Editorial · December 20, 2016
Business Plan Template: A Simple Outline From the SBA
A business plan template gives you a fixed list of sections to fill in, so you never stare at a blank page. The U.S. Small Business Administration (SBA) publishes a simple one. It has nine parts, and each part answers a question a reader will ask. Use it as a map. Then write each part in your own words.
What a business plan is for
The SBA calls a business plan an essential roadmap for business success. It describes it as a living document that generally looks ahead three to five years. It lays out the route a company plans to take to grow its revenue.
That means the plan is not a one-time form. You write it, then you update it as you learn. If you want a loan or a partner, the plan is also the first thing they will ask to see. A clear plan shows that you have thought the work through.
The nine parts of the outline
The SBA guidance lists these sections, in this order:
- Executive summary
- Company description
- Market analysis
- Organization and management
- Service or product line
- Marketing and sales
- Funding request
- Financial projections
- Appendix
The appendix is optional. The SBA says it is a useful place for resumes, permits and leases. Every other part is worth writing, even if some parts are short.
One tip: write the executive summary last. The SBA says it should highlight the strengths of the whole plan, so you need the whole plan finished first. It still goes at the front of the document.
What the first parts should say
The executive summary is a short snapshot. For an established business, the SBA suggests a mission statement, basic company facts, signs of growth, a brief description of what you sell, and your future plans. Keep it to about one page.
The company description says what you do, what makes you different, and which markets you serve. The market analysis shows that you know your industry and your customers. The SBA warns that many owners try to reach too many target markets. Pick a group you can actually serve, and describe its needs, its size and where it is located.
The market analysis should also show how much of the market you expect to win, and explain the logic behind that number. It should state your pricing and your target gross margin. Lenders read these numbers closely.
What a lender wants to see
If you are asking for money, two parts matter most: the funding request and the financial projections.
The funding request should state how much you need now and how much you may need over the next five years. It should say how you will use the money. Is it for equipment, working capital, paying off debt, or buying another business? Also give the time period, the type of funding, such as equity or debt, and the terms you want. The SBA notes that these details matter to a creditor because they affect your ability to repay.
The financial projections back up the request. Established firms usually give income statements, balance sheets and cash flow statements for the last three to five years. Every business, new or old, gives forecasts. Most creditors want to see what you expect over the next five years. Give monthly or quarterly figures for year one. Quarterly or yearly figures are fine for years two through five.
Make sure your projections match your funding request. The SBA says creditors look for gaps between the two. It is far better to catch your own mistakes first. State your assumptions too, so the reader is not left guessing.
A second template from SCORE
SCORE, the nonprofit network of volunteer business mentors, offers a startup business plan template as well. Its template is a generic model for any startup. SCORE says it contains more than 150 questions split into sections, and you can work through them in any order. The exception is the executive summary, which you should do last.
SCORE also says the real value of a plan is in the process. Researching and thinking about your business in a careful way helps you avoid costly mistakes later. It expects a good plan to take several weeks, and most of that time goes to research and rethinking your ideas. SCORE suggests you keep notes on your sources and on the assumptions behind your numbers.
How to use the template well
Start with the sections you know best. Answer in plain, short sentences. Skip questions that do not fit your business, but do not skip a whole section.
Then check the plan the way a lender would. Does the market section show real research? Do the numbers in the projections match the amount you ask for? Is each assumption written down? Finally, ask someone outside the business to read it. SCORE also says to contact a local SCORE mentor to review and refine a draft.
A short, honest plan that you update is worth more than a long one that sits in a drawer.