Five-year business plan: why you need one and how to write it

Founders generally don’t like the idea of predicting their business growth for the next five years. But having a clear plan with ambitious yet realistic goals can help you attract investors.

In this article, we’ll explain why a five-year business plan matters and share tips from Anthony Rose, CEO of SeedLegals and a serial entrepreneur.

• What is a five-year business plan?
• Do you actually need a five-year business plan?
• Who is a five-year business plan for?
• How to write a five-year business plan
• Five business plan tips from Anthony Rose
• Final thoughts

What is a five-year business plan?

A five-year business plan explains what a business does, what it wants to achieve, and how it plans to get there.

It covers things like your vision statement, market research, strategy, and financial forecasts. This plan helps investors decide if a business has long-term potential.

Do you actually need a five-year business plan?

Both founders and investors know that a five-year business plan isn’t set in stone – no one can predict the future.

Plans may take longer than expected, and the economy can change quickly.

But still, a five-year plan is useful. If your numbers make sense, you can use it to show investors why they should back you and how they could see a return on their time and money.

Who is a five-year business plan for?

For startups, it’s useful for both founders and investors.

For founders, it helps map out how the business will grow. Plus, it keeps senior team members aligned on goals.

For investors, it shows the market opportunity and potential returns they might see. If the opportunity looks strong, they’re more likely to invest.

How to write a five-year business plan

It’s a good idea to create two versions of your plan: a detailed one and a shorter one.

The detailed version covers every part of your business. It can help you clarify your goals and strategy.

The shorter version gives your investors a clear, easy-to-read summary of your plans.

What to include in your detailed five-year business plan

Your five-year plan should explain who you are, what you do, why it matters, and – most importantly – how you’ll succeed.

Here’s what to include:

• Business description: What your company does
• Long-term goals: Where you want to be in five years
• Short-term goals: Key milestones along the way
• SWOT analysis: Your strengths, weaknesses, opportunities, and threats
• Competitor analysis: Who your rivals are and how you compare
• Customer details: Who your ideal customer is
• Products and pricing: What you sell and how much it costs
• Management team: Who’s running the company and who you still need
• Financial details: A spreadsheet covering all your company’s numbers
• Revenue forecast: A line graph showing expected growth
• Investment needs: How much funding you require

Once you’ve put this together, you can condense it into a shorter general overview.

What to include in your general overview

A general overview sums up your business in a clear, concise way. Investors don’t have time to read a 20-page plan – they want the key points fast.

Founders who’ve been through funding rounds recommend including:

• An executive summary: A one-page snapshot of your business and goals
• SWOT analysis: Your strengths, weaknesses, opportunities, and threats
• Revenue growth forecast: A simple line graph showing projected growth over five years
• Financial breakdown: A spreadsheet with profit and loss, expenses, and revenue

This overview makes it easier for investors to see the big picture and decide if they’re interested.

Your pitch deck for investors should include the executive summary, revenue forecast graph, and a SWOT analysis.

When pitching, focus on describing your business and key goals. You don’t need to go into all the details from your full business plan. Also, the financial spreadsheet isn’t needed in the pitch deck – save it for later discussions with investors.

It’s worth having a look at some pitch deck examples for inspiration.

What to include in your line graph

Your line graph should give a quick, clear picture of your projected revenue growth.

How many years you show depends on your business. If revenue will take time because you have a complex product that requires development, then extend the to show when growth takes off.

Your graph should include:

• Profit forecast: Expected earnings over the chosen timeframe.
• Loss forecast: Projected losses over the same period.

This helps investors see when your business is expected to become profitable.

What to include in your financials spreadsheet

Your spreadsheet needs to break down the financial details behind your line graph. This is what investors will look at once they’re interested in your pitch.

You should include:

• Revenue (sales) forecast: Clearly outline how your business projects income growth over time. Show your key assumptions about pricing, customer acquisition, and market size, and demonstrate how you’ll actually collect the cash – don’t just record theoretical revenue.
• All business costs: Break these down into direct costs (“cost of goods” sold if you have a product or service with direct expenses) and operating costs like salaries, rent, and administrative fees. Including a detailed “staff costs forecast” helps investors see how quickly your team will grow and how much that will cost.
• Customer acquisition cost: Highlight exactly how much it costs to gain each new customer – investors want to know you can scale efficiently.
• Profit & loss (P&L) forecast: Summarize revenues, costs, and overall profit or loss over a specific period. This gives investors a high-level view of your financial performance.
• Cash flow forecast: Show how money moves in and out of your business each month and how much funding you’ll need to reach your next major milestone. This is where you prove you can manage money effectively.

The more detail, the better – investors will use these forecasts (and the assumptions behind them) to decide if your business is worth backing!

Here’s an idea of what your spreadsheet might look like 👇

Five business plan tips from Anthony Rose

Anthony Rose, CEO of SeedLegals, has been through many funding rounds and reviewed hundreds of pitch decks.

In the video below, he shares his insights on “The art of the five-year business plan.”

1. Show the potential for ROI

A strong five-year business plan does more than outline a vision – it builds excitement with real numbers. Investors want to see that your goals are ambitious but achievable.

To secure funding, your plan needs to show how your business will grow exponentially, not just modestly. Many founders aim for a stable, profitable company that covers salaries and expenses. While that’s great for them, investors might see it as a “hobby business” rather than a high-growth opportunity.

Your financial projections should clearly show a steady, exponential rise in revenue. If investors see strong growth, they’ll see strong returns – and that’s what makes them invest.

2. Don’t overpromise

The key is to find the right balance in your five-year projections. Your graph should show steady revenue growth, but it needs to be realistic.

If your numbers are too ambitious and you don’t hit them, investors will be disappointed, and you’ll need to make big adjustments. On the other hand, if your projections seem statistically impossible, investors may not take you seriously in the first place.

Investors want to see that you understand your numbers. If your projections don’t add up from year to year, or if you’re showing losses with no clear path to profit, they’ll lose confidence in your ability to run the business.

3. Use the unicorn formula

A unicorn company is a business valued at $1 billion or more. The unicorn formula is a common growth pattern for reaching this level:

Triple, triple, triple, double, double.

What does this mean for your five-year business plan?

Your revenue projections should show tripling growth for the first three years, followed by doubling growth for the next two. If you can map out this kind of financial trajectory, you’re on a strong path toward becoming a unicorn.

At a 10x revenue valuation, reaching $100 million in revenue after five years would make your company a unicorn.

But what if you’re not aiming for a unicorn valuation? The key takeaway from this formula is the growth rate it suggests. It’s both ambitious and steady, which is exactly what investors want to see.

Even if you’re not chasing unicorn status, using this formula in your financial forecasts can still help. Investors will feel more confident if your growth trajectory follows a strong, predictable pattern.

The shape of your revenue line graph matters most – smooth, upward curve that follows this pattern signals healthy business growth.

4. Spreadsheet the numbers

We already covered this in the section on how to write a five-year business plan, so be sure to read it carefully. But in case you missed it, here’s the key takeaway:

The most important part of your investor meetings is presenting a clear and detailed breakdown of your company’s financials.

Keep an up-to-date spreadsheet that tracks current and future income and expenses. Investors will expect to see this, and they rely on it when deciding if they want to invest.

5. Be honest about where you are now

Be completely transparent about your current revenue – make sure there’s not a big gap between the numbers in your pitch deck and what your business is actually making.

Your financial forecasts should always start from where you are today. Keep them up to date so you’re always prepared to share accurate numbers with investors. And make sure you’re updating them regularly to help you stay confident and seem trustworthy to your investors.

Final thoughts

A five-year business plan is still valuable. If it’s done well, it can help you secure investment and plan for growth.

The key takeaway is to get your financials right. Show ambition, aim for steady growth, and be transparent.

Learning from experienced founders is invaluable, so seek expert advice when needed.

At SeedLegals, our team can help you navigate starting and growing your business. So, if you have any questions, reach out to us.

Want to get your business investor-ready? Let’s talk.

From financial modelling to pitch deck essentials, we’ve got you covered. Book a call below, and we’ll guide you through the process.

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