.
To increase your chances of getting funding, it’s wise to tailor your cover letter based on the investor reading it. This means researching the companies the investor has previously invested in, their risk tolerance, and the values they look for in a business partner.
Although your business plan already details all crucial data, the cover letter should provide a glimpse into the current financial position of your company including its profitability, debt, projections, and more.
The idea here is to let the investor know what they are getting into and reduce uncertainties. If they like your cover letter, they will be more interested to go through the whole business plan and ask questions before investing.
How to write a business plan cover letter?
Before you start writing a cover letter, make sure you’re done preparing a business plan and that there are no errors in it. A well-written cover letter isn’t going to get you very far if the business plan itself is not properly made.
Once your business plan is ready, follow these steps to write a cover letter:
Step 1. Create a header
The header of your business plan cover letter should include your name, the name of your business, your address, and your contact information. Next, write the date. And finally, write the name of the investor, the institution they are affiliated with, and their address.
If you’re sending the document via email, there’s no need to write a header, and you can jump to addressing the recipient with a formal greeting.
Step 2. Address the recipient
Unless you don’t know the name of the recipient, don’t make the mistake of addressing them as “Dear Investor” as that may give the impression that you haven’t researched the person you’re sending your business plan to.
Addressing the name of the recipient such as “Dear Mr. Green” or “Dear Ms. Jones” sets a good tone and is preferred over a generic greeting.
Step 3. Write a strong opening
The first paragraph of your letter should immediately grab the reader’s attention. This means stating the intent of the letter, the reason you want to work with this investor, and how you will use their money to scale the business.
Explain why you think your business is a good investment opportunity, and mention details such as the type of ownership, legal formation, the structure of the business, its history, and any notable achievements.
Step 4. Support your statements
Claims made without evidence don’t mean much, so you’re going to need to provide some form of data or facts to prove that you’re worth the risk.
This is admittedly hard to do if you’re a startup since most startups fail. That’s why it’s a good idea to track these key startup metrics to assess your financial position and the overall viability of your business idea.
Step 5. Close with an acknowledgment
The last paragraph of a cover letter should emphasize three things: your interest in working with the investor, the value of this opportunity, and the timeline of how you’re expecting things to happen.
Once done, thank the reader for their time, express your eagerness to see their response, and request a meeting to discuss things further. End the letter with a formal sign-off.
Tips for writing a business plan cover letter
Here are some tips for writing a business plan cover letter:
- Keep the letter short and descriptive, no more than one or two pages.
- Use a formal, conversational tone, and avoid using slang, jargon, and contractions. The easier it is to read your letter, the better.
- Address the reader by name, and avoid using “To Whom It May Concern.”
- Mention your professional background, the competency of the management team, and how it all benefits the business.
- If you’ve acquired funding in the past, highlight the individuals, institutions, or banks that have invested in your company.
Business plan cover letter template
[Your Company’s Name]
[Your Contact Information]
[Investor’s Company Name]
Dear [Name of Investor],
I am writing to request your investment in [Your Business Name]. We are [brief overview of your business] and we believe that [Your Business Name] has great potential to be a valuable addition to your portfolio.
[Provide a brief description of your current financial situation and how the funds will be used]
[Mention your unique selling proposition]
Please find attached a copy of our business plan which provides more information on our company and product offerings. We would appreciate it if you could take the time to review our plan and offer your feedback. We look forward to working with you.
Thank you for your time and consideration.
Business plan cover letter example
Cutler and Colors Co.
132, My Street, Kingston
New York 12401
February 17, 2023
James F. Miller
Miller Industries Pvt. Ltd.
1234 NW Bobcat Lane,
St. Robert, Missouri
Dear Mr. Miller,
Cutler and Colors is an emerging fashion retailer in New York City specializing in men’s garments, and we’re looking to expand to six more cities in the U.S. by the end of 2023. With your financial support, we project to double our production and strengthen our supply chain efficiency.
We believe Cutler and Colors will be a valuable addition to your portfolio. We currently have $220,000 of our own funds invested in the business and are looking to raise an additional $500,000. The money will be used to hire more staff, set up new stores, purchase new equipment, and advertise online.
By streamlining our supply chain, we intend to undercut our competitors and offer high-quality garments at an affordable price.
Please find attached a copy of our business plan which provides more information on our company and product offerings. We would appreciate it if you could take the time to review our plan and provide us with your feedback. We look forward to working with you.
Thank you for your time and consideration.
Lure investors with a great first impression
Writing a good cover letter is key when presenting your business plan to potential lenders and investors. Your cover letter should be well-written, professional-looking, and tailored to the interests of the investor reading your business plan.
Be mindful of the length of your cover letter; it should be short enough to retain the reader’s interest and long enough to cover the subject. If you’re sending the cover letter over email, it’s a good idea to follow up after some time in case you don’t get a response.