How to Write a Business Plan, Step by Step

A well-written business plan should include

a mission statement and financial

projections.

A business plan can make or break a small

business. 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.

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 applying for a loan or looking for

investors, a business plan shows you’re

prepared and have fully vetted your

business idea.

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.

So Let's  go to steps 

Steps

1. Executive summary

This is the first page of your business plan.

It should include a mission statement,

which explains the main focus of your

business, as well as a brief description of

the products or services offered, basic

information such as ownership structure,

and a summary of your plans.

2. Company description

This section provides a snapshot of your

small business. It contains important

information including its registered name,

address of any physical locations, names

of key people in the business, history of the

company, nature of the business and more

details about products or services that it

offers or will offer.

3. Objective statement or business

goals

An objective statement should clearly

define your company’s goals and contain a

business strategy that details how you plan

to achieve them. It spells out exactly what

you’d like to accomplish, both in the near

term and over the long term.

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. The key is to provide a clear

explanation of the opportunity presented

and how the loan or investment will grow

your company.

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.

4. Business and management structure

Here, you’ll list your business’s legal

structure — such as a sole proprietorship,

partnership or corporation — as well as key

employees, managers or other owners of

the business. It should also include the

percent ownership that each owner has and

the extent of each owner’s involvement in

the company.

5. Products and services

In this section, you can detail the products

or services you offer or plan to offer. It

should include the following:

•An explanation of how your product or

service works

•The pricing model for your product or

service

•The typical customers you serve

•Your sales and distribution strategy

•Why your product or service is better than

what the competition is offering

•How you plan to fill orders

You can also discuss current or pending

trademarks and patents associated with

your product or service.

6. Marketing and sales plan

This is simply an explanation of what your

marketing strategy is and how you will

execute it. Here, you can address how you

plan to persuade customers to buy your

products or services, or how you will

develop customer loyalty that will lead to

repeat business. This section can also

highlight the strengths of your business

and focus on what sets your business apart

from your competition.

7. Business financial analysis

If you’re a startup, you may not have much

information on your business financials yet.

However, if you’re an existing business

seeking small-business loans , you’ll want

to include income or profit-and-loss

statements, a balance sheet that lists your

assets and debts, and a cash flow

statement that shows how cash comes into

and goes out of the company.

You may also include ratios that highlight

the financial health of your business, such

as:

•Net profit margin: the percentage of

revenue you keep as net income

•Current ratio: the measurement of your

liquidity and ability to repay debts

•Accounts receivable turnover ratio: a

measurement of how frequently you

collect on receivables per year

8. Financial projections

This is a critical part of your business plan

if you’re seeking financing or investors. 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. Accuracy is

key, so carefully analyze your past financial

statements before giving projections.

9. Appendix

List any supporting information or other

additional information that you couldn’t fit

in elsewhere, such as resumes of key

employees, licenses, equipment leases,

permits, patents, receipts, bank

statements, contracts, and personal and

business credit history. If the appendix is

long, you may want to consider adding a

table of contents at the beginning of this

section.