How to write a business plan that will wow lenders and get you the funding you need
A solid business plan is a key part of demonstrating how and why your business will be a good investment.
If you’re a new entrepreneur with creative ideas for products or services and you’re filled with passion for your business, that’s a great start. But it’s still likely you’ll need to secure funding from lenders or investors, either before you launch or when you want to expand.
Potential funders will want to know exactly what they’re investing in, and whether your business has a good chance to succeed. This is true for any type of business, from a clothing manufacturer to a construction company to a software testing service.
The best place for funders to get the information they need is your business plan. That’s why is worth spending enough time and effort on this important document. Here are some tips to create the strongest plan possible and improve the chances that funders will join you on your business journey.
Say Enough But Not Too Much
Your business plan will require many details and supporting documentation, but you should be careful not to make it too lengthy. Be detailed and thorough and give funders what they need to know but leave out superfluous information and try not to be repetitive. A longer plan isn’t necessarily a better plan and essential details can even get lost in too much information.
Start your plan with a concise overview of your business idea called an Executive Summary. This will serve you to catch the interest of your potential funders enough so they want to read the rest of the plan. Keep this summary brief, simple, and easy to understand and let your confidence shine through right from the start.
Help Readers Envision Your Company as a Reality
If you’re seeking startup funding, you won’t be able to demonstrate your idea in action yet. However, you can use your business plan to help funders “see” what your company will look like once it’s up and running. To accomplish this, include the following items:
Products or services
- Detailed descriptions of the products or services you plan to offer, including visuals when possible
- An explanation of the need your business will fill and how it will benefit customers
Location and people
- Where your business will operate, including its physical location, geographic area, and online presence
- Who you are as a leader and how your background will contribute to success
- An organizational chart including details about who will manage which areas and resumes from key team members
- The current and projected financial picture of your business, including graphs and charts
- Information about factors that could positively or negatively change these projections
Use Real Data
Your vision is important, but you must back it up with hard data. These data should come from a range of areas:
- Potential customer information based on survey and interview results
- The narrow target market you’ll focus on, including gender, age, geographic location, income, interests, and needs
- Projected market share
Sales and revenue figures
- Pricing information
- Realistic projected sales numbers
- Expected revenue based on pricing and sales forecasts
- A complete look at the current state of your finances, including existing debt
- A thorough operational budget with accurate numbers that includes sections on equipment, property, legal fees, payroll, insurance, and inventory
- Projections and forecasts out at least three to five years
Identify Clear Goals and Strategies
Funders want to know your specific goals for the future and the strategies you’ll use to accomplish them. Especially important is showing how the funds you’re requesting will play a role. Provide your business “blueprint,” covering at least the next three to five years, including:
Financial goals and strategies
- Sales and revenue targets you plan to reach
- How much funding you need to reach your goals
- How you’ll use the requested funding
- Your loan repayment plans
Marketing goals and strategies
- How you’ll stand out from the competition
- Your marketing approach, including website, mobile app, and social media
- Your goals for customer retention and loyalty programs you’ll utilize
Growth and development goals and strategies
- Goals for future expansion
- Steps you’ll take to grow and develop, such as adding new products or services, increasing sales of existing products or services, and entering new markets
While you should highlight your business’ many strengths in your plan, it’s just as important to identify challenges and discuss how you’ll overcome them. Potential funders want to see a realistic picture of what your business faces on its road to success.
Include an analysis of your likely competition, including their strengths and weaknesses, and how you compare. Specify likely barriers you expect to encounter, such as regulatory compliance, technological changes, or the ability to hire quality talent in your area. Describe your strategies for addressing each potential difficulty.
In addition to being an invaluable planning tool for you as you move forward with your new venture, a solid business plan is a key part of demonstrating how and why your business will be a good investment. Don’t go overboard with too much information, but do include hard data and clear, realistic goals and strategies to help funders see your bright future to come.
- Is SEO really worth the investment for small businesses?
- What type of cloud solution is best suited for your business?
- Top 5 ways technology can enhance the growth of your businesss
- Tips for businesses to save money on merchant accounts