How to write a business plan (with a section-by-section template)

Should I write a traditional or a lean business plan?

Write a traditional plan if you'll ask a bank or investor for money. A one-page lean plan is fine for a simple business or a plan you'll keep changing.

The SBA also says you don't have to follow its outline exactly. Use the sections that make sense for your business ^[1]. If a loan is part of the plan, though, a lender will want what the lean version leaves out, so start with the traditional template below.

What sections go in a traditional business plan?

The SBA lists eight: executive summary, company description, market analysis, management, products, marketing, funding request and projections.

Copy the outline below into a document and fill in each part in order. Steps 1 to 6, 8 and 9 follow the SBA's list ^[1]. NerdWallet's loan plan adds an operational plan and an appendix ^[4], and both are worth including if you're applying for a loan.

1. Executive summary (write it last). Say what the company is and why it will succeed. Include your mission statement, your product or service, and basic facts about the leadership team, employees and location ^[1]. If you're asking for money, add financial information and high-level growth plans ^[1]. NerdWallet suggests keeping it under two pages ^[4].
2. Company description. Explain the problems the business solves and name the customers, organizations or businesses it will serve. List your competitive advantages, such as experts on the team or a strong location ^[1].
3. Market analysis. Describe your industry outlook and target market. Show what successful competitors do, why it works and whether you can do it better ^[1].
4. Organization and management. State the legal structure: sole proprietorship, partnership, LLC, or C or S corporation. Add an organizational chart showing who is in charge of what, and consider attaching resumes of key team members ^[1].
5. Service or product line. Describe what you sell, how it benefits customers and what its lifecycle looks like. Note any copyright or patent plans and any research and development work ^[1].
6. Marketing and sales. Explain how you'll attract and keep customers and how a sale actually happens. The SBA says you'll come back to this section when you build your projections, so be thorough ^[1].
7. Operational plan. Cover what it takes to run the business day to day: location, facilities, equipment, vehicles, inventory and supplies ^[4].
8. Funding request. State how much you need over the next five years, whether you want debt or equity, the terms you'd like and how long the request covers. Then say exactly what the money pays for, and describe your longer-range plans, such as paying off debt or selling the business ^[1].
9. Financial projections. Give a five-year outlook with forecasted income statements, balance sheets, cash flow statements and capital expenditure budgets, quarterly or monthly for year one. An established business adds three to five years of past statements ^[1].
10. Appendix. Attach the supporting papers: credit histories, resumes, reference letters, product pictures, licenses, permits and contracts ^[4].

What goes in a one-page lean business plan?

The SBA's lean format has nine parts, from key partnerships to revenue streams. Each one gets a few lines rather than a full section.

1. Key partnerships: suppliers, manufacturers, subcontractors and other partners you'll rely on ^[1].
2. Key activities: how the business gains a competitive advantage, such as selling direct to consumers ^[1].
3. Key resources: staff, capital, intellectual property and any other assets you'll use to create value ^[1].
4. Value proposition: one clear statement of what makes your company different ^[1].
5. Customer relationships: how customers deal with you, automated or personal, in person or online ^[1].
6. Customer segments: the specific market you serve. The SBA's point is that the business won't be for everybody ^[1].
7. Channels: the main ways you'll reach customers ^[1].
8. Cost structure: whether you're cutting costs or maximizing value, and your biggest costs ^[1].
9. Revenue streams: every way the company makes money, such as direct sales, memberships or advertising ^[1].

What do lenders look for in a business plan?

They want to see the business can repay. The SBA says to bring a business plan, an expense sheet and five years of projections when you ask for a loan.

The SBA's funding guide says that to improve your chances of getting a small business loan, you should have a business plan, an expense sheet and financial projections for the next five years ^[2]. Together they tell you how much to ask for, and they help the bank see that lending to you is a smart choice ^[2].

For SBA 7(a) loans, the business must be creditworthy and show a reasonable ability to repay, and most 7(a) term loans are paid back monthly from the business's cash flow ^[3]. You apply through a lender, not the SBA, and what goes in the application depends on the loan size and the lender's process ^[3]. Your lender tells you which documents it needs. Our SBA loans guide compares the programs.

NerdWallet says lenders judge applications on the five Cs of credit: character, capacity, capital, conditions and collateral ^[4]. A plan can't answer all of those, but each section can speak to one of them. The table further down shows which section covers which C. For the published minimums lenders use, see business loan requirements.

How do I write the funding request and use of funds?

Give one amount, split it into line items that add up to that amount, and name the type of financing and the repayment term you want.

The SBA wants a detailed account of how you'll use the money: equipment or materials, salaries, or bills you need covered until revenue picks up ^[1]. NerdWallet's checklist adds the type of financing (a term loan or a line of credit, for example), how long you need to repay it and how you plan to pay it back ^[4]. A table works well for this. Here's a made-up example for a landscaping company asking for $60,000.

Each line maps to a use the SBA lists for 7(a) loans: machinery and equipment, supplies, and working capital ^[3]. Check that your use of funds is one the loan you're applying for allows. Then make the projections in step 9 show the new monthly payment, so the request and the numbers match. The SBA says to match your projections to your funding request ^[1].

What financial projections does a loan business plan need?

Five years of forecast income statements, balance sheets and cash flow, with year one by quarter or month. Established businesses add three to five years of history.

• Forecast income statements, balance sheets, cash flow statements and capital expenditure budgets for five years ^[1].
• Quarterly or even monthly figures for the first year ^[1].
• Income statements, balance sheets and cash flow statements for the last three to five years, if the business is already running ^[1].
• Any collateral you could pledge against the loan ^[1].
• A break-even point: the SBA calls it an important calculation in a business plan ^[5].
• A plain explanation of every assumption behind the numbers ^[1][4].

Startups without much history can use estimated costs and revenue, NerdWallet says, and charts help ^[4]. Put the new loan's payment into the cash flow forecast. The calculator below works it out from the amount, rate and term, and our DSCR calculator shows whether your income covers it.

What mistakes make a business plan weaker for a lender?

Projections that don't match the request, assumptions you never explain, and sending a one-page lean plan when the lender expects the full version.

• The funding request and the projections tell different stories. The SBA says to match them ^[1].
• The numbers come with no explanation. Both the SBA and NerdWallet say to explain the assumptions ^[1][4].
• A lean plan goes to a lender that wanted more. The SBA notes some lenders and investors will ask for more information ^[1].
• The executive summary was written first. NerdWallet says it's easier to write well once the rest is done ^[4].
• The legal structure is missing or unsettled. The SBA puts it in the management section ^[1]. If you haven't chosen one, read sole proprietor vs LLC.

Where can I get free help writing a business plan?

The SBA has sample plans to download. SCORE mentors and Small Business Development Centers, both SBA resource partners, help at no cost.

The SBA's business plan page has fictional sample plans to download: traditional plans for a consulting firm and a toy company, and a lean plan for the same toy company ^[1]. Read one before you start. It's the quickest way to see how much detail each section needs.

For a second pair of eyes, try the SBA's resource partners. SCORE is a network of about 10,000 volunteer experts offering no-cost help in every state and territory, and you can request a mentor at score.org/find-mentor ^[6]. NerdWallet says SCORE also offers a free step-by-step template for startups, and mentors who can review your plan online or in person ^[4]. Small Business Development Centers have nearly 1,000 locations ^[6], and NerdWallet says they help with business planning and finding capital ^[4].