A business plan is more than simply a tool for securing the funding you need. It’s a statement of purpose. And if built with care, a business plan can ultimately be your roadmap for growth and evolution.
A business plan is more than simply a tool for securing the funding you need.
It’s a statement of purpose. And if built with care, a business plan can ultimately be your roadmap for growth and evolution.
The following guide is designed to help founders, fledgling and seasoned alike, take business planning to the next level with what truly adds value: short- and long-term goals, a clear-eyed vision, and precise financials.
Keep Information clear, factual—and realistic
A well-executed business plan will walk the reader through the reasons why the business has a great chance to succeed, while also demonstrating a full awareness of potential obstacles and approaches to tackling them.
Here are a few important things to think about before you begin to write:
- Your audience. If a key objective of the plan is to secure financing for your business, you’ll need to present a convincing, detailed account of anticipated expenditures as well as the size of the loan you’re seeking.
- Your purpose. Not a professional writer? Don’t sweat it! Your readers—particularly financial professionals—look for straightforward writing and realistic outlooks, not pumped-up marketing.
- Your endgame. It takes time and careful thought to bring together critical information about your industry, operations, marketing and financials into one compelling package. Attention to detail is extremely important, but don’t lose sight of the bigger story you are working to tell.
Elevate the basics
Now that your eyes are firmly on the prize, let’s talk structure.
Your business plan should include several main elements, including:
- Executive summary
- Company description
- Market overview
- Products and services
- Marketing and sales efforts
- Financial outlook
- Operations and resources, if needed
The executive summary should concisely describe the nature of your business and its customers. You should also discuss the kinds of products and/or services you’ll offer, and what your vision is for the company’s future.
Remember, you’re setting the tone for your entire presentation, so be sure to touch on the essential factors—including why your venture has a strong likelihood of success.
Keep it at a high level here. You can explore topics more in depth further on.
Company description is comprised of a mission statement (can you summarize your business’ mission in one clear sentence?), a description of the specific expertise of key partners and employees (you may want to include resumes of key team members in your appendix), and legal structure—i.e., whether your business is a sole proprietorship, LLC, S corporation.
From here you can move on to the market overview—that all-important section in which you demonstrate a thorough knowledge of your market and your competitors.
Be sure to touch on the following areas:
- An analysis of your industry, including potential headwinds for your business. Can you cite specific trends? How big is your potential market?
- A detailed picture of your target customers, including as much specificity as possible.
- Your value proposition or, in other words, a convincing thesis on why you believe you can enter this market and succeed. What problems are you solving? What trends are you taking advantage of? What will you be doing differently from your competitors?
- Do anylocal or federal regulations pertain to your business? If so, how do you plan to achieve compliance?
This naturally leads to a discussion of products and/or services offered and subsequent pricing. Describe the lifecycle of your products if there is one. Also consider your approach to intellectual property (IP) – mention any measures taken to trademark your company name, register a domain name for the web, or protect proprietary information.
At this point, the product and the business likely sounds great, but what about marketing and sales? Be sure to address how you intend to reach—and retain—your customers. It’s also good to mention core communication strategies, and how your sales force will operate if you plan to have one.
This is a critical area of your plan and will inform a forward-thinking financial outlook that paints a picture of your company’s projected revenues and expenditures for the next one to five years.
To qualify for funding, your numbers must be well-researched and presented, so include forecasts and breakdowns of income, cash flow, and capital expenditures. For the first year, break these numbers down by each quarter or month. If your business is already established offer balance sheets and income and cash flow statements for the past several years.
As a corollary describe how your company’s launch will be funded, including your own resources, those of any co-owners and investors—as well as how much you’re seeking in a business loan and how this money will be applied, of course.
Finally, you’ll want to include an appendix for any specifically required information, documentation and supporting materials.
Depending on the nature of your business, your plan may benefit from including sections on operations and resources.
Regarding the former, if your company’s success will depend on many moving operational parts, discuss how you’ll organize and run your business.
The latter, meanwhile, will cover how you’ll meet your business’ essential needs in terms of staffing, equipment and other material requirements.
Critical feedback is your best friend
You’ve pulled together a draft of your research, ideas, and goals. Now it’s time to seek out critical feedback from your associates.
Have you covered timelines, tasks, deadlines, and budgets? What’s missing? If you’re applying for a Small Business Loan or other financing, your numbers will need to pass muster with financial professionals, so better to receive the news of an informational gap or confusing section from an associate than amidst a high-stakes presentation.
Keep in mind that while loan officers and/or investors will be looking for accurate metrics, they’ll also likely take a keen interest in other positive qualitative attributes—for example: descriptions that reflect your honesty and willingness to dig into potential challenges and downsides as well as the factors that will support your success. These professionals can also be a great resource in letting you know if any projections or conclusions should be reconsidered.
Though honing your vision and securing the financing you need will be just the beginning, your business plan can also serve as a highly useful working document you’ll continue to revisit as you strive to stay on target and make necessary course corrections as needed in the years ahead.