Everyone can draw up a business plan. Not everyone can draw a great business plan. This article is aimed at helping you make the best 1st impression on lenders with your business plan. Let's get into it.
A great business plan will contain approximately 10 to 12 sections. Everything from your product/service, target market, key employee qualifications, and financial projections. The plan should also include multiple plans for revenue, and clear strategies, pivot points, and/or contingency plans if things go south.
In this article, we are going to go in-depth regarding everything you need to know about each step of creating a great business plan. So, keep reading.
11 Things That Make A Great Business Plan
This article will be a rather lengthy one. For this reason, let's not waste any time and get straight into the 11 factors that make a great business plan.
Use this, the first page, to introduce yourself. Think of it as a cover letter where you are trying to make the best impression possible. You can start by introducing yourself, highlighting your qualifications, work experience, and previous business ventures.
You can also talk a little bit about your current business venture, the one that this specific business plan is for.
#2. Make It Easy To Navigate
You might be wondering why you would need to do this and how you would even make your business plan easy to navigate. Well, it is quite simple really. All you have to do is make sure that your pages are numbered when printing a business plan.
Then, right at the beginning of your business plan, just after your introduction, you can make a table of contents. This will take a few minutes for you to do if you know your business plan thoroughly and it will save you a lot of time in the future.
It will also make life easy for the person who is reading your business plan and it just makes sense to want to make their life as easy as possible because you are the one who is going to be asking them for money at the end of the day.
#3. Summarise The Entire Business Plan At The Beginning
When you present your business plan to a lender, they are going to read the entire thing a few times and they are gonna pass it over to their peers and colleagues as well. So, why would you need to summarise your entire business plan right at the beginning? Let's take a look.
You want the lender to understand what they are reading while they are reading it. You want them to know as much about the plan as possible so that nothing catches them by surprise and so that everything that you highlight in your business plan is easily digestible and absorbed by the reader.
#4. Company Structure Breakdown
What we mean by a “breakdown of the structure of your company” is; who are the key employees going to be? This is specifically for management roles. You want to have a little introduction for each of the key members of the company and then you want to list their qualifications.
You also want to illustrate why you think that these employees are going to bring to the company what it needs in order for it to turn a profit and to be a success.
#5. Describe Your Target Audience
Right, now we are getting to the most important part of your business plan and you want to start off by demonstrating that you know who your target audience is.
You can also add this section after you have described your product or service but I have found that giving somebody a better understanding of who you are trying to attract before listing your service or product can help him understand why you are so confident that your product or service is going to work.
#6. Describe Your Service Or Product
When describing a product, you want to be as straightforward and informational as you possibly can be. A lot of people tend to want to show their passion for the product in this section rather than explaining the product in depth.
It is great to be passionate about your product but that passion will show through your knowledge of the product or service. It is not something that you have to artificially fabricate in your writing.
For a service, you can explain exactly what it is you are going to be doing and one key thing that you want to highlight is; what sets your product or service apart from the rest, or at least, what makes it competitive with your competition's offerings.
The same can be said for a product, why is your product better and if you can't explain why your product is better than your competition then that is something that you want to stay away from mentioning. However, you can highlight why you think your product will have enough to draw enough market share.
#7. Describe Your Strategies
Next, you want to describe your strategies. These include how you plan on turning a profit and how you plan on generating multiple streams of income if necessary. You also want to show that you have a clear marketing strategy.
You want to show the lender that you have enough knowledge or you have a key employee that is going to let your target audience know that you have something to offer them. Basically, have a good marketing strategy and demonstrate that in your business plan.
#8. Financial Projections
I understand that not everybody who is reading this article is in the same situation. Some of you have existing companies and you are trying to get financing to grow your company and some people are trying to look for finance for their startups. It is very important to distinguish between those two before we carry on
If you have an existing company, you need to attach all of your financials to your business plan. The lender will look to see if you are in good standing with the IRS, they will look to see if you manage your finances correctly, they also want to know at which point you are going to break even and when they can expect to see their money returned.
For a startup, you want to give them a detailed projection of how much it is going to cost you and how much you are going to make, how long is it going to take you to break even, and how long is it going to take you to pay back the loan.
#9. Contingency Plans (Very Important)
This is where a lot of people go wrong. We need to understand that when you go to a bank or an investor and you ask for money, you are asking them to put their trust in you. You are also asking them to take a risk on your behalf.
This is why it is extremely important that you demonstrate to them that you have a “plan b”. You know what you are going to do if things start to go south. When things don't go as planned, the lender is the one who stands to lose money.
If you can demonstrate that you have a strong contingency plan, the lender is more likely to say yes to your application. However, a lot of people tend to skip over this step mainly because they don't have a contingency plan or because they simply don't see it's importance.
#10. Why Do You Need The Money? Or Why You Don't
Basically, in this section, you are going to tell them why you need the money. You can do this in a number of ways.
You could highlight how the money that they lend you is going to be used step-by-step. This is very important whether you are a small start-up or an existing company that has been in operation for years and years, you need to be able to tell the bank or the lender how you plan to use that money.
Remember, a lender is more likely to say yes to an application where the money is going to be used to grow an already successful company. With that being said, they are less likely to lend money to a company that is asking for a loan to keep themselves afloat.
If you don't require start-up funding, or loans, you still want to include this section. But outline why funding is not necessary instead of why it is.
#11. Ask For The Money
Now it is time to ask for the money. Even though you are going to fill out a lot of applications and a lot of forms where you are probably going to write this figure down a number of times, you still want to ask for a specific amount of money in your business plan. This will again show them that you know how you are going to use the money.
I guess there isn’t much left to say except, when you are creating your business plan, be thorough. Make it easily digestible and be specific with your strategies.