Steps to Writing a Three-Year Business Plan

David Sarokin reports:

"Although some small businesses manage to grow successfully without a formal business plan, creating a business plan for the short term serves two valuable purposes. The first is internal: A three-year or five-year business plan helps you focus on the steps you need to take [to] get your business up, running and growing. Second, the plan communicates to outsiders the nature and seriousness of your undertaking. This is especially important for fundraising purposes. A lender is unlikely to extend credit to a new business without reviewing a plan for the first few years of operation. Writing your three-year business plan is relatively straightforward and revolves around several major themes...Include a compelling description of what it is, exactly, you plan to do. This is more than a simple statement of goods or services, like, 'I want to sell office supplies' or[,] 'My company will make bicycles.' Lay out the features of your business that will help it to stand out in a crowded market and draw in customers who usually have plenty of other options to choose from. Make clear, to yourself as well as to others, what the competitive advantage of your business is (or will be). Include timing in your description. Your first[-]year startup operations will look different from a more mature venture during your third year. Lay out the key steps to your transition over time...Include your product line in the business description. But if your product is unique – a new invention, say, for which you hold the patent, or the world's best cupcakes – then create a separate section to highlight your product line...Who will be your customer base?...Be as specific as you can. If you plan to sell a product to schools, for example, describe the number and types of schools in your area and provide information on the amount of money they spend on external supplies and services...Getting the word out is an important part of any business strategy. Perhaps you plan on hiring an expanding team of salespeople. Advertising, social media marketing, local print and radio – there are almost endless variations of how marketing is carried out. Again, lay out your time sequence. First-year marketing of a brand new business will look different from third-year marketing for a more mature operation...A fact of life for most new businesses is that you have to spend money before you begin to make money. Your plan should carefully and realistically account for the anticipated expenses to start up and then operate your business, as well as the income you expect as sales begin and then grow over time. Your financial projections will form the basis of any requests you make to funders for loans or investments in your operations...Explain how your business will be organized and who the principle players are. This is an opportunity to really polish the resumes for yourself and your key managers: Describe what expertise they bring to the business, years of experience and so on. Don't be shy – you have to sell yourself just as ambitiously as you plan to sell your products...Your business plan can get lengthy, but try to keep it concise and add an Executive Summary for those who prefer a quick read."