Dream big and plan smart because it’s time you start charting the course to your success the right way, courtesy of business plans.
Remember, investing in your business is the same as investing in yourself. So, for your business to reach new heights and your dreams to turn into reality, you need the right investment and the right people to help you get there. And so, it makes you wonder: how to make a business plan for a loan that’s guaranteed to be successful?
Whether you need funding to start, expand, or even acquire a business, the first thing you need to master is how to write a business plan for a loan the right way. You need to both impress and satisfy prospective lenders to grant you the loan that often has the potential to change your life.
So, why let something so crucial in determining the trajectory to your success be sub-par or have any room for error? Yes, it’s true that lenders look at the main things, such as your credit history, credit score, and assets, but without a business plan, the request for a loan often won’t be accepted.
Before we dive right into the details, if you’re still wondering why you need to write a business plan for a bank loan, the short answer is that it’s essentially for banks to assess your idea’s viability and sustainability. They also assess all aspects and strategies, and look into areas such as your financial plan to gauge whether the funding will be used well.
So, let’s catch you up to speed with all things business plan and set you on your way to success.
Business Plans 101 – How to Write a Business Plan For A Loan?
So, when you sit down to write your business plan, keep in mind that it should be clear and comprehensible to the bank’s loan officers. A well-written business plan can do wonders for your business by unlocking new opportunities and maximizing returns.
So, before you rack your brain for what all goes in a business plan, we’ve got the whole list of things to include coming right up. Let’s start crafting success, one plan at a time, shall we?
What is a Successful Business Plan made of?
So, now that we’re answering your question of how to make a business plan for a loan, here’s what you should know. The key to writing a successful business plan is to make sure it outlines your entire business clearly and provides a very effective explanation about how it drives you towards making money and brings in success. This is also especially crucial if your business is a new small business because now you have all the more to prove
Although, not every business plan is exactly the same. In fact, business plans tend to vary company by company. So, it’s important you know how to formulate the information according to your company’s plan.
Rest assured, because we’ve got the list of the most important features of a business plan all lined up.
1. Executive Summary
First and foremost, we’ve got the executive summary. Your executive summary will be a concise and to-the-point summary of your business plan. The executive summary is usually found on the first page of your document and aims to provide the readers with an overview of your business’s goals as a whole. This is why it’s important to capture their interest right here from the get-go, too.
But then again, how you formulate your executive summary also depends on the age of your business too. This will change the nature of the content you’ll be incorporating, hence altering the way you capture your readers’ attention.
- Startups: if we talk about startup owners, they typically make topics such as business opportunity, target market, and strategy for business building the center of discussion in their executive summary. The executive summary then also goes on to mention their relevant market competition. It is also crucial for them to include factors to build lenders’ confidence in their business, as that is absolutely vital for their business plan to be successful.
- Well-established Businesses: companies that have been around for quite some time or at the least for a few years usually center their executive summaries around their past achievements and future growth plans and prospects. This is why their section usually begins with their company’s mission statement and goals and continues on to provide more in-depth details about the business and its place in the industry and market.
2. Industry Analysis
The industry analysis section in a business plan is the part that defines the industry in which your business is operating as well as the current ongoing market trends, as well potential risks, and opportunities. This section is also crucial for your business plan to be successful and, so, must be formulated with great attention to detail.
The industry analysis section also makes it clear to the reader and lenders, in this case, how the respective industry functions and also what your company’s place in the market is. You should also emphasize on the value your business adds to the industry and what sets it apart.
A good pattern to follow is to define the industry first, as well as the products or services it encompasses. Don’t forget to add information about the general consumers’ demands, too, and how the industry caters to them. Then, highlight the industry’s renowned players and influences, followed by any applicable government regulations such as consumer trends and budget.
3. Market Analysis
Your business plan’s marketing analysis section focuses on the market niche that you’ve described your business operates in the previous section. The main purpose of this section is to provide details about the part of the market in your business that wants to further expand and grow in.
You can also use this section to provide your readers with an explanation of how your segment is different from the other ones in the market as well as the industry.
It’s also important to add a description of your business’ size, such as through market share, along with the size of your niche in the market and its place in the overall industry. This entails details such as how your business targets consumers and operates.
4. Competitor Analysis
The competitor analysis section is the part where you explain what your competitors in the market and, more specifically, the niche are doing. Make this will inform the readers a bit more about your market’s environment.
You can do this by conducting an overall assessment of your competitors, at least the most relevant ones. In doing so, these are questions you should focus on answering:
- Where are your target customers shopping currently?
- How are your competitors differentiating themselves?
- How have your competitors priced their products ?
- Why are customers choosing these products and service providers?
By making sure you cover all these points and have the right answers, you’ll have a detailed competitor analysis ready to go.
5. Target Market Segmentation
In the target market segmentation section of your business proposal, you will be identifying your business’s target market and how it plans to cater to the existing needs. This segment is crucial as the explanations and points provided here are what build the lenders’ confidence in you and your company.
A good way to start writing this section is first by giving a brief description of how your business’s services are catering to customers’ needs. This is followed by an explanation of how customers can access them and a brief outline of your marketing strategy. This outline should also include how your marketing strategy is tailored to your target clients.
After these details, you compare your information to your competitors’ strategies and plans. Once the reader or lender, in this case, is done reading this section, he should have a very clear idea of how your business plans to compete in the market and industry.
6. Products / Services
This section is exclusively for a description of what your business is offering in terms of services and products with a direct comparison to those provided by your competitors. You can start by first providing information about your product and service and its pricing. Then, discuss what equipment and materials are required for you to provide these products to your ideal customers.
This information should then be compared to your competitors’ services and more to give the reader a good idea of where your business stands in terms of product offerings next to the competition.
7. Marketing Plans and Sales Strategies
So, now that you’ve explained to lenders exactly what your business offers and where it stands in the market, it’s time to give them an idea of how you plan to market it in a whole lot of detail. With this section, you’ll be highlighting how you plan on attracting and convincing a lot more new consumers to choose your brand and go ahead with the purchases.
The focus of the section is making flexible, realistic, and time-sensitive marketing and sales plans, which are also compelling and get the message across to your readers.
When you’re writing the sales strategy part of your business plan, you need to make sure to include the business’s overall sales and revenue goals and define how your marketing and sales departments will be collaborating to collectively achieve these goals.
It’s also a good idea to add details about the challenges that both departments could be facing and strategies to overcome them. This is crucial information for lenders because they’re able to gauge how you plan to use the money to achieve your goals and how to overcome obstacles that may arise.
8. Operations Plan
In the operations plan section of your business plan, you’ll be detailing your company’s daily operations. This would be achieved through a rather comprehensive explanation of your business’s operations, which all begin with the lists of daily tasks, processes, and activities.
You can include activities such as sourcing new inventory for the business, activities related to building an online media presence, and even researching future and current marketing trends. So, the focus remains on all things operations throughout.
Under this section, you’ll be detailing to the lender all the tasks delegated to individuals in the business, mainly specifying who’s responsible for what and how the business compensates them. This helps the lender understand the people who are running the business and sustaining its continued functioning and progress.
You also need to provide details about the background and biographical information about company owners as well as key executives. Now, a good way to present this information is through formulating and creating an organizational flowchart. You should also add some information about your company’s mission statement and values too.
10. Financial Plan
With the financial plan section, you’re conveying two key points:
- The expected expenditure for the business over the entire year
- The expected revenue generated over the year
This information is very crucial, as it usually acts as a make or break when it comes to lender’s confidence in your business and the all-important decision of willingness to extend credit. And so, to make sure you refine this section to perfection, here’s a list of what you should remember to include:
- The Cash-flow statements
- The Income Statements
- Budgets for Capital Expenditure
- Balance Sheets
You should also consider the fact that lenders usually ask well-settled businesses for up to three to four years of financial data. So, make sure to include as much financial data as possible, especially if you are a startup. This includes information such as estimated costs, projected revenue, supporting industry averages, and some data on competitors.
11. Exit Strategy
Now, as we’re wrapping up your business plan for a loan, one of the last sections is your exit strategy. Here, you will basically detail a strategy as part of your crisis management in case things start going south for your business or you’re forced to shut down.
You can include details like partnering with new investors, selling your business, or declaring bankruptcy. By including a well-written and well-thought-out exit strategy, you’re sending a message to your lenders that you are prepared to confront the risks involved in continuing your business.
Your appendix marks the end of your business plan. And so, under this section, you’ll be detailing some additional financial information and documents that are essential in helping the lender fully understand your business in its entirety.
Some businesses include financial projections and statements, while startups can include the research that they’ve conducted to formulate this business plan.
Now, let your worries disappear because you’ve officially become a business plan pro by successfully reaching the end of our complete guide on how to write a business plan for a loan. It’s time you embark on the journey of crafting success, one business plan at a time.
But if you still need some help, you can always look into hiring professional business plan writers from reputable business plan writing services. They have the experts and expertise to write you a business plan that’ll get you the loan, guaranteed.