Writing a strong business plan is essential to the growth of your business and is often required to obtain a loan.
There are two main purposes for writing a business plan. First and foremost, a business plan will serve as a guide during the life of a business, with the understanding that it will change and evolve over time.
Second, a business plan is generally a requirement if you are seeking a loan, which provides detailed information to potential lenders on all aspects of the company (both past, if you are buying an existing business, and future projections).
In other words, the business plan is the roadmap for the business, with a clear vision of the progression and growth of the company.
In general, a good business plan contains:
- A detailed description of the business and its goals.
- Outline of business ownership and its structure.
- List the skills and experience you bring to the business.
- Discuss the advantages you and your business have over competitors and potential growth opportunities.
- Providing information on your target market and reasons why they would want to buy from you.
- Identify customer demand for your products and services.
- An understanding of your market, its size, and locations.
- An outline of your communication strategy with detailed information on how you plan to reach customers (i.e. promotions, advertising, public relations, personal selling, and printed materials).
- This covers how you plan to actually sell your product.
- Explain your pricing strategy, factoring in the cost and profit margin.
- Detail on collateral you have that may be used to guarantee a loan, an assurance of your ability to repay lenders.
- Develop an expected return on investment and monthly cash flow for the first year. (Consider planning a 5-year projected ROI plan)
- Provide projected income statements, balance sheets, cash flow statements, and capital expenditure budgets.
- Discuss your break-even point.
- Detail who will maintain your accounting records and how they will be kept.
- Provide “what if” statements addressing alternative approaches to potential problems.
- Explain how the business will be managed day-to-day.
- Discuss hiring and personnel procedures.
- Provide details on insurance, lease or rent agreements, and issues pertinent to your business.
Summarize your business goals and objectives and express your commitment to the success of your business. Once you have completed your business plan, review it with a friend or business associate and professional business counselor like SCORE, WBC or SBDC representatives, SBA district office business development specialists or veteran’s business development specialists. Remember, the business plan is a flexible document that should change as your business grows.
The Small Business Administration (SBA) and its resource partners, including Small Business Development Centers, Women’s Business Centers, Veterans Business Outreach Centers, and SCORE, have the expertise to help you craft a winning business plan. The SBA also offers online templates to get you started.
Once you have your business plan in place, it’s time to research your funding options. Benetrends has successfully funded entrepreneurs since 1983. To learn more, schedule a consultation.