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.
It should also include the percent ownership that each owner has and the extent of each owner’s involvement in the company.
You can also discuss current or pending trademarks and patents associated with your product or service.
Accuracy is key, so carefully analyze your past financial statements before giving projections.
Your goals may be aggressive, but they should also be realistic.This section can also highlight the strengths of your business and focus on what sets your business apart from your competition.[Back to top] If you’re a startup, you may not have much information on your business financials yet.If you’re applying for a loan or looking for investors, a business plan shows you’re prepared and have fully vetted your business idea, says Craig Allen, a financial advisor who teaches business plan writing classes at Southern New Hampshire University. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your company.“If you have no financial forecast, which is part of the business plan, it’s very difficult to show the bank how you are going to repay the loan,” Allen says. 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.To do this, many or all of the products featured here are from our partners. A strong, detailed plan provides a clear road map for the future, forces you to think through the validity of a business idea, and can give you much greater understanding of your business’s financials and the competition. It spells out exactly what you’d like to accomplish, both in the near term and over the long term.A business plan typically looks out over three to five years, detailing all of your goals and how you plan to achieve them. 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.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.“I always feel like if the person can’t even bother to proofread something that they wrote, how detail-oriented is this person in running their business? Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. Small Business Administration’s Small Business Development Centers, which provide free business consulting and help with business plan development, can also be a resource.You can search for a mentor or find a local SCORE chapter for more guidance.