Chapter 13

Pitching for business funding

Seeking business funding is a major step but you needn’t be daunted. Here’s how to pitch your business.

What to demonstrate in your pitch

Whether you’re approaching a bank for a loan or trying to convince someone to invest in your business, there are some basics to get down.

  • Show you have a plan.
  • Share detailed financials.
  • Convince them you know your stuff.
  • Get them excited.

On the one hand, you want to sell the dream. But you also need to demonstrate that you’re sensible and cool-headed. It’s a balancing act. Get advice from other business owners and an accountant or bookkeeper – they frequently prepare finance applications and know what works.

1. Show you have a plan

There are dozens of approaches to writing a business plan (we cover two in our guide on how to start a business). But the most important things to communicate to a financier are:

  • the opportunity – explain the need you’re fulfilling and estimate the size of the market
  • market analysis – present some research that proves the opportunity is real
  • how you’ll resource the business – identify the skills you’ll need versus the skills you already have
  • your business model – demonstrate how you’ll turn the opportunity into money
  • financial forecasts and budgets – show when you’ll be profitable

It’s also important to talk about the long-term future, and your role in it. Are you staying in the business for the long haul? Or do you want to grow it and sell it on? There’s no right or wrong answer. But investors and lenders will want to know your intentions.

2. Share detailed financials

Show financiers you’ve thought of everything – the good, the bad and the ugly:

  • Your budget needs to be thorough and should include allowances for unexpected costs (contingencies) so they can see you’re well prepared.
  • Be specific about how you plan to spend the funding.
  • Show your workings on high-cost items. Is there a cheaper alternative and, if so, why didn’t you go with it?
  • Don’t be too ambitious with your sales forecasts. Include a best and worst-case scenario but base your budget somewhere in the middle.
  • If the business has assets (or owes money), create a balance sheet. Lenders and investors want to see what value already exists, and if you’ve put your own money into it.
  • Show how and when your business is going to be profitable.
  • Give details of how much you intend to take from the business as a salary or wage, and if you’ve got another source of funds in reserve.

Show how they’ll make money with you

You need to show the financiers what’s in it for them:

  • Show lenders how repayments fit in your budget (and don’t forget to account for interest).
  • Show investors when they can expect dividends (or an increased share price).

Buying a business?

If the funds are for buying a business, then you should also provide:

  • two years of the business’s profit and loss statements
  • sale and purchase agreement
  • turnover warranty – a statement of the business’s guaranteed turnover during a defined period
  • any restraints of trade which prevent the previous owner setting up in competition or contacting customers for a period of time

Expanding a business?

If the funds are to help you expand a business, then you should also provide:

  • two years of profit and loss statements
  • tax returns for the same period
  • an explanation of how the funds will make the business more profitable

3. Convince them you know your stuff

You need to show you understand the industry you’re entering. That goes without saying. But you must also give lenders and investors confidence that you understand the financial side of your proposal. It helps to know some (or all) of these numbers off the top of your head:

  • Revenue – the money you’ll generate from sales of your product or service over a specific period (normally a year)
  • Costs – direct costs; costs that go up the more sales you make (includes things like inventory) and indirect costs; costs that stay the same no matter how busy you are (includes things like rent and staff).
  • Gross profit – the amount of money your business will make from sales after deducting the cost of goods or services sold (and before you pay operating costs, payroll, tax and overheads)
  • Net profit – the total amount of profit your business will make after deducting all costs (including direct costs, operating costs, payroll, tax and overheads)
  • Margin – the difference between your product or service's selling price and the cost of production
  • Value of security – the value of the assets you’ll use to secure the lending
  • Credit score – an external rating of how good you are at paying your bills and debts
  • Repayments or payback on the finance you’re seeking – what repayments you’ll make and when, or what dividends you hope to pay out to investors and how much you’ll grow the value of the company and their shares

4. Get them excited

Don’t forget to show them your product or service! If it’s not created yet, show them a mockup. Make a video, take photos, show screenshots. Lenders and investors want to see something tangible. Don’t leave it all to their imagination.

Show your belief in the idea when you pitch it, but don’t lose sight of reality. While it’s great to be excited about the financial potential of your business, you need to assure your audience that you understand the risks and threats. It’ll be even better if you have strategies for addressing them. And if there’s anything you don’t know, be upfront about that too.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

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