Before starting your business, you should devise a good plan to help you succeed. With a business plan, it will guide you through building and managing your business.
What is a business plan?
A business plan acts as your roadmap for how to structure and grow your business, looking over a three to five-year period. With a plan, it can help get you partners or funding to run your business and convince investors or partners that your business is a good choice.
What should I include?
When writing your business plan, you should include:
- Executive summary: As your first page in your plan, it should include a mission statement explaining the business’ focus, description of products or services, basic information such as structure, and a summary of your plans.
- Company description: This is a snapshot of your business. You should include the registered name of the business, address, names of key people, company history, nature of the business, and details about products or services.
- Objective statement or business goals: Clearly define your goals and a strategy on how to achieve them short and long-term. You can also include your reasons for money if you’re seeking outside funding. These reasons may include how financing will help your business grow and the investment will grow your company.
- Business and management structure: List your business’ legal structure such as sole proprietorship, partnership, or corporation. It should also include key employees, managers, or other owners along with percent ownership and each owner’s involvement.
- Products and services: Detail the products and services you plan to offer and include an explanation of how they work, a pricing model, the customers you would serve, sales and distribution strategy, reasons your products or services are better than the competition, and how to fill your orders. You should also discuss current or pending trademarks and patents.
- Marketing and sales plan: Create a marketing plan and explain how you will achieve it. You should address how you plan to market to your customers or develop customer loyalty.
- Business financial analysis: If you’re looking to apply for a small business loan, you should include income or profit-and-loss statements, assets and debts balance sheet, and cash flow statement. You may include ratios highlighting your financial health such as net profit margin and accounts receivable turnover ratio.
- Financial projections: If you’re looking for financing or investors, this should outline how your business will generate profit to repay your loan or give a return for investors. Provide monthly or quarterly sales, expenses, and profit estimates for at least a three-year period. Make sure you analyze your past financials, so your projections are more accurate.
- Appendix: You can provide any information that doesn’t fit in the other categories including licenses, equipment leases, permits, receipts, bank statements, and contracts.
What else should I know?
When you write your business plan, consider these tips:
- Keep it concise: According to NerdWallet, keep your business plan to 15 to 25 pages. Focus only on the key elements and don’t get slowed down the technical aspects or industry jargon.
- Proofread: Review all spelling, punctuation, and grammatical errors. Errors on your business plan may turn off lenders and prospective investors.
- Free resources: Visit the U.S. Small Business Administration website for tools and resources to help you with business plan development.
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