The Step-By-Step Guide to Writing an Effective Business Plan
Putting together your business plan is usually the hardest step in applying for a loan, but it is also usually the step that makes or breaks approval. Banks weigh credit scores and financial statements carefully, but when it comes down to it, the persuasiveness and clarity of your plan will determine whether the loan officer believes you will recoup your expenses and make good on the loan. Before you even get started, you’ll need to make sure your information is detailed and accurate, so you’ll want to assemble all your legal and financial paperwork.
The first section is your executive summary. This should be between 10 and 15 percent of the total document length in most cases, and rarely more than 20. This summary should paint the plan’s broad strokes clearly, allowing a reader to understand your general strategy and available resources. After that, each section will go into more and more detail about specifics in each area of your operations.
After the executive summary, your business plan needs a company overview and statement. These provide a look at your operation’s goals and the scope of your services, as well as your current income and workforce size. It also provides the reader with your philosophical outlook and company goals. Once those are established, it’s time to outline your managerial structure. This includes both the hierarchy of managerial positions and the current staffing of your operation, to allow the lender to get to know your top-level management and understand their day-to-day responsibilities.
The next four steps are the real nuts and bolts of the plan. First, your products and services section provides the detailed look at the exact scope of your moneymaking activity as a company, including any planned-for products and services that you will be expanding into with financing. After that, you’ll also need to write out a marketing plan that demonstrates your ability to connect to customers. Be detailed about the strategy you use and the numbers of potential customers you’re hoping to reach with your resources.
The last two major sections before the appendix and its assortment of visual aids and additional definitions are the financial analysis and financial projections. These areas draw from your existing business and detail your income moving forward, providing the financing company with insight into your ability to repay as you continue operations after receiving the loan. Once you’ve written each of these sections, your business plan is ready for editing and then submission as part of your loan application package.