A business plan is a document that shows the financial goals of your business and how you plan to reach them. A strong, detailed plan will give you a road map for the next three to five years of your business, and you can show it to investors, lenders, and other important partners.
Here’s a step-by-step list of what you need to do to write your business plan.
The first page of your business plan looks like this. Think of it as your pitch in an elevator. It should have a mission statement, a short description of the products or services offered, and an overview of how you plan to grow financially.
Even though investors will read the executive summary first, it may be easier to write it last. So, you can highlight information you’ve found while writing other sections with more information.
2. Describe Your Company
The next step is to write a description of your business, which should include things like:
- The official name of your business.
- The address of where your business is.
Names of the business’s most important people. Make sure to highlight people on your team who have unique skills or technical expertise.
Your company description should also say what kind of business you have, such as a sole proprietorship, a partnership, or a corporation, as well as how much each owner owns and how involved they are in the business.
Last, it should talk about the history of your business and what it does now. This gets the reader ready for the next section, where you talk about your goals.
3. State Your Business Goals
A business plan’s third part is a statement of its goals. This section explains exactly what you want to do, both right away and in the long run.
If you want a business loan or investment from outside sources, you can use this section to explain why you need the money, how it will help your business grow, and how you plan to reach your growth goals. The key is to explain clearly what the chance is and how the loan or investment will help your business grow.
For example, if your business is launching a second product line, you could explain how the loan will help your company launch the new product and how much you think sales will rise over the next three years as a result.
4. Describe Your Products and Services
In this section, describe in detail the goods or services you sell or plan to sell.
You should add these things:
- A description of how your service or product works.
- How do you decide how much to charge for your product or service?
- Who is your typical customer?
- Your plan for the supply chain and order fulfillment.
- Your sales strategy.
- Your plan for getting the word out.
You can also talk about trademarks and patents that are already in place or are in the process of being made for your product or service.
5. Do Your Market Research
6. Outline Your Marketing and Sales Plan
7. Perform a Business Financial Analysis
If you just started your business, you might not know much about how it makes money yet. But if you already have a business, you’ll need to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and leaves the business.
You could also include things like:
- Net profit margin is the amount of money you keep as net income after all expenses.
- Current ratio: a way to measure your cash flow and ability to pay back debts.
- Accounts receivable turnover ratio: a way to measure how often you collect on receivables over the course of a year.
This is a good place to put charts and graphs that make it easy for people to understand how your business is doing financially.
8. Make Financial Projections
This is one of the most important parts of your business plan if you want to get money or investors. It shows how your business will make enough money to pay back the loan or how you will give investors a good return on their money.
Here, you’ll estimate your business’s monthly or quarterly sales, costs, and profits for at least three years, assuming you’ve gotten a new loan for the future numbers.
Accuracy is very important, so carefully look at your financial statements from the past before making projections. Your goals can be ambitious, but they should also be possible to reach.
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