Business plan cover letters must be written in business letter format and signed by hand.
A business plan cover letter provides a summary of the purpose of your business and how you plan to fulfill that purpose. The audience is usually a potential investor or a group of investors. Given the objective and target audience, the letter must be persuasively written and detail the desired investment value as well as the type of return the investor can expect to receive.
Popular slang used in texting should be avoided when writing a business plan cover letter.
Selling a business plan to potential investors is the purpose of a business plan cover letter. The investor needs to be convinced that the business plan has been carefully designed and has significant market potential. The company name and description should be included in the first few sentences.
In the first paragraph of the cover letter, the reason for contacting the potential investor must be disclosed. In addition, a brief summary of the product or service the company will offer should be provided. Details on how the company will serve the market competitively should also be included in this paragraph.
A summary of the target market and how it will be reached can be included in the second paragraph of a business plan cover letter. At the very least, the letter should provide some justification for how the business will turn out to be profitable. Potential profitability can be communicated by highlighting various competitive advantages, unmet market needs, or market test data.
The business plan cover letter should also outline a long-term strategy. A summary of where the company intends to be in three to five years is vital for a potential investor. Having business growth and expansion plans can be an attractive selling point. Linking the nature of the business to the interests of a potential investor is also a good idea. For example, if an investor has a keen interest in the welfare of underprivileged children and their business plans to provide services to that segment, this information should be included in the cover letter.
When writing a business plan cover letter, you should also include a paragraph that describes the exact amount you are seeking from potential investors. Details should be provided on why this value is needed and how it will be used. A compelling cover letter usually states what the investor will get in return. For example, a percentage of shares or equity can be exchanged, or a certain return on investment can be provided within a specific period of time.
The ultimate goal of a business plan cover letter is to convince an investor to provide funds for your business. In addition to being informative, the letter needs to highlight the positive aspects of the business plan without going into too much detail. The cover letter must state that the full business plan is attached for further review and must be compelling enough to persuade the potential investor to actually read the plan.