If you will need to approach a financial institution to ask for funding for your business, the lender will most likely ask you for a business plan. A business plan describes your business — how it will be structured, what it will make/sell/perform, and how it will be run. It also outlines your strategies for marketing, managing, financing, and dissolving the business.
What Should a Business Plan Include?
All business plans are slightly different, depending on the type of business and the people who are starting it. However, they do tend to follow a specific format and contain similar information. A quick Internet search can show you examples of business plans and business plan templates to follow. Most business plans contain the following information:
- Executive summary. This describes your company and explains its purpose and goals.
- Company story. Shows how your company is different from others in the marketplace and reveals why this idea will work.
- Market analysis. Describes your business' place in the market and its competitors.
- Structure. This section outlines how your company will be structured and managed.
- Sales and marketing strategy. Tells readers how you will market your business and sell your products and/or services.
- Products and services. Describes what you will be selling and the benefits it will bring to your clients or customers.
- Funding plans. Shares how the business will be funded, and possibly asks for capital investments.
- Financial projections. Creditors expect to see what you project for incoming revenue and earnings over the next 3-5 years.
Business plans usually also include supporting legal documentation such as:
- Tax returns from business partners
- Franchise contracts (if applicable)
- Credentials for the business partners
- Leases or purchase agreements for business-related real estate
- Professional licenses and permits
- Letters of intent from distributors, buyers, or suppliers
- Other pertinent legal documentation