Understanding How to Write a Business Plan

Learning how to write a business plan is always the first step in seeking financing for a new business venture. It does not matter how great your idea is or how experienced you are in the field, if you cannot present your ideas in a qualified business plan, then you are going to struggle to get the funding you need. Here is a little more about the basic structure you need to have.

Executive Summary

The opening of your business plan is the executive summary. This is the most important section, as it persuades the loan office to choose you. This section should be about two to three pages and should showcase your goals and objectives. Within these pages, you need to introduce your business strategy and show the potential lender exactly why they should fund your business.

History

The next section should very briefly explain the history behind your business. Show the reason that you came up with the idea to start your business. This should also highlight the skills you and your team bring to the project, but subtly.

Goals

The third section should go into more details about your short and long term goals for your company. Do you have projected growth figures? How will you reach your customers? Who will your customers be? In a few paragraphs, state some of these facts.

Management Team Biographies

The management team is your business’s backbone. You need to outline their backgrounds so the potential lender can see how they benefit your business. They also need to be named and their basic responsibilities listed.

Product or Service

Your business would be nothing without your project or service. In this section, you need to show how you are different from the others in the market. What makes your business’s product or service stand out?

Market Potential

A lender wants to see that there is a market for what you offer. You need to show that the market is not only present, but is large enough and growing enough to sustain your business. Explain information about the radius of the customer base, the demographics of the target market, and how they will access your product or service. Be sure to include information about the current demand for similar products, and how yours specifically fills a need in the market.

Marketing Strategy

If you do not market your business, it will fail. Outline your marketing strategy in this section. Be as specific as possible. Remember that you have a lot of venues available to you. Word of mouth, online marketing, offline marketing, and any other venues you can think of should all be considered and included, if you will be using them.

Financial Projections

You need three- to five-year financial projections in order to succeed in this project. You will want detailed financial forecasts, spreadsheets, balance sheets, income statements, and cash-flow projections. Some new businesses may not have actual sheets to display, but you should have projections. You will also need to summarize the amount you need to borrow in order to start your business successfully.

Exit Strategy

What are you going to do if your plans fail? What benchmarks will show that you are going to need to stop? By showing this, you will show the potential lender that you have thought through all possible scenarios, including the negative end of things.

Learning how to write a business plan properly will ensure that your proposal receives a second look when you present it. This is well worth the time it takes to get the plan right the first time, so before you begin writing, learn all you can about these important documents.