A business/investment plan is often a necessary requirement by investors like banks because it enables potential startups qualify for any amount of loan they may require. A business plan serves proof to the creditors as they want to know how you will put their money into use and whether you’ll manage to pay it back on time. Here’s how to Write a 5-Year Business Plan.
How to Write a 5-Year Business Plan
Whether it’s a start-up company or already established business, a short-term plan (5 years) and long-term (over 10 years) business plans are vital because they portray the company’s financial projections enough to stir up confidence and excitement in the readers. They also serve a success blueprint or management tool to help you successfully run your business. Your chances of being financed by banks is high. A strategic 5-year business plan shows that your business has a sustainable future with goals and potential targets.
So, having said that, what does your 5-year plan for your business look like? Don’t say you do not have one or haven’t thought about it because that means the future of your business is definitely at high risk of failure. In order for your company to scale the heights of business, you need to adopt the habit of setting 5- year business plans.
How to set a strategic 5-year business plan
Take stock of the current state of your business
Take a look at the company’s mission and vision, financial records as well as sales data. Do a SWOT analysis to find out its strengths, weaknesses, threats and opportunities.
State how you want your business to be in 5 years
This is in terms of the net income and what strategies to put in place to achieve that, your employees, target market, distribution channels, consumer penetration, marketing campaigns etc.
Describe your products/services
In detail describe the kind of products and services that you offer, total sales in a month and your planned target in a month in the next 5 years. State how viable your products or services are and the measures you plan to put in place to tackle challenges (like low sales) should they occur.
Describe your management team
Define the current strengths of your executive team if applicable and how you intend it to look like in 5 years. Whether you want to increase the number or downsize, whether to fire it and hire a fresh one or, apply the employee motivation techniques for better results. On the other hand, if you manage your business single-handedly, make sure you describe your skills and expertise. If you prefer outsourcing, state your plan towards that and the kind of skills you’re looking for.
State your financial projections
Build financial data for your business that covers the past 5 years on a spreadsheet. Find out whether you’ve made any progress- in terms of profits and overall business growth, then make projections for the next five years. This should be a complete financial statement that will include the balance sheet and a cash flow statement showing money in and money out, not to mention your annual tax returns.
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