Complete Guide to Writing a Business Plan

A business plan describes the financial goals of your company and how you plan to meet them throughout the next three to five years. This is a step-by-step guide to creating a business plan that will provide your company with a strong, detailed road map.

What is a business plan?

A business plan is a written document that details operations, revenue streams, and customers of your company. Internally, organizing your operations and defining your vision should be helped by creating a business plan. To demonstrate to possible lenders and investors that you’re headed in the right direction, you can share it with them externally.

Because business plans are living documents, it’s acceptable for them to alter over time. Startups may frequently revise their business plans as they learn more about their target market and what kinds of goods and services appeal to them. Only every few years, mature companies may reexamine their business plan. Examine this document, regardless of the age of your company, before submitting a business loan application.

1. Write an executive summary

This serves as your elevator pitch. A mission statement, a synopsis of your company’s products and services, and an overview of your financial growth strategies should all be included.

Even though your investors will read the executive summary first, it may be simpler to write it last. In this manner, you can draw attention to the information you’ve found when writing subsequent sections that delve deeper into detail.

2. Explain your company

The description of your company comes next. This ought to include fundamental details like:

The name is registered under your company.
Your company’s address.
Names of important figures in the company. Make sure to highlight your team members with special talents or technical know-how.

In addition to defining your business structure (such as sole proprietorship, partnership, or corporation), your company description should also detail each owner’s percentage of ownership and level of involvement in the business.

Finally, briefly describe the current state of your business as well as its past. This sets the reader up to understand your goals in the next section.

3. Describe your company’s goals

An objective statement appears in a business plan’s third section. This section outlines your goals for the foreseeable future as well as the next several years.

You can use this section to outline how the financing will support business growth and how you intend to meet those goals if you’re looking for a business loan or outside investment. The secret is to make sure the lender understands the opportunity your business offers.

For instance, if your company is introducing a new product line, you could describe how the loan will assist in the introduction of the new product and the approximate increase in sales you anticipate over the following three years.

4. Summarize the products and services you offer

Describe in detail the products and services you currently offer or intend to offer in this section.

Include the following, if applicable:

• An explanation of how your product or service works.
• The price structure for your good or service.
• The typical customers you deal with.
• Your order fulfillment plan and supply chain.

Additionally, you can talk about any pending or registered trademarks and patents related to your good or service.

5. Conduct market research.

Investors and lenders will be interested in learning what makes your product unique from the competition. Describe who your competitors are in the section of your market analysis. Talk about their strengths and make suggestions for how you can improve. Tell them if you’re catering to an underserved or different market.

6. Describe your sales and marketing strategy

This is where you can talk about how you’re going to convince people to purchase your goods or services, or how you’re going to foster a relationship with them that will encourage repeat business.

Provide specifics about your distribution and sales plans, including the price of selling each product.

7. Conduct a financial analysis for your company

If your company is new, you might not have much financial data at this point. If your company is already established, you should include a balance sheet that lists your debts and assets, a cash flow statement that illustrates how money is coming into and going out of the business, and an income or profit-and-loss statement.

You might be able to get these reports from accounting software. It might also assist you in calculating metrics like:

Net profit margin: your net income as a percentage of revenue.
Current ratio: the evaluation of your cash flow and debt-repayment capacity.
Accounts receivable turnover ratio: a figure representing the frequency of receivables collection you achieve annually.

The financial health of your company can be easily understood by readers of your plan with the help of these handy charts and graphs.

8. Calculate your finances

If you’re looking for investors or funding, this is a crucial section of your business plan. It describes how you will make a respectable profit for investors or how your company will make enough money to pay back the loan.

Here, you’ll submit estimates for your company’s monthly or quarterly sales, costs, and profits for a minimum of three years, with the future figures presuming you’ve secured a new loan.

Before making projections, thoroughly review your previous financial statements because accuracy is crucial. While being aggressive, your objectives should also be grounded in reality.

9. Describe in brief how your business runs.

Provide an overview of your company’s organizational structure and the roles and responsibilities of each team before closing your business plan. This will assist your readers in understanding who handles the various tasks you’ve listed above, such as creating and marketing your goods and services, as well as the associated costs.

If any of your staff members have extraordinary abilities, you might want to include their resumes to further highlight the edge over the competition.

10. Include any extra details in an appendix

Lastly, include any supplementary information or files that you were unable to include elsewhere. That could consist of:

• Licenses and permits.
• Patents.
• Equipment leases.
• Contracts.
• Bank statements.

Information about your credit history—both personal and business—if you’re looking for financing.