If you're applying for a loan, grant, or another form of funding for your new business, you'll need to create a business plan that spells out the strategic direction you plan to take. This plan is a critical piece of the funding review process, and the contents of it can be the make-or-break factor in whether you receive the financing you need for startup.
Why is a business plan important to lenders?
Lenders want to see that you have a viable idea and a sustainable plan worth funding. They also want to evaluate whether you have the means to bring your plan to fruition.
When you create and compile your business plan well, loan, grant, and funding providers will learn about your business’s financial capacity, the competitive challenges it’s up against, the members of your team who can help you realize your vision, and other important details that can contribute to its success. These elements will help them make assessments about the business’s strength and the likelihood you’ll be able to repay any capital they provide.
What should my plan include?
Your plan should include the following elements:
A cover sheet
|Set a professional tone by creating a cover sheet that includes your company’s name and logo, the title of the document, the date on which you prepared it, and your contact information.|
A table of contents
|List the section titles of the document and the page on which the lender may find them.|
An executive summary
|Create a section titled Executive Summary and write a one-page summary of your business and your plan for its success. You may choose to structure it in the following way:|
An explanation of the opportunity
|Create a section titled Opportunity and explain the key challenges the business is facing. Your explanation should include the following subsections:|
An explanation of your approach to helping the business succeed
|Create a section titled Methodology and describe the methods you’ll use to fortify the business. Your description should include the following subsections:|
A description of the business
|Create a section titled Company and describe the organization’s structure, key members of your team, and any advisors who are helping you establish or run the business.|
Create another section titled Progress and describe the steps your business has taken to form, develop its offerings, reach its target market, and achieve early-stage goals.
Your financial plan
|Create a section titled Financial Plan and include your forecasts and a description of why you need capital. You should include the following components:|
Net profit margin: net profit after taxes / net sales
Gross profit margin: (revenue – cost of goods sold) / revenue
Profit margin: (revenue – expenses) / revenue
Quick ratio: (current assets – inventory) / current liabilities
Return on investment: (gain from investment – cost of investment) / cost of investment
Current ratio: current assets / current liabilities
The business’s historical financials
|Create a section titled Historic Financials and include three years of income statements, cash flow statements, and balance sheets.|
Note: If you started your business less than three years ago, you should include yearly or monthly statements that date back to its founding.
|Create a section titled Appendix and include any other documents that are relevant to your funding request. These may include:|
How can I make my plan look professional?
Here are some tips:
- Use a professional font, like Times New Roman or Calibri, that’s easy to read on- and off-screen.
- Use a bold, slightly larger font for headings and subheadings that’ll help lenders find content quickly and easily as they review your document.
- Create easy-to-read charts that’ll help the lender understand your projections and forecasts.
- Use chart and text colors that are pleasing on- and off-screen.
- Embed color graphics of your facility, team, product, or parts of your processes into the appropriate sections of your plan.
- Ensure that your business’s name and contact information are included on every page of the document. You can insert this information into the document’s header and set it to appear on every page except the cover sheet.
- Run a spelling and grammar check on the document.
- Update the table of contents after finalizing every other change.
Before you submit the plan, you should print a hard copy and review it for typos and formatting issues. Once the document is ready, you can print it to a PDF file and submit it to your lender.
Can you help me write my business plan?
Yes! With our newest service, we can help you create your business plan to firm up your strategy or secure a loan. You can learn more about this done-for-you service here.
Looking for a DIY option? Try a service like LivePlan, which can help you pitch, plan, and track the success of your business plan. Many owners use this service to browse more than 500 sample plans, organize their ideas, build robust financial projections, and access professional guidance through the planning process.
Want a business loan expert to look over the business plan you create when you're finished? We're happy to consult and provide the expert feedback you need. Check out how we can help here.
Projectionhub is another great service that can help you take on the projection piece of your plan. This service offers 50+ industry-specific templates expertly prepared by a CPA for as little as $49. For a limited time, you can save up to 15% on this service with the code OWNERACTIONS (some restrictions apply; contact Projectionhub for details).
You may need to work through numerous financing options to raise the capital you need to start your business. In our article, Your Go-to Guide to Raising Capital for Your Small Business, we’ll help you evaluate your options and find solutions that can help you achieve your goals.
After working through the financing process, you can use the cash you raise to develop your product, market to a wider audience, improve your processes, or realize other important early-stage goals. Each of these objectives presents a new set of challenges. Our articles and advice can help you with every action you need to take. Log into your owner’s portal for free, personalized guidance that will help you make your venture a success.