Business Plan Musts - For Loan Approval

Great, you’ve got a good idea for a new company, did your research homework and know it is sure to succeed. Now you need to apply for a business loan with a well-written business plan. Here’s how to write a business plan help, using low-cost or free business plan software options, that will impress investors and loan officers – to say yes to your business loan application.

Guide: Learn how to start a business

Business Plans MUSTS

Basic Business Plan Layout

Executive Summary

For your start up business plans start with a concise, clear overview of your business model that answers the question – What is this business? Whom are theirs, customers and product or service? A few well-crafted sentences will suffice. This introduction begins the process of “selling” your startup to possible Kabbage loans.

Description of Startup

Begin with an overview of your industry and the marketplace trends. Then describe how your new business fits into the current economic landscape. Tell how you plan to fulfill previously unfulfilled needs for paying customers. Free templates for business plans include these fields for completion for a simple business plan.

Marketing Strategy

This part of your business plan is your tactical map of sales strategies to reach those paying customers. Illustrate your target customer with details of their demographic, geographic and psychographic characteristics. State your competition’s sales revenue, based on your market research, and how this relates to your financial projections in the upcoming section. Be sure to review how businesses succeed for important points to include in your document

Competition Analysis

Who are your competitors? What are their strengths and weaknesses? What are their marketing strategies? Here is where you will show your new firms point of difference as compared to this existing businesses.

Operations Plans

How will you achieve the goals you set forth in your financial projections and marketing strategy?  This includes your human resources chart, roles, and responsibilities of key executives.  Individual departments and their reporting structure will be included. Illustrate the flow from the customer, through the company, to final delivery with flow charts and graphs. This level of clarity really helps investors understand your business model.

Financial Projections & Reports

A vital section of your business plan is the financials. Here is where your ideas and concepts become real numbers.

Sales Forecasts

Begin with your sales projections forecasting your sales revenue on a monthly basis for the first year, second and fifth year. Bank and investors want to see your sales growth over time to be reasonable and achievable. Supply documentation of how you developed these sales forecasts. An example would be that you plan to obtain a certain percentage share of the market, based on your competitor’s service gap, multiplied by the average sales transactions equals your financial revenue projections.

Cost & Expenses Budgets

Next, you need to research and document all the cost of goods and overhead required to deliver your product or service to your customer.  Separate out fixed costs, such as rent and payrolls, from variable items such as advertising and marketing. Additionanly7 you will need to illustrate your cost of goods COG for each item sold.

Additional Report to include:

Cash Flow Statement

This is the report showing the movement of cash through your new business.  For business owners, this is the report they must read regularly to be sure that they have enough working capital on hand to make payroll, buy supplies and pay rent. To develop this statement:

Steps to create a cash flow statement:

Inflow

Sales Forecast Annual

Divide your annual sales forecast into individual months. Remember to estimate sales based on seasonality to accurately predict your cash needs.

Invoice Receivables

Determine a realistic, not hopeful, time period of average invoice aging 30,60 and 90 days+. Experts recommend that you over estimate the time to receive invoices for better cash management.

Other Income

Add any other incomes in the particular month you estimate to receive payments such as rental fees paid to your firm, loan proceeds, and grants.

OutFlow

Expenses

These include all items that comprise your cost of goods, including supplies and materials, and fixed expenses such as rent, utilities, and payroll. Don’t forget costs for variable items such as advertising and marketing. Also, include loan payments and owners salaries.

Get Free Business Plan Template for Startup Business

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Small Business Blog by Marsha Kelly, Entrepreneur & Small Business Reporter

Hi - I am a serial entrepreneur, after doing "time" in corporate America, who has learned about what products and services work well for entrepreneurs who want to start a business. You can learn from my experience and my associates as we shop from the internet for tools, supplies and information to build our businesses and improve the lives of our family and ourselves. Read more ...