A business plan is a critical tool in every business, regardless of size. It serves as a roadmap that will bring clarity on all aspects of your business, from marketing to operations and product or service details. But besides that, a business plan outlines the resources necessary for achieving anticipated results, such as financing.
When you apply for business financing, it’s most likely the top element creditors will check on. It’s because they want to ensure that you have a viable and sustainable business, and they can assess that through your business plan.
If you’re new to business planning, it can be overwhelming to figure out the essential elements and put them into writing. But don’t worry, we’ve put up the following tips to help you write a business plan that your creditors will surely love.
Define Business Opportunity
One of the crucial elements in a business plan is defining your business opportunity. You should be able to tell the creditor or investor how your business is different from your competitors and what makes it a more notable place for investment or financing. The key here is to show them why your business deserves to get the funding you need and support it with data.
When writing the business opportunity section, you must highlight the areas of greatest potential in your business. It can be opening up a new market with new products and services or a new solution to address the current needs of the general public.
To help you come up with an effective business opportunity statement, consider the following questions:
- What is the problem that needs to be solved?
- Who is most affected by the identified problem?
- What is your company’s solution?
- What is motivating the company to solve such a problem?
Indicate Your Business Financial Picture
Creditors also need to have a full picture of your business’s financial performance. Although it can be the most challenging part to complete in your business plan, it’s also the deal-maker or deal-breaker when you’re looking for financing. Expect your prospective lender or creditor to pay more attention to this section to evaluate how likely your business will succeed.
Before writing the financial analysis section, it would be best to consult your accountant or other qualified financial professionals. Bear in mind that in-depth data of your business finances is required to develop a good financial analysis.
Nevertheless, below are the vital components that you should not miss when preparing the financial analysis of your business plan:
- The financial projection of your business plan must cover three to five years.
- It must include sales forecasting, expense outlay, income statements, cash flow projections, break-even analysis, and operation plans.
- If you own or are purchasing an existing business, you should provide relevant historical financial data.
Demonstrate Execution Plans
Besides the opportunities and financial picture of your business, creditors and investors would also want to see whether you have a strong and sound plan to succeed. With that, they will definitely give close attention to how you will use any investments or financing to grow your business.
To show that your plans can generate the best chance of repayment possible, here are other important elements that you should include in the business plan.
Marketing and Sales Plan
You need to demonstrate how you plan to connect with your target market. In this section, you should be able to discuss the following:
- A clear statement that describes the benefit of your offers
- A reasonable pricing strategy
- A plan to get your products to customers
- Budget for both sales and marketing
A good execution plan also covers milestones for your business. Basically, they are the goals that are critical to the success of your new business venture. Each milestone can vary in time and scope from one business to another.
A strong repayment plan is also a crucial element of a good business plan for funding. You should be able to outline how you’re going to repay the loan based on your financial projections. Note that your repayment plan tells potential creditors how you understand the responsibilities of financial management.
Your creditor can usually help you with this based on the type and term of your loan. You may visit financial websites like CreditNinja to give you an idea of how repayment terms on business financing might look like.
Make A Strong Executive Summary
The executive summary is the first section of your business plan, but it’s easier to write it last. It covers the essential information about what your business does, who it serves, and what you’re looking for from the people reading it. Keep it as clear and concise as possible. Remember that it’s a quick read designed to get the attention of a creditor on your business.
Provide The Necessary Appendix
Of course, you need to back up your business plan with sufficient data or graphics. You can put them in the appendix and make sure that they don’t contrast the rest of your business plan. An appropriate appendix may include advertising and marketing materials, relevant financial statements, sales forecasts, tax returns, and other applicable documents.
Points To Consider
Your business plan can either make or break your loan application. If you need some help in writing it, don’t hesitate to ask a professional. You may also try to explore different business plan templates online to give you an idea of what it looks like. In preparing your business plan, it’s important to remember that the goal is not only to impress creditors but to embrace growth for your business.