Business plan

How to write a business plan, step by step

A business plan is a document that outlines the financial goals of your business and explains how you will achieve them. A solid, detailed plan will provide a roadmap for the next three to five years of the business, and you can share it with potential investors, lenders, or other important partners.

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Here is a step-by-step guide to writing your business plan.

1. Write an executive summary

This is the first page of your business plan. Think of it as your elevator pitch. It should include a mission statement, a brief description of the products or services offered, and a general summary of your plans for financial growth.

Although the executive summary is the first thing your investors will read, it may be easier to write it last. This way you can highlight the information you identified when writing other more detailed sections.

The next step is your business description, which should contain information such as:

  • The registered name of your business.

  • Names of key people in the business. Be sure to highlight the unique skills or technical expertise of your team members.

Your business description should also define your company structure – as a sole proprietorship, partnership or corporation – and include the percentage of ownership held by each owner and the extent of each owner’s involvement in the business.

Finally, it should cover your business history and the nature of your business now. This prepares the reader to learn more about your goals in the next section.

3. State your business goals

The third part of a business plan is a goal statement. This section spells out exactly what you would like to accomplish, both short-term and long-term.

If you are looking for a Business loan or an outside investment, you can use this section to explain why you have a clear need for funds, how funding will help your business grow, and how you plan to achieve your growth goals. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your business.

For example, if your business is launching a second line of products, you can explain how the loan will help your business launch the new product and how much you expect sales to increase over the next three years.

4. Describe your products and services

In this section, detail the products or services that you offer or plan to offer.

You must include the following:

  • An explanation of how your product or service works.

  • The pricing model for your product or service.

  • The typical customers you serve.

  • Your supply chain and order fulfillment strategy.

  • Your distribution strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

5. Do your market research

Lenders and investors will want to know what sets your product apart from your competitors. In your market analysis section, explain who your competitors are. Discuss what they do well and point out what you can do better. If you serve a different or underserved market, explain that.

6. Describe your marketing and sales plan

Here you can explain how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty which will lead to customer retention.

7. Perform a financial analysis of the business

If you’re a startup, you may not yet have a lot of information about your company’s finances. However, if you’re an existing business, you’ll want to include income or profit and loss statements, a balance sheet that lists your assets and liabilities, and a cash flow statement that shows how money comes in and goes out. ‘company.

You can also include metrics such as:

  • The net profit margin: the percentage of income you keep as net income.

  • Current Ratio: the extent of your liquidity and your ability to repay your debts.

  • Customer account turnover rate: a measure of how often you collect your receivables per year.

This is a great place to include charts and graphs that make it easy for people reading your plan to understand the financial health of your business.

» NerdWallet’s choices for setting up your business finances:

8. Make financial projections

It is an essential part of your business plan if you are looking for funding or investors. It describes how your business will generate enough profit to repay the loan or how you will get a decent return for investors.

Here you will provide monthly or quarterly estimates of your business’s sales, expenses and profits over a period of at least three years, with future figures assuming that you have obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals can be aggressive, but they should also be realistic.

9. Add additional information to an appendix

List any additional information or additional documents that you could not fit elsewhere, such as key employee resumes, licenses, equipment leases, permits, patents, receipts, bank statements, contracts and personal and professional credit history. If the appendix is ​​long, you may consider adding a table of contents at the beginning of this section.

Business Plan Tips and Resources

Here are some tips to help your business plan stand out:

Avoid over-optimism: If you are applying for a business loan from a local bank, the loan officer probably knows your market quite well. Providing unreasonable sales estimates can hurt your chances of loan approval.

Reread: Spelling, punctuation, and grammatical errors can jump off the page and discourage potential lenders and investors, causing them to forget about your business and blame them for the mistakes you’ve made. If writing and editing aren’t your forte, you might want to hire a professional business plan writer, copy editor, or proofreader.

Use free resources: SCORE is a non-profit association that offers an extensive network of volunteer mentors and business experts who can help you write or modify your business plan. You can seek out a mentor or find a local SCORE chapter for more guidance.

The United States Small Business Administration Small Business Development Centerswho provide free business advice and help with developing a business plan, can also be a resource.

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