Biz Tips

How to Write a Business Plan

Business Plan - How to Write

Your Business Plan is possibly the most important document you can create when starting a new business. Think of it as a roadmap to the future success of your business! It forces you to think about things you will need to decide, challenges you may have to overcome, and ways of attracting customers.

Many times, in order to get the bank (or a business partner) to fork over some cash to help you get up and running, you will be required to show them your business plan. Even if it’s a loan, any person or entity who will be investing in your business wants to know that their money will be repaid in some way. This is called return on investment (ROI).

Before we get started, I want to make sure I mention that I offer this as a guide and am in no way offering any legal advice in this post. If you have any questions regarding the legality of any section of your business plan, please seek advice from a legal professional.

Formatting Your Business Plan

Now that we have that out of the way, let’s get down to business! The way you format your plan is up to you, but most businesses choose one of two popular types.

Traditional formatting is more detailed and takes longer to create, but it includes a LOT of great information – pages and pages of info! Lean business plans are short and sweet and just kind of summarize the plans. You can usually crank one of these out in an hour or so with all the information available.

For the purposes of this post, we are going to focus on the Traditional formatting option to make sure we cover ALL our bases. Typically, lenders and investors want to see the comprehensive collection of info from this format. The next nine sections are what you would expect to find in a typical traditional business plan.

Executive Summary

The Executive Summary is where you state what your company is and why you know it’s going to be a success. Why are you choosing this particular business?

In the Executive Summary you’ll find the mission statement, what the product or service is that you’re selling, and a little bit about your leadership and employees, as well as the location of your business.

If you’re asking for help with financing, you’ll want to mention financial info here as well.

Company Description

This section is where you go into a little more detail about your business. What do you offer and what problem does it solve for your potential customer? WHO is your customer? Be as detailed as possible here.

What is your competitive advantage – the thing that makes you different and successful? Do you have experts on your team? Is the location you chose the absolute best place this type of business can thrive in? This section is dedicated to bragging about why you’re the greatest thing since crème brulee (or sliced bread… but crème brulee is better).

Market Analysis

You’re gonna need to do a little research for this section. Get to know your industry. Know your competitors. What works and doesn’t? Do your competitors do really great in one area? What can you do better?

You may have heard of a SWOT analysis. SWOT stands for Strengths-Weaknesses-Opportunities-Threats. Strengths and Weaknesses fall under the Internal Category – things that are specific to you and your business. Opportunities and Threats on the other hand lie outside of the company.

In order to really understand your market, it’s important to know where you are in each of these areas. Dig deep – list several points for each. Brainstorm! Once you have it all in front of you, it will help to guide you to even more success as you recognize where you are good and where you may need to work on some things.

Organization and Management

Who is going to be running your company? How will it be set up? Do you have an organizational chart? If not, now is the perfect time to create one! Detail what each person in a leadership capacity is going to contribute to the company. Include their resumes if you feel their expertise is important to highlight.

What KIND of business are you creating? Is it a Sole Proprietorship? An LLC? How are you going to structure the company legally?

Product or Service

What are you selling? How does it benefit your customer? Do you have any copyrights or patents? Explain the product lifecycle from start to finish. Are you ordering ingredients to create a food product to sell? Are you purchasing materials to create a product by hand or are you having a product(s) manufactured?

You also want to include the research you have completed in determining that your product or service is needed.

Marketing and Sales

How do you plan to attract and keep your customers? Describe in detail how the sale is going to take place. Marketing best practices are constantly changing, so you will need to stay on top of this!

Keep in mind that what you include in your business plan today may not actually be what works in 2-3 years. You may also find that your marketing strategy doesn’t work as well as you’d thought it would and needs some tweaking. That’s ok! In fact, it’s good!

Funding Request

This is the section where you are going to list out what your funding requirements will be, and you want to be very specific. How much money do you need and how do you plan to use it?

What kind of funding are you looking for? Do you want a loan? What terms would be ideal? How long will this funding sustain your business?

What exactly will you be purchasing with the funding that you’re requesting? Equipment, payroll, rent (or mortgage)… unless you will have enough revenue to cover it all from day one, you’re going to need to ensure you’re asking for what you need.

What are your future plans for the money? How long do you expect to take to pay off your debt? Do you plan to sell the business in the future? Describe these plans in as much detail as possible.

Financial Projections

This section needs to support your funding request. Show here that your business is stable and is going to be successful.

If you are already established, provide income statements, balance sheets, and cash flow statements for the last 3-5 years. If you have other collateral items you want to include, do so here as well.

What are your financial projections for the next 5 years? Be sure to include projected income statements, balance sheets, cash flow statements, and capital expenditure budgets.

If you are in your first year, you want to be even more specific and do your forecasting quarterly or even monthly. Explain them in detail and make sure you match them up to your funding request.

Show off your graphs and charts you created that show how great your business is going to be!

Appendix

This is where you include other documents that were requested. Some things you might include here are your credit history, resume(s), photos of your products, reference letters, licenses or permits, copyrights or patents, and any other legal documents or contracts that pertain to your business.

I hope this helps! There are SO MANY resources online that dive deeper into each of these sections if you hit any bumps along the way while you’re creating your business plan. Keep in mind that there may be a category or two that don’t pertain to your business. If that’s the case, just don’t include it!

Also, as mentioned above, I am not a lawyer. I do not offer this guideline as legal advice in any way. If you have any questions regarding the legality of any particular section, please refer to a legal professional.

Sources:
US Small Business Association

Want more biz tips from FoodBizMama? Check out Biz Tips to see what other tips and tricks I have to share!

Wanna be friends?

You Might Also Like

No Comments

    Leave a Reply

    error

    Like what you see? Please spread the word :)

    Follow by Email
    Instagram