If you ever want to apply for a small business loan, the lenders will want to see your business plan. Your business plan gives lenders a concise snapshot of your business model. Having a small business plan also gives the owner added benefits. Often, business owners refer back to their business plan to ensure that they are holding true to the foundations of the business. A well-written business plan can help you stay on track to reach business goals for years to come.
What Should be Included in Your Business Plan?
A standard business plan is typically comprised of eight sections. Each section explains a different category of information about your company. Investors will look at the business plan in terms of sections and as a whole. Here is everything that you should include in your business plan:
1. Executive Summary
Usually, the executive summary is the first thing investors look at. This section only needs to be a two or three short paragraphs.
Information in the executive summary should include:
- what kind of business you’re in
- the age of your business (when it was founded, etc.
- a snapshot of any business successes
- highlights of the business model
- rough future business goals: 3, 5, 10 and 20 years
- a brief outline explaining your plan to achieve your goals
2. Company Overview
The company overview is just a broad look at your business. It’s a closer look than the executive summary, but still painted with broad strokes. The reader should be able to learn more about what your company is all about by reading this section.
Start off this section with an overview sentence that explains your general business model. For example, you could say, “Acme is a logo design company.” Then the following sentences should elaborate on that. “We provide logo design and embroidery services for local trade businesses and sports teams.” Discuss who your customers are, your target demographic and how many customers you currently serve.
3. Market Analysis
In this section, you want to share how much of the market you serve. This section should have statistics and actual numbers to demonstrate your knowledge of the market you’re in. You should also discuss your competition, with number showing how much of the market they have. This shows your understanding of your competitors and how you fit in with the market.
The Market Analysis section should include:
- a broad overview of your industry
- details of your target demographic
- how your business serves your target market
- names of your competitors
- challenges your business faces
4. Business Organization
This section is all about how your business is organized. You could even use an organizational chart to make this section more visually compelling. Include the key players and what their job titles are.
You’ll also need to do some explaining of how your entity is organized; whether it’s an LLC, S-Corp, C-Corp, or sole proprietorship.
There should also be a section dedicated to the relevant backgrounds of key personnel, including education, degrees and certifications. If a key personnel has related job experience, mention that. Essentially, this section explains why those people are in that job.
Finally, if you have plans to expand personnel, mention it here. Talk about your reasons for wanting to hire additional people and how they will help your business.
5. Products and Services
What is it that your company sells? You’ve already touched on it before in the Company Overview, but in the Products and Services section it’s time to get specific. Be as detailed as possible. Using the example of the logo design and embroidery business, talk about what threads you use. Are the logos hand sewn or do you use machinery? What kind of machinery do you use? Where do you source your materials? Is any part of your product dependent on another business? Where are your suppliers located? Do you use contracts? What are your terms? When are your contracts coming up for renewal? This section should answer any question the reader has about your products and services.
6. Marketing and Sales Plan
The Marketing and Sales Plan section should include details about how you market your business. It should include your marketing budget, marketing strategies and how you implement your marketing plan. You should also show how much of your marketing budget you allocate to each strategy. For instance, you might write that you allocate 55% to social media, 20% to print ads and 25% to online forum postings. You can make this even better by detailing on what social media platforms your business has a presence and how often you post.
7. Financial Plan and Projections
The Financial Plan and Projections section is one that your reader may have already skipped to. That’s how important this section is. This section reveals how financially stable your business really is. This is where you can demonstrate that you have a strong financial foundation and that you understand how to run a business and make it grow.
This section should include your financials, including:
- income statements over the last year
- cash flow statements covering the last 12 months
- current A/R report
- current A/P report
- A/R aging report
- statement of debts
8. Owner and Key Employees
This last section of your business plan includes the owner and key employees information. This is actually the easiest section to complete. Essentially, it’s just a collection of resumes for you and the rest of your key employees. The reader will be interested in learning about the employment and educational backgrounds of all the essential personnel, including you. If you happen to have a Board of Directors, you should attach their resumes as well.
These eight sections comprise the entirety of what’s needed for your business plan. Although individual business plans vary, formal business plans all contain these eight sections. If you’d like help compiling the information for the Financial Plan and Projections section, consult with your CPA.