How Do You Create a Business Plan for a Small Business Loan?
If you want to get a small business loan, banks will need you to offer a business plan, among other documents. Here is how to create one.
1. Table of Contents and Cover Page
The cover page of your business plan requires having the name, logo, and contact details of your business. A table of contents shows how organized you are, which is a critical characteristic of any entrepreneur.
2. Executive Summary
The initial page of the business plan needs to have a short and appealing mission statement. The mission statement should explain the core of your business and imply that your business will be successful. As this is the first page of the business plan, you need to get the bank interested. If you are unsure about how to create an attractive mission statement, create the entire business plan first. Then describe the services or products offered by your company as well as the organization structure. Lastly, create a short summary of your future plans in the event you get the funding. Be sure not to be too detailed.
3. Company Description
This section needs to have the registered name of the business, the address of every physical location, and the names of the directors. Then you can include the company history and how it suits the business model and the services or products offered.
4. Market Analysis
In this section, you will describe the industry you operate in, how your company will lure and satisfy the target audience, and how the company will compete with companies that have the same offering. Decent space should be used to describe the biggest and closest competitors. You need to describe how these firms are, what they excel at, and what you will do better than them.
5. Business Goals
Here, you will outline the short-term and long-term goals of the business as well as the plan of achieving them. You will also get to explain why a small business loan is more suitable for your business than other financing methods, and how the funds will aid you in achieving the stated goals. The majority of lenders will want you to use data to support your claims. Hence, you require utilizing all the data you can get in establishing a direct relationship between your projections and the funding program.
6. Management and Company Structure
This is the outline of the roles and responsibilities of every employee, mainly with regards to supervisors and managers. You also need to break down the legal structure of the business, the role of the owners, and the percentage of ownership held by each owner. Make sure to describe the relevant experience of every employee, shareholder, and director.
7. Services or Products
In this section, you require detailing the services or products offered by the business. You need to describe what the service or product does, how much it costs, and the people who usually buy it. It is also important to explain how you plan to handle increment in orders. Additionally, include more details about how the product is different from those of the competitors. Discuss how the product has better quality and why you are better at meeting the needs of your clients or serving a wider market with more buying power. You also need to explain any pending or current copyrights, patents, or copyrights linked to your service or product.
8. Marketing and Sales Plan
The main purpose here is to explain the business strategies for convincing the target customers to buy the service or product and creating customer loyalty so that these clients can buy more in the future. Use this part to focus on your most unique business elements and discuss how these elements offer the business a competitive edge.
9. Funding Request & Financial Projections
In this section, you will detail the current and future prospective financial requirements for the next three to five years or the period of the loan. You also need to include the current and previous cash flow, balance sheet, and income statement. Explain how the company will generate sufficient returns to clear the loan and grow.
Once you develop your business plan, you will not only have a chance to get a loan, but you will also understand your business better.