How to Write a Business Plan in Five Easy Steps

Have you wondered how you can prepare a business plan?

A business plan can be used to attract business partners or secure loans and investment capital. A comprehensive plan is especially important if you have a new business because it shows that you have worked out any potential problems and developed a strategic plan of operation. Established companies can also benefit from a business plan. Putting intentions and goals down on paper can be helpful when it comes time to track progress, establish alternatives, and show clients or employees where the business is going.

Developing a business plan takes both time and careful thought, but it is not nearly as difficult as most people think it is. In only five easy steps, you can learn how to write a business plan that makes money. You could have a business plan that is respectable enough to present to potential business partners, investors, clients, and employees.

Step One: Create a Cover Sheet and Statement of Purpose

The cover sheet, or title page as it is also known, should be simple and to the point. It should include the name of your business as well as the words “Business Plan”. The statement of purpose should be written on one sheet and immediately follow the cover sheet. Your statement of purpose should also be kept short–about half a page will do. This statement should sound professional and include a short description of your business (what you do, sell, or market), your current business position (age of your company, phase of operation, etc.), a short blurb about principal owners and key employees, and major achievements (patents, prototypes, awards, crucial contracts, focus group results, etc.). If you are applying for a loan or trying to secure capital or a business partner, you should also include a short line describing what you need. For example. The XYZ Company is seeking a short-term loan for $100,000 to purchase inventory, secure premises, and provide adequate working capital.

Step Two: Describe Your Business.

The first actual “section” of your business plan should include a more comprehensive description of your business. You can offer a brief account of how your business got started and present an outline of your goals and business strategy. You can also use this section to explain what sort of need your business fills and describe the way it differs from similar businesses. Other information that should be included: biographies of the management team and key personnel, market potential for your product or service, advertising and marketing strategies, and basic operating procedures.

Step Three: Prepare Financial Information.

How much money will you need to start your business?

This section is one of the most tedious to prepare, but it is also one of the most important aspects of a good business plan. It should begin with a summary of your financial standing, a three to five year financial forecast, and an estimate of your financial needs. Do not hesitate to go into detail here. This section will help others determine whether or not you have a viable and profitable business idea. You should also provide an income statement that includes revenues, expenses, and profits for a specific time period (usually six months to one year for a new business, broken down by month), a cash flow projection statement that estimates how much money will be coming and going from your business on a monthly basis, and a balance sheet that summarizes business assets, liabilities, and equity.

Step Four: Collect and Organize Supporting Documents.

Supporting documents are a must if you are trying to secure a loan or investment capital. Basic documents include tax returns, personal financial statements, business licenses, franchise agreements (if applicable), and necessary purchase agreements. You may also need to submit a loan application, letters of intent from suppliers, and other legal documents supporting statements you have made in the business plan.

Step Five: Proofread and Write the Table of Contents for Your Plan.

The final step involves proofreading your work–you don’t want your business plan to be riddled with typos or grammar errors–and creating a table of contents. These tasks can be performed simultaneously. The table of contents should be broken down by section (statement of purpose, business description, financial data, and supporting documents) and include identifying page numbers for important information in each section.

That’s how you can prepare a business plan in five easy steps. If you feel overwhelmed, you can start a online business right now.

Guest post from education writer Karen Schweitzer. 

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