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The SBA offers a free business plan template and checklist to help you create a strategic, five-year business plan for your small business.
A well-prepared business plan may help businesses seek a loan from the Small Business Administration (SBA). An SBA business plan is a strategic document that outlines your company’s goals and the activities you’ll take to achieve those goals. Using an SBA business plan template may help you save time and money while also increasing the chances of your loan application getting approved.
We’ve outlined the important elements that should be included in your SBA business plan to help you.
Why Do You Need an SBA Business Plan?
An SBA business plan is crucial because it establishes a strategic foundation for your company’s operations. Taking the time to do research and put together the different components of a business plan requires you to concentrate on parts of your company’s operations that you would otherwise ignore.
Analyzing each area of the business plan and using an SBA-approved business plan template will help you find answers to questions you didn’t realize you needed to ask. Entrepreneurs who devote time and effort to developing a business strategy are 16 percent more likely to succeed than those who do not.
Small firms seeking finance, particularly via SBA 7(a) loans, may discover that SBA lenders need them to submit a business plan along with their loan applications. Lenders want to know that you have a solid strategy for success. If properly researched and produced, your company strategy may give that confidence.
Components of the SBA Business Plan Template
An SBA business plan template is consisting of nine primary parts that define your firm and follow the same framework as most conventional business plans. To assist you, we’ve produced a printable checklist and SBA business plan template.
Executive summary, company description, market analysis, organization and management, product or service provided, marketing and sales, funding request, financial forecasts, and additional information are all important elements to include in your SBA business plan.
Executive Summary
Your business plan’s executive summary serves as an introduction. This summary should be no more than two pages long. The following features of your company should be highlighted in the executive summary:
- Introduce your company, its mission, and its product in a single phrase.
- A brief summary of the business opportunity
- Your intended audience
- How your product or service satisfies market demands
- Who you are and your company model
- Competition in the market
- Your sales and marketing approach
- Financial forecasts
- How will you put your strategy into action?
Last but not least, it should be the final element of your business plan to write, even if it acts as an introduction. This is because the summary summarizes the material presented in the remainder of your business plan and emphasizes significant aspects for those who are reading it.
Each facet of your company should be addressed in simply a few phrases. In the parts that follow the executive summary, you’ll go through them in further depth. This portion of your SBA business plan is an overview that sets the tone for the remainder of the document.
2. Business Description
The company description section of your SBA business plan is where you explain how your firm’s product or service addresses a particular consumer need, who your target market is, and any competitive advantages you have. The strengths of your firm should be highlighted in your company description.
The following are important features of your firm to include in your company description:
- What your business does
- The goods or services that your company provides
- What is the customer issue that your business solves?
- Who are your customers?
- What competitive advantages does your company have?
- Strategic alliances.
When discussing these features of your business, be precise and emphasize any advantages your company has over its rivals. This portion of your SBA business plan lays out the foundation of your company and sets the tone for the next sections.
3. Market Research
You will describe the market in which your firm competes in the market study portion of your SBA business plan. This analysis demonstrates to your readers how well you understand the current market and where your company fits within it.
In the market analysis part, you should answer the following questions:
- What are other companies in your field doing?
- What are the advantages and disadvantages of your competitors?
- What are the shortcomings of your competitors?
- Are there any current market trends or themes?
- Why are some people more successful than others?
- Can you accomplish the same thing as your competition and do it better?
- Are there any other companies with strategic benefits, such as an excellent location?
In certain businesses, such as restaurants or retail, you should also talk about the number of direct rivals in your town that provide comparable goods or services. If you have no direct competition, use this as a competitive advantage since your business will be unique in the area.
The purpose of the market study is to demonstrate to the reader that you have researched the present market for your product or service. This part discusses the feasibility of your company in the present market, the level of competition, and how you plan to position your company for industry success.
4. Management and Organization
Your business plan’s organization and management part are where you’ll explain how your company is organized. You’ll want to include information on your company’s legal structure, organizational structure, and management team.
The following are the two most essential parts of this section:
- Legal structure: Describe your company’s legal business structure. Will you form a general or limited partnership, a limited liability company (LLC), a sole proprietorship, or a C corporation (C-corp) or S corporation (S-corp)?
- Copy of your company’s organizational chart: Include a copy of your company’s organizational structure. The organizational chart for your company depicts the management and organizational structure of your company, including job titles and management hierarchy.
You should also explain how your company’s management team will contribute to its success. Give an overview of your management team’s accomplishments and experience. This information can assist you in persuading lenders that you are ready to manage a profitable firm.
5. Product or Service
This area will give information on the product or service that your company provides. In this area of your business plan, you should describe the following components of your company:
- A description of the goods or service you’re selling, as well as their cost.
- What is the customer’s benefit?
- The product life cycle.
- Plans for dealing with intellectual property, copyright, and patent filings are being developed.
- Any research and development initiatives.
Additional details on how you intend to safeguard intellectual property can reassure funders that you have a strategy in place to preserve these intangible assets for your company. Furthermore, research and development activities demonstrate that your product or service is always changing and improving.
6. Sales and marketing
Your company plan’s marketing and sales section will explain how you aim to acquire customers and create income. This section should contain the following items:
- Information about how you plan to sell to your target audience
- A summary of the sales process
- Budget information for marketing and sales
- Your marketing and sales objectives
- A look at your pricing strategy as it relates to sales and marketing.
You should not only describe your sales and marketing objectives, but also the steps you will take to achieve them. You should also think about how you’ll measure your sales and marketing goals’ success.
7. Request for Funding
One of the main reasons business owners create an SBA business plan is to demonstrate to lenders that their company is feasible. Details of the following should be included in the financing request part of your SBA business plan:
- The amount of money you’ll need
- What will be done with the money?
- The kind of cash you’re looking for
- Any financial projections for your company in the future?
You should use this part to discuss your future financial goals, including how you will repay loans, in addition to your present financial demands. Both the payback of current debt and the repayment of the funds for which you are requesting should be addressed.
8. Financial projections
The financial forecasts portion of your business plan is designed to persuade prospective investors that your company is financially sound and will continue to operate. This section of your business strategy should contain the following information:
- Income statements over the previous three to five years
- Balance sheets over the previous three to five years
- Statements of cash flow over the last three to five years
- Any collateral that may be available
- Income statements, balance sheets, cash flow statements, and any anticipated capital expenditures for the following three years.
Explain Your Predictions: Explain how you came up with the facts you’re providing and how these projections relate to your funding requests in your projections. Growth estimates should be reasonable, and if they are higher than usual market growth rates, they should be explained.
9. Additional Information
You may include any extra documents relevant to your company or that meet particular lender needs in the appendix of your SBA business plan. This part may include papers such as your credit history, owner resumes, product photographs, or letters of recommendation. Any legal papers, contracts, licenses, or permissions relevant to your company should be included in the appendix.
A lender may sometimes want extra information that isn’t generally included in a business plan or that you didn’t include while creating your plan. Any material not fitting into one of the pre-defined sections may be added to the appendix as required.
Resources to Aid in the Development of an SBA Business Plan
There are a number of tools available to help you prepare an SBA business plan. These sites provide free or low-cost assistance in the drafting, screening, and maybe linking with local financiers of business plans.
- The Small Business Administration’s website has an entire section dedicated to business planning. The Small Business Administration (SBA) offers an online business plan tool that guides you through the process step by step.
- SCORE is a non-profit organization that provides mentorship, online resources, webinars, and local training events. You have the option of meeting with a local mentor or enrolling in an online business plan development course.
- Small Company Development Centers (SBDC): Another organization that provides small business owners with counseling and training activities is the SBDC. SBDCs are located around the nation and are linked with schools or economic development agencies.
- Business plan software, such as that provided by LivePlan, has the advantage of guiding you through the many steps of the process and providing a user-friendly interface for creating your business plan.
Conclusion
When applying for an SBA loan, using an SBA business plan template will assist ensure that you have covered all of the needed details in your business plan. Business plans include all of the essential components of your company and act as a road map for how you’ll run it. Investing time to study and deliberately draft your business plan may improve your chances of receiving finance.
