1. Executive Summary
This is the first page of your business plan. It should include a mission statement, which explains the main focus of your business, as well as a brief description of the products or services offered, basic information such as ownership structure, and a summary of your plans.
2. Company Description
This section provides a snapshot of your small business. It contains important information including its registered name, address of any physical locations, names of key people in the business, history of the company, nature of the business and more details about products or services that it offers or will offer.
3. Business Goals
An objective statement should clearly define your company’s goals and contain a business strategy that details how you plan to achieve them. It spells out exactly what you’d like to accomplish, both in the near term and over the long term.
If you’re looking for outside funding, you can use this section to explain why you have a clear need for the funds, how the financing will help your business grow, and how you plan to achieve your growth targets. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your company.
For example, if your business is launching a second product line, you might explain how the loan will help your company launch the new product and increase its sales by 50% over the next three years.
4. Business Structure
Here, you’ll list your business’s legal structure — such as a sole proprietorship, partnership or corporation — as well as key employees, managers or other owners of the business. It should also include the percent ownership that each owner has and the extent of each owner’s involvement in the company.
5. Products & Services
In this section, you can detail the products or services you offer or plan to offer. It should 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 sales and distribution strategy
Why your product or service is better than what the competition is offering
How you plan to fill orders
You can also discuss current or pending trademarks and patents associated with your product or service.
6. Marketing & Sales Plan
This is simply an explanation of what your marketing strategy is and how you will execute it. Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business. This section can also highlight the strengths of your business and focus on what sets your business apart from your competition.
7. Business Financial Analysis
If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business seeking small-business loans, you’ll want 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 goes out of the company.
You may also include ratios that highlight the financial health of your business, such as:
Net profit margin: the percentage of revenue you keep as net income
Current ratio: the measurement of your liquidity and ability to repay debts
Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year
8. Financial Projections
This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.
Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan. Accuracy is key, so carefully analyze your past financial statements before giving projections.
Your goals may be aggressive, but they should also be realistic. “It’s OK to be optimistic if you can justify it,” Allen says. “In general, you don’t want to stand out in a negative way by being too optimistic.”
You want to show that your business can generate strong enough cash flow to cover the regular debt payments on a loan. But you should also address the various risk factors of the business, Allen says.
“The loan officer is definitely going to want to know that you’ve thought through all of the potential risks and that you’ve mitigated those risks in some way,” he says.
List any supporting information or other additional information that you couldn’t fit in elsewhere, such as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit history. If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.