A business plan is often used to apply for a business loan, but it can also help startups highlight priorities, create realistic goals and entice and convince investors to come on board.
A business plan is a comprehensive document outlining a business’ mission statement, legal structure, goals and strategies. Typically, the purpose of a business plan is to attract potential investors or lenders and can serve as a guide for development.
If you’re going to apply for a business loan, count on needing a formal business plan. Business loan providers often require one to be considered for funding. A thorough business plan can answer a lender’s questions and includes information as to why you’re applying for a loan, what you’ll use the money for and how you plan to repay it.
You don’t need a formal business plan to start a business, but it can be helpful. A written plan can help you outline your business’ key goals, narrow down an ideal market, showcase products, and organize your plans in a clear and concise way. It can serve as a way to craft a tangible roadmap to success.
You’ll find numerous examples, but there are at least eight key parts in a business plan. At the very least, you’ll need basic information about your business’ products, services, leadership and employees.
The executive summary will serve as a brief overview of your entire business plan. Keep it brief and to the point, typically no longer than one or two pages. It should contain key information, such as your business’ name, location, mission statement, and a summary of your products and services.
Pro tip: Similar to writing an essay, we recommended writing the summary last. It should appear first, but it’s easier to write a summary after you’ve written everything else.
This is the meat and potatoes of your business plan and can serve as an outline of the whole document. Here, you’ll cover the most important aspects of your business, going into a little more depth than you did in the summary. Depending on how complex your business is, it may be at least three or four pages long. Vital information to include is:
This is where you’ll go into detail about your business’ current market, research and trends that impact your business, as well as more information about your ideal customer.
This section will show you have a good understanding of your market, how you’ll go about targeting those customers, and how you’ll adjust to any changes.
Here you’ll outline your business’ structure, such as owners, founders, current leadership, board of directors, CEO, directors and so on. You’ll state the legal structure of your business, such as whether it’s an LLC or corporation. An easy way to include this section is to use a flowchart. This could include headshots of your top people and their contact information.
It should be clear in the business plan by now what your business does, but in this section, you’ll go into detail about your key products or services. List the products you sell and the services you offer and take the time to mention any copyrights or patents you have as well.
Pro tip: You can use this section to highlight what makes your product or services unique from the competition.
In this section, you’ll cover how you intend to get more customers. Depending on the complexity and size of your business, this could be a lengthy section.
You can cover social media outreach, advertising, content plans, promotional sales, markets you’d like to branch out to and more.
Arguably one of the most important sections, this is where you’ll detail future performance. Briefly describe the process you went through to come up with any forecasts and try to be as accurate as possible. Include things like:
This section is particularly important when you’re applying for funding as a new business. It should cover details for the next three years at a minimum. One of a lender’s top concerns is whether you can repay the loan for the entire term. A lender will want to see strong projections and a history of profitability.
If you’re applying for a loan, it’s recommended that you include a section outlining why you’re requesting funds, how much you need and what you’ll use it for. Using items from your financial projections section, you can show how you’ll repay the loan with supporting evidence and how the funds will benefit your business.
If you’re a startup, your business plan will likely be shorter because you won’t have any history, your financial documentation won’t be as hefty, and you may not have as many products and services to cover. You may also have a smaller organizational structure. For example, you might just be a sole proprietor at the beginning.
Startups can focus on these key sections for their business plans: Market research, customer analysis, future plans, and include heavy detail on funding requests and financial projections.
A solid business plan is likely to be anywhere from 10 to 30 pages long. If starting from scratch is too overwhelming as a new business owner, there are business plan templates to check out.
At the very least, before you submit your business plan to anyone, be sure it’s well-written, free of errors and includes the most important aspects of your business.
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