With the rise of lean startups and agile business practices in recent years, it’s no surprise that many business owners believe that a business plan has become irrelevant in today’s market.
Nothing could be further from the truth, however. As a bank that offers Waco business loans, we know better than most just how critical effective business plans can be — whether you need to kickstart a new venture or expand an existing business. While we know documents can never tell the whole story, business plans are a great starting point from which we can get to know you and your idea.
Today we’re taking a closer look at business plans: what is their purpose, what they should contain, and tips for pulling it all together.
What is the Purpose of a Business Plan?
Beyond providing clarity for yourself and your leadership team on the business’ trajectory, an effective business plan can serve as a strategic step-by-step road map to success when seeking funding from private investors or a Waco bank.
A carefully written business plan presents an outline of your vision for investors. They can use it to assess the financial merit of investing in your business and, in fact, it’s often a prerequisite to receiving funding.
Typically, a business plan will break down a future growth period of five years for a company. The information provided in the business plan should demonstrate to the prospective lender that the business is (or can be) profitable and viable with the right investment.
An effective business plan should logically and rationally communicate your vision to those who will have a vested financial interest in it. As the company’s leader, it shows that you have a clearly defined:
. . . and that you’re prepared to execute them in a timely manner.
In short, a well-organized business plan dramatically improves your chances of receiving funding from a Waco bank or credit union. While there are a number of different types of business plans that vary in length and detail depending on their intent, there are a few key elements that every good business plan should include.
A business plan is a strategic step-by-step road map to success.
Make a Great First Impression with a Concise Executive Summary
Every business plan should have an executive summary.
The executive summary should be:
Steer clear of generic or templated executive summaries. This part of your business plan should give the reader a high-level overview of your company and the “need-to-know” highlights. As such, it should also be representative of your brand’s unique voice.An executive summary provides a comprehensive overview of the entire company and its structure. Remove the heavy-lifting of skimming the whole plan; make it easy for Waco banks and financial institutions to quickly and easily assess your application for funding.Right off the bat, the Waco bank or lender will want to know:
- What your company’s mission statement is
- How the corporate structure is defined
- Who the key partners and personnel are
- Where the company is located
- What the company logo is (if there is one)
- Any other pertinent information that provides background knowledge of the business
Start your business plan the right way by offering an engaging narrative of who you are as a company.
Show That You've Done Your Homework with Thorough Niche & Market Analysis
- What is the value of the product or service being offered?
- How profitable are these products or services in the current financial climate and the existing market?
Investors or lenders always want to know why your product or service is better than the competition. Therefore, comprehensive market research and analysis are vital building blocks of a successful business plan.
Ready to Write? Find More Resources from the SBA
Writing a business plan can be a daunting task. Fortunately, there are resources available to help you along the way. In addition to implementing the tips above in writing your business plan, the Small Business Association (SBA) provides a wealth of resources for creating your business plan no matter what stage of business you’re currently in.
Demonstrate an Eye for the Future by Including Vital Financials, Goals, and Projections.
Not surprisingly, some of the most important elements of your business plan when seeking funding is your financials, goals, and projections.
Much of your business plan is conceptual. Until you get to the hard numbers, that is. In this all-important section, you’ll want to be sure to have a handle on things like financial projections, profit and loss statements, balance sheets, and expected future growth.
Think of goals as precise and attainable. This shows the investors or bankers that your plan is well thought out, allows for challenges and opportunities, and is flexible to suit growing and changing industry standards and customer needs.
Financials should include things like:
- Income statements
- Cash flow statements
- Capital expenditure budgets
- Balance sheets
- Profit and loss (P&L) statements
- Any other pertinent information
Using visuals such as graphs, charts, images, and illustrations will make the business plan flow smoothly and clearly demonstrate the effectiveness of the plan.
Of course, you’ll also want to clearly outline how much funding you believe is required and how that funding will be allocated in the budget. This is especially important when it comes to the creation, development, execution, or expansion of the business. Additionally, consider including benchmarks to periodically assess the company’s progress over time as it grows.
Some of the most important elements of your business plan when seeking funding is your financials, goals, and projections.
Show Off Your Plan With a Solid Strategy
Your business plan must include well-thought-out strategic ways to fulfill the purpose and achieve the goals of the company.
Prioritize three strategic plans that are vital to the success of the company. Describe in detail what these strategies are and how these strategies will be implemented — having clearly defined goals for growth demonstrates that you’ve put thought into the future trajectory (and profitability) of the business.
Back it all up with supporting data
TFNB is the Waco Bank for Small Business
An effective business plan is a necessary tool for growing your business, but it’s not the only thing our business lending team uses to get to know you.
We care about the person behind the plan, so we meet with you to learn how best we can champion your idea.
If you’ve written a business plan and are ready to put it into action, visit one of our locations in Waco or McGregor to meet with a local TFNB banker. As a champion for Central Texas entrepreneurs, we would love to help guide you through this exciting process.