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Here is a free business plan sample for a mortgage brokerage firm.

Embarking on a journey as a mortgage broker can be both exciting and daunting, especially if you're unsure about the first steps to take.

In the content that follows, we will present you with a comprehensive business plan tailored specifically for mortgage brokers.

As an aspiring entrepreneur in the financial sector, you're likely aware that a meticulously formulated business plan is crucial for laying the foundation of a successful practice. It serves as a roadmap, guiding you through the intricacies of the industry while setting clear objectives and strategies.

To streamline your planning process and get started on the right foot, feel free to utilize our mortgage broker business plan template. Our team of professionals is also on standby to provide a free review and fine-tuning of your plan.

How to draft a great business plan for your mortgage brokerage firm?

A good business plan for a mortgage broker must be tailored to the nuances of the mortgage industry.

To start, it's crucial to provide a comprehensive overview of the mortgage market. This includes up-to-date statistics and an analysis of emerging trends in the industry, similar to what we've included in our mortgage broker business plan template .

Your business plan should articulate your vision clearly. Define your target market (such as first-time homebuyers, property investors, or those refinancing) and your unique value proposition (expertise in specific loan types, personalized service, etc.).

Market analysis is a key component. You need to understand the competitive landscape, regulatory environment, and the needs and behaviors of potential clients.

For a mortgage broker, it's important to outline the range of mortgage products and services you plan to offer. Describe how these will cater to the diverse needs of your clientele, such as fixed-rate mortgages, adjustable-rate mortgages, government-backed loans, and refinancing options.

The operational plan should detail your brokerage's structure, including your office location, the technology you will use for loan processing, your network of lenders, and your approach to client consultations and application processing.

Compliance with financial regulations and maintaining a high standard of ethical practices should be emphasized in your plan.

Discuss your marketing and client acquisition strategies. How will you build trust and establish a reputation in the market? Consider your approach to networking, partnerships, online marketing, and customer service excellence.

Incorporating digital strategies, such as a professional website, online application tools, and a social media presence, is vital in the modern marketplace.

The financial section is critical. It should include your startup costs, revenue projections, operating expenses, and the point at which you expect to become profitable.

As a mortgage broker, understanding your commission structures and potential volume bonuses is essential for accurate financial forecasting. For assistance, you can refer to our financial forecast for a mortgage brokerage .

Compared to other business plans, a mortgage broker's plan must pay special attention to industry-specific regulations, the importance of building strong relationships with lenders, and strategies for maintaining a steady flow of clients.

A well-crafted business plan will not only help you clarify your strategies and goals but also serve as a tool to attract investors or secure lines of credit.

Lenders and investors will look for a thorough market analysis, realistic financial projections, and a clear plan for client engagement and compliance.

By presenting a detailed and substantiated business plan, you showcase your professionalism and dedication to the success of your brokerage.

To achieve these goals efficiently, you can fill out our mortgage broker business plan template .

A free example of business plan for a mortgage brokerage firm

Here, we will provide a concise and illustrative example of a business plan for a specific project.

This example aims to provide an overview of the essential components of a business plan. It is important to note that this version is only a summary. As it stands, this business plan is not sufficiently developed to support a profitability strategy or convince a bank to provide financing.

To be effective, the business plan should be significantly more detailed, including up-to-date market data, more persuasive arguments, a thorough market study, a three-year action plan, as well as detailed financial tables such as a projected income statement, projected balance sheet, cash flow budget, and break-even analysis.

All these elements have been thoroughly included by our experts in the business plan template they have designed for a mortgage broker .

Here, we will follow the same structure as in our business plan template.

Market Opportunity

Market data and figures.

The mortgage brokerage industry is a vital component of the real estate sector, facilitating a significant volume of home loans every year.

Recent data indicates that the mortgage brokerage market in the United States is robust, with mortgage brokers originating approximately 15% of all residential mortgages. This translates to billions of dollars in home loans, showcasing the critical role mortgage brokers play in the housing market.

With a growing population and a steady demand for housing, the mortgage brokerage industry is poised for continued growth, emphasizing the need for professional and reliable brokerage services.

The mortgage industry is experiencing several key trends that are shaping the future of home financing.

Technology is playing an increasingly important role, with the rise of online mortgage platforms and digital loan processing. This shift towards digital services is streamlining the application process and improving the customer experience.

There is also a growing demand for more flexible and tailored mortgage products, as consumers seek options that fit their unique financial situations.

Regulatory changes continue to influence the industry, with brokers needing to stay informed and compliant with the latest laws and guidelines to protect consumers.

Sustainability is becoming a consideration for borrowers, with green mortgages and incentives for energy-efficient homes gaining traction.

Lastly, the importance of financial education is being recognized, as brokers increasingly provide valuable advice and guidance to help clients make informed decisions.

Success Factors

Several factors contribute to the success of a mortgage brokerage.

Trustworthiness and transparency are paramount in building long-term relationships with clients. A broker who consistently acts in the best interest of their clients is more likely to secure repeat business and referrals.

Expertise in the mortgage industry is essential. A broker with a deep understanding of various loan products, regulations, and market conditions can provide superior service and advice.

Networking and partnerships with lenders and real estate professionals can greatly enhance a broker's ability to offer competitive rates and diverse loan options.

Customer service is also a critical component. Prompt and clear communication, personalized attention, and a commitment to guiding clients through the entire loan process can set a brokerage apart.

Finally, effective marketing strategies and a strong online presence are important for attracting new clients in a digital age where many consumers begin their search for mortgage information online.

The Project

Project presentation.

Our mortgage brokerage project is designed to address the needs of a diverse clientele seeking reliable and personalized mortgage solutions. Strategically located in an area with a booming real estate market, our brokerage will offer a comprehensive range of mortgage services, including first-time homebuyer loans, refinancing options, and investment property financing. We will work with a variety of lenders to ensure competitive rates and terms tailored to each client's unique financial situation.

The emphasis will be on transparency, trust, and tailored advice to ensure clients make informed decisions about their mortgage options.

This mortgage brokerage aims to become a trusted advisor in the community, guiding clients through the complexities of the mortgage process and helping them achieve their property ownership or investment goals.

Value Proposition

The value proposition of our mortgage brokerage project is centered on providing expert, unbiased mortgage advice and facilitating access to a wide range of financing options. Our commitment to personalized service ensures that each client receives a mortgage plan that aligns with their financial objectives and lifestyle.

We are dedicated to simplifying the mortgage process, offering clarity and support at every step, and building long-term relationships with our clients based on trust and integrity.

Our brokerage aspires to empower clients with the knowledge and resources they need to make confident mortgage decisions, contributing to their financial stability and peace of mind.

Project Owner

The project owner is a seasoned mortgage broker with a comprehensive understanding of the real estate and finance industries.

With a track record of successful client relationships and a deep knowledge of mortgage products, the owner is committed to establishing a brokerage that stands out for its dedication to client success, ethical practices, and market expertise.

Driven by a vision of financial empowerment and education, the owner is determined to offer tailored mortgage solutions that support the community's homeownership dreams and investment strategies.

His commitment to professionalism and his passion for helping others navigate the mortgage landscape make him the driving force behind this project, aiming to enhance the financial well-being of clients and contribute to the growth of the local economy.

The Market Study

Market segments.

The market segments for a mortgage brokerage are diverse and can be categorized as follows:

Firstly, there are first-time homebuyers who are navigating the complex process of purchasing their initial property and require guidance and financing options.

Next, existing homeowners looking to refinance their mortgages to take advantage of lower interest rates or to consolidate debt form another significant segment.

Investors who are interested in purchasing properties for rental or resale purposes also represent a key market segment for mortgage brokers.

Lastly, real estate agents and financial advisors can be influential by referring clients who are in need of mortgage financing expertise.

SWOT Analysis

A SWOT analysis of the mortgage brokerage business reveals several key points:

Strengths include a deep understanding of the mortgage industry, strong relationships with various lenders, and the ability to offer a wide range of mortgage products to clients.

Weaknesses might involve the highly competitive nature of the mortgage industry and the sensitivity to interest rate fluctuations and economic cycles.

Opportunities can be found in the growing housing market, the potential to leverage technology for improved customer service, and the ability to specialize in niche markets such as eco-friendly or sustainable housing loans.

Threats include regulatory changes that could affect lending practices, the entry of new fintech competitors in the mortgage space, and the potential for economic downturns which can impact the housing market.

Competitor Analysis

Competitor analysis in the mortgage brokerage industry indicates a crowded and competitive landscape.

Direct competitors include other local and national mortgage brokers, banks, credit unions, and online lending platforms.

These entities compete on interest rates, customer service, speed of processing, and the diversity of their loan products.

Key competitive advantages may include personalized customer service, a wide network of lender relationships, expertise in specific types of loans, and advanced technology for efficient processing.

Understanding the strengths and weaknesses of competitors is crucial for carving out a unique value proposition and for client acquisition and retention strategies.

Competitive Advantages

Our mortgage brokerage's competitive advantages lie in our personalized approach to client service and our commitment to finding the best financial solutions for our clients.

We offer a comprehensive suite of mortgage products, including conventional loans, government-backed loans, and innovative financing options for unique property types.

Our expertise in navigating complex financial situations and our dedication to educating our clients on their mortgage options set us apart in the industry.

We also pride ourselves on our agility in adapting to market changes and our use of cutting-edge technology to streamline the mortgage application and approval process, enhancing the overall customer experience.

You can also read our articles about: - how to become a mortgage broker: a complete guide - the customer segments of a mortgage brokerage firm - the competition study for a mortgage brokerage firm

The Strategy

Development plan.

Our three-year development plan for the mortgage brokerage firm is designed to establish us as a trusted leader in the industry.

In the first year, we will concentrate on building a strong client base by offering personalized mortgage solutions and exceptional customer service.

The second year will focus on expanding our services to include refinancing options, debt consolidation, and financial advisory services to provide comprehensive financial solutions to our clients.

In the third year, we aim to form strategic alliances with real estate agencies and financial institutions to broaden our service offerings and enhance our market reach.

Throughout this period, we will remain dedicated to maintaining the highest standards of integrity, transparency, and professionalism to meet the evolving needs of our clients and secure a dominant position in the market.

Business Model Canvas

The Business Model Canvas for our mortgage brokerage firm targets individuals and families looking to purchase or refinance their homes, as well as real estate investors.

Our value proposition is centered on providing expert mortgage advice, competitive rates, and a seamless application process.

We offer our services through our office, online platforms, and mobile consultations, utilizing key resources such as our industry knowledge and network of lending partners.

Key activities include client consultations, loan application processing, and market analysis.

Our revenue streams are generated from commissions on successful mortgage placements, consultation fees, and potential partnerships with financial institutions.

Find a complete and editable real Business Model Canvas in our business plan template .

Marketing Strategy

Our marketing strategy is built on trust and expertise.

We aim to educate potential clients on the mortgage process and the benefits of working with a broker. Our strategy includes online educational content, mortgage calculators, and workshops on home buying and financing.

We will also establish referral programs with real estate agents and previous clients to expand our network.

Additionally, we plan to leverage social media, search engine optimization, and targeted advertising to reach a wider audience and showcase our success stories and client testimonials.

Risk Policy

The risk policy of our mortgage brokerage firm is to minimize financial and operational risks.

We adhere to strict compliance with industry regulations and ethical standards, ensuring all loan options presented to clients are in their best interest.

We conduct thorough risk assessments on loan products and maintain a diversified portfolio to mitigate market volatility.

Prudent financial management and a contingency plan are in place to safeguard against economic downturns.

Additionally, we carry professional indemnity insurance to protect against potential legal claims. Our priority is to provide secure and reliable mortgage brokerage services while ensuring client satisfaction.

Why Our Project is Viable

We are committed to establishing a mortgage brokerage firm that addresses the needs of homebuyers and investors in a changing financial landscape.

With our focus on customer-centric services, market expertise, and strategic partnerships, we are poised for success in the competitive mortgage industry.

We are enthusiastic about empowering our clients to make informed financial decisions and are prepared to adapt to market changes to achieve our objectives.

We look forward to the promising future of our mortgage brokerage firm and the opportunity to serve our community.

You can also read our articles about: - the Business Model Canvas of a mortgage brokerage firm - the marketing strategy for a mortgage brokerage firm

The Financial Plan

Of course, the text presented below is far from sufficient to serve as a solid and credible financial analysis for a bank or potential investor. They expect specific numbers, financial statements, and charts demonstrating the profitability of your project.

All these elements are available in our business plan template for a mortgage broker and our financial plan for a mortgage broker .

Initial expenses for our mortgage brokerage include securing a professional office space, obtaining the necessary licenses and certifications, investing in industry-specific software for loan processing and customer relationship management, as well as costs related to brand creation and launching targeted marketing campaigns to reach potential homebuyers and those looking to refinance.

Our revenue assumptions are based on a thorough analysis of the local housing market, interest rate trends, and the demand for mortgage advisory services, considering the growing need for personalized mortgage solutions.

We anticipate progressively increasing client acquisition, starting modestly and growing as the reputation of our mortgage brokerage develops.

The projected income statement indicates expected revenues from our service fees, commission from lenders, and potential consulting services, minus the operating expenses (office rent, marketing, salaries, etc.), and the cost of maintaining our professional credentials.

This results in a forecasted net profit crucial for evaluating the profitability of our business over time.

The projected balance sheet reflects assets specific to our business, such as office equipment, software, and liabilities including debts and anticipated operating expenses.

It shows the overall financial health of our mortgage brokerage at the end of each period.

Our projected cash flow budget details incoming and outgoing cash flows, allowing us to anticipate our cash needs at any given time. This will help us effectively manage our finances and avoid cash flow problems.

The projected financing plan lists the specific financing sources we plan to use to cover our startup expenses, such as business loans or investor capital.

The working capital requirement for our mortgage brokerage will be closely monitored to ensure we have the necessary liquidity to finance our daily operations, including office expenses, marketing initiatives, and salary payments.

The break-even point specific to our project is the level of transactions needed to cover all our costs, including startup expenses, and start making a profit.

It will indicate when our business will be financially sustainable.

Performance indicators we will track include the conversion rate of leads to closed loans, the average commission per transaction, the liquidity ratio to assess our ability to cover financial obligations, and the return on investment to measure the effectiveness of our capital invested in the project.

These indicators will help us evaluate the financial health and overall success of our mortgage brokerage.

If you want to know more about the financial analysis of this type of activity, please read our article about the financial plan for a mortgage brokerage firm .

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Home » Blog » Business Loans » How To Write A Business Plan For A Loan

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How To Write A Business Plan For A Loan

A solid business plan is often critical to securing funding for your small business. Learn how to create a business plan for a loan that includes the information lenders want to see.

WRITTEN & RESEARCHED BY

Lead Staff Writer

Last updated on Updated August 18, 2024

REVIEWED BY

Editor & Senior Staff Writer

• Elements of a good business plan include an executive summary, company description, products and services, market analysis, marketing and sales plan, organizational structure, and other important information.
• Your business plan should address the "5 Cs of Credit" by demonstrating your business's financial health, investment, repayment ability, market conditions, and available assets.
• To improve loan approval chances, avoid jargon, show clear cash flow projections, document personal investment, seek professional help if needed, and be willing to revise your plan

A business plan is a crucial business document you need to have on hand when applying for business loans. However, the mere thought of writing a business plan for a loan is intimidating to a lot of business owners.

A one-page business plan may be sufficient for certain types of small business loans (for example, online loans), but bank loans and SBA loans typically require a more in-depth business plan that delves further into your financials.

If you need to write a business plan for a loan, you’ve come to the right place. Keep reading to learn more about everything you need to include in your business plan to improve your chances for loan approval.

Table of Contents

What Is A Business Plan For A Loan?

10 key sections to include in your business plan, what do lenders look for in a business plan, business plan examples, resources for writing a business plan for a loan, final thoughts on writing a business plan for a loan.

A business plan is a written document that provides a complete overview of your business, including information about your business’s services, strategies, finances, and goals. All businesses should have a business plan, but a business plan is especially important when applying for a business loan.

Most business plans should include some version of the following sections. Depending on your industry and other factors, such as whether you own a startup or established business, some sections could be condensed or combined. The exact verbiage for section titles can vary, as well.

For a business plan that’s longer than one page, it’s a good idea to preface these sections with a cover page and table of contents.

Executive Summary

This section is a condensed version of your entire business plan. It will likely include:

• Details of when, how, and why you started your business
• Your company mission statements
• High-level financial information about your business
• An explanation of how funding will help your business

Depending on whether you’re a startup or an established business, you may use this section to focus on your growth strategy or your past successes.

Company Description

Use this section to delve deeper into your company’s offerings, core principles, legal structure, and leadership. Your company description should also include your unique value proposition . Describe your company’s unique strengths that will ensure your success.

Products & Services

This section should detail the products and/or services your company provides. Make clear the problem that your offerings solve. Include information such as:

• Information on your raw materials and production process (if applicable)
• Profit margins
• Whether you have or plan to file patents or copyrights

Market Analysis

Use this section to demonstrate your understanding of your overall industry and the specific markets you serve, including market trends, competitors, and the demographics of your target customers. Some companies hire a consultant or agency to perform the research for the market analysis section.

Marketing & Sales Plan

Building off your market analysis, how will you market to your target customers and beat your competitors? How will you sell to them and distribute your product? What are your sales goals and projections? Provide these details in this section.

Organization & Management

Use this section to include your organizational and leadership structure, ideally including an organizational flowchart. Also include job descriptions, qualifications, and years of experience to demonstrate why your team is capable of delivering on your company goals and is worthy of investment.

Operational Strategy

This section is used to describe your day-to-day operational processes, including information about your location, facility, equipment, inventory, and daily production. If you have a service-based business, this section may focus more on your team’s daily activities and how they contribute to long-term goals.

Financial Outlook

This section should tell lenders how much you spend and how much you make in profits. Include up to five years of data if possible, including financial documents such as:

• Income statements
• Cash flow statements
• Balance sheets
• Capital expenditure budgets
• Sales forecasts
• Projected income statements
• Information on any collateral you have to secure the loan

Depending on how much financial documentation you have, you might refer to specific documents in this section and indicate that the full documents can be found in the Appendix section.

Though startups may not have all of this data, you can make projections based on monthly or quarterly data and industry averages.

Funding Request

Now that you’ve laid out your expenses and financial projections, it’s time to make your case for a loan. Be clear about how much money you need, how you will spend it, and how you will repay the loan. Be as detailed as possible.

In the Appendix, include any supporting documents, such as financial documents referred to in the Financial Outlook section. Some other types of documents you might include in this section are:

• Business licenses  or permits
• Credit reports
• Product photos
• Marketing materials
• Letter of intent to purchase business

If you know what lenders are looking for in a business plan for a loan, you will increase your chances of approval. Learn the five things lenders want to see in your business plan, followed by five tips to create a loan-worthy business plan.

The 5 Cs Of Credit

The Five Cs of Credit is a phrase that summarizes what lenders look for when deciding whether to extend a loan to a business. Lenders will, accordingly, look for the five Cs when reviewing the business plan in your loan application. The five Cs are:

• Character: Your knowledge, experience, and creditworthiness
• Capacity: Your ability to repay the loan
• Capital: How much you have already invested in your business
• Conditions: Your market viability, considering your industry as well as overall economic conditions
• Collateral: Assets you can use to secure the loan

5 Business Plan Tips For Loan Approval

Besides emphasizing your “5 Cs,” there are a few other things you can do to make the best impression with your business plan to increase your chances of securing funding.

• Avoid Industry Jargon: Use plain English rather than industry terminology that the lender might not be familiar with. Remember that the loan underwriter may not have deep knowledge of your specific industry.
• Show Cash Flow: Cash flow is one of the most important factors that determine loan eligibility. You can even get a loan with bad credit as long as your cash flow is sufficiently high. The more insight you can provide into your past, current, and future cash flow, the better.
• Show Your Investment: Before extending a loan, the lender will want to see that you have already invested some of your own resources, such as personal savings, into your business. Be sure to include documentation that demonstrates your investment.
• Enlist Help: You will likely need some professional assistance in creating your business plan, whether that means hiring a writer, an industry consultant, or both. At the very least, you should have a third party review your business plan before you submit it as part of a loan application.
• Revise Your Plan As Needed: If this is the first time you’ve taken a close look at your business strategy and financials, you will surely learn some things about your business while creating your plan. For example, you may realize you cannot afford a business loan as large as you planned to ask for. Rather than trying to justify the number you started with, it’s better to modify your funding request (and other aspects of your plan) to align with your financial reality.

It’s easy to find templates and examples of business plans online. Though you may not want to copy and paste from a template verbatim, these samples provide a starting point and show you different ways a business plan can be structured. Here are a few to start with:

• Business plan template for a startup (from SCORE)
• Business plan template for traditional businesses  (from the SBA)
• Business plan template for retail or eCommerce (from Shopify; requires email address)

These tools and resources can help you create a solid business plan for a loan. While some free business plan creation tools are available online, you will have to pay for some options.

SBA Business Plan Resources (Free)

The SBA has a great resource in its online learning center that includes business plan worksheets . In addition to business plan templates, the SBA also helps you connect to free local business counselors who may be able to help you with your business plan.

Business Plan Software ($)

If you need extra help creating a business plan and don’t mind spending a little bit of money, consider business plan creation software. For example, LivePlan ($20/month) is business plan software that connects with QuickBooks to import your financial data to your plan.

Business Plan Writer/Consultant ($$$)

If you’re willing to invest more heavily into your business plan, consider hiring a writer or consultant that specializes in creating business plans. This option costs anywhere from $2,000 to $20,000, with the lower end of that scale typically including only basic writing services and the higher end representing a specialized industry consultant agency.

While it’s helpful to know how to write a business plan for a loan, you can always hire someone to help you draft the plan if the task is too daunting. A business plan is a worthwhile investment no matter what type of business you have or whether you are currently trying to secure business funding. Even if you don’t need a loan right now, it’s important to maintain an updated business plan to serve as a guide for your own business decisions.

Was your loan denied because of your business plan (or another reason)? Learn what to do if your business loan was denied .

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How to Write a Professional Business Plan for a Loan

Business Plan Template

• March 27, 2024

11 Min Read

So, are you thinking of getting a loan or funding to start an exciting business journey?

That’s great! But before you go any further, it’s very important to have a solid business plan in place.

Well, we understand that creating a successful plan for a loan can be a daunting task. That’s why we’re here to help you!

This investment-ready business plan template for loans will help you include all the essential elements in your plan, from summarizing your business concept to projecting the financial data. It not only impresses business loan lenders but also sets the stage for success.

Ready to get started? Let’s first understand how business plans will help you with loan proposals.

How business plans help in loan applications?

A business plan is a professional document that serves as a written loan proposal if you want to secure a loan for capital investment. It details every aspect of your business, including its concept, goals, market opportunity, and financial data.

Whether you’re a new entrepreneur or a small business owner, you’ll need a well-prepared business plan. It helps you persuade potential investors or lenders of its viability and potential for success.

Here are a few primary reasons why business plans are necessary in loan applications:

It helps you showcase your vision

A well-written business plan communicates your business vision effectively and allows you to demonstrate your clarity of purpose and strategic direction. It offers lenders a compelling narrative of what your business is aimed for and how it will achieve its goals.

It helps you prove your financial feasibility

Well, lenders need assurance that they’re making a wise investment. A detailed business plan presents them with realistic financial projections, along with how your business will earn money and repay the loan. This infuses confidence in lenders and convinces them that your business is a safe bet.

It helps you mitigate potential risks

Once you start your business, it naturally involves fair enough risks. However, a good business plan clarifies that you’re aware of those challenges and have backup plans or strategies to mitigate them. This shows lenders that you’ve considered different situations and keep contingency plans in place.

It helps you demonstrate your preparedness

A business plan shows lenders that you’ve carefully outlined every aspect of your business—from conducting market analysis to predicting finances. It assures that you’re serious about your business and well-prepared to manage the ups and downs of starting a business.

In short, having a solid business plan can be the cornerstone of a successful loan application that explains your business idea and how you plan to utilize the loan money to get started.

Now that you know how business plans help in a loan application, it’s time to check out and understand the key elements of a business plan for a loan template.

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Key components of a successful business plan for a loan

1. executive summary.

An executive summary is the first section of the plan, providing a concise overview of the entire business plan.

Generally, it is written in the last, as it summarizes the most important components you mentioned in your plan.

Since the potential investors or lenders would read this section first, make sure that you keep it simple, crisp, and compelling to build their confidence in your business. Also, it should not be more than 1 or 2 pages.

You may write your executive summary with a precise explanation of your business concept, the type of business you operate, and its status.

Here are a few primary elements you must add to your summary:

• Your company’s mission statement
• The product or service you intend to offer
• Market Opportunity
• Management team’s background and experience
• Growth plans or long-term objectives
• Financial projections and funding needs

2. Company Overview

As you’ll give a brief introduction in the executive summary, this chapter will expand on it, providing an in-depth understanding of your business.

Company description includes all the business-related facts, such as the startup concept, vision-mission statements, company location, etc. Also, it explains the problems or challenges you aim to solve.

In addition to that, consider answering a few questions that would help lenders to grasp the significance of your business:

• What is the legal structure of your business?
• Who is the business owner?
• Do you have any business partners?
• Why did you start this business, and when it was founded?
• What are your business accomplishments to date?
• Who will get benefits from your company’s product or service?

Note that the company overview section can be regarded as your extended elevator pitch.

So, it’s a good opportunity to present your business’s specific details and structural aspects that the financing partner needs to know.

3. Market Analysis

The market analysis section provides readers with a deep understanding of the specific industry or market in which you plan to serve.

This seems unnecessary but serves different purposes. Those who are looking to fund a franchise business should do some serious work for this section, as lenders will review it very closely.

To carefully draft this section, you should conduct thorough market research and industry analysis to define your target customers, industry trends, market demand, and competitors.

This will demonstrate that you understand the market dynamics and validate the demand for your products or services.

Here are a few elements you should include in your market analysis section:

• Ideal target market
• Market size and growth potential
• Customer segments
• Competitive analysis
• Emerging trends
• Applicable government regulations

4. Product or Service Offerings

In this section, you may provide a detailed description of your products and service offerings, along with their features, benefits, and pricing structure.

It helps you highlight what your business offers to its ideal customers, how your offerings will satisfy their needs and explains the value proposition of your products or services.

You may consider including these points in the product or service section:

• A brief description of your product & service
• Pricing details
• Intellectual property, copyright, and patent filings
• Quality measures
• Any additional offerings

5. Sales and Marketing Strategies

Your marketing and sales plan elucidates how you intend to market your products or services in greater detail. It helps you outline the marketing and sales strategies you’ll use to attract and retain potential customers.

The primary goal is to give a flexible and practical marketing and sales strategy that persuades the lenders you know how to advertise or develop a public relations campaign to reach the company’s revenue goals.

For a well-crafted marketing plan, you might consider adding the following details in your plan:

• Your target audience and brand positioning
• Detailed marketing strategy
• Sales and marketing goals and KPIs
• Sales and marketing budgets
• Customer retention plan

While reviewing your loan application, lenders would like to know how you plan to make money and how you overcome marketing and sales challenges, so ensure that this strategy is always relevant.

6. Operations Plan

The operations plan section provides a clear picture of your company’s day-to-day operations and activities. It is a detailed-oriented section that outlines how you’ll manage to run your business smoothly.

Also, operational excellence is necessary to achieve your goals, satisfy client commitments, and maximize results. So, try to mention your operational intricacies and showcase efficient systems and processes.

Here are a list of details you must include in your operations plan:

• Staffing & training
• Operational processes
• Inventory needs and supplies
• facilities & technology
• Regulatory compliance

By offering insights into these operational aspects, this section helps you instill confidence in lenders about your ability to effectively handle and grow your company.

7. Management Team

Your management team section introduces the key individuals who are responsible for driving your business ahead.

It helps lenders easily understand your team’s roles & responsibilities, educational qualifications, industry experience, and how you plan to compensate your leadership team.

Even this will assure lenders that your team is capable enough to navigate challenges, make informed decisions, and reach strategic objectives. Also, they feel confident giving you a loan—even if it’s your startup.

So, you may consider including the below information:

• Company owner profile
• Resume-styled summary of key executives
• Organizational chart
• Compensation plan
• Details of advisory board members(if any)

8. Financial Plan

A well-written and comprehensive financial plan is one of the most crucial sections of your plan, as it helps you prove to lenders your business’s financial health, growth potential, and ability to repay the business loan.

So, your financial analysis must include the projected financial statements for three years or more. The following are the key financial projections that you should add:

• Income statements
• Cash flow statements
• Capital expenditure budgets
• Balance sheet
• Break-even analysis
• Funding requirements

As well as you should also list hard or soft collateral if you possess it so that you can put it up to get a loan. Even lenders may request to add more granular data(such as cost of sales or cost per product/service).

Note that if you’re a startup and don’t carry enough data to highlight, consider including estimated costs, revenue streams, and other strategic future projections you may have.

9. Appendix

The appendix is the last section of a professional business plan that typically provides supplementary information and other supporting documents the lender may need for better understanding.

You may include the following details in an appendix:

• Business licenses and permits
• Contractual agreements or other legal documents
• Letters of reference
• Credit histories and tax returns
• Key managers’ resumes and certificates
• Product photos

By adding these details, you offer more detailed explanations or validation for your business plan, strengthening your discussions and claims.

What factors do lenders look for in a business plan

When you submit a business plan to secure funding, lenders will analyze it to evaluate the viability and creditworthiness of your loan application. Here are several key factors they look for:

Character of your management team

Lenders will assess a business’ character that includes subjective or intangible qualities like whether its owners or key executives are perceived as honest, competent, or committed. Also, they consider educational background, industry experience, skills, leadership capabilities, and credit histories. This can be critical for evaluating prospects as most lenders don’t wish to lend to whom they don’t feel trustworthy.

Your capability to repay loans

Loan officers also spend a lot of time analyzing the borrower’s ability to repay the loan. They will thoroughly examine the financial statements such as projected revenue, expenses, cash flows, growth plans, and loan payments. Further, lenders analyze the financial history to see how much revenue you have generated or how much profit you have made in the past.

The capital amount you’re seeking

While reviewing loan applications, lenders will go through your financial information that highlights how much funding you’re seeking, how much cash you carry on hand, and how much debt you have. Also, they assess your personal financial investments as a sign of commitment and seriousness. So, make sure your business plan clearly outlines your investment amount and funding needs.

Collateral or personal guarantees

In some cases, lenders may request collateral or personal guarantees to secure the loan. Thus, you should document any assets or valuable items you can offer as collateral or additional security. Even lenders may still approve your loan without collateral if you have a good credit history and a reliable business plan.

By understanding these key considerations, you can prepare a business plan that resonates with the lender’s interests and concerns. Now, let’s move to a few business plan examples for a loan.

Business plan examples for a loan

When you’re just venturing into your entrepreneurship journey, crafting a comprehensive business plan for a loan application can be overwhelming.

So, try to consider some sample business plan templates or resources to get started on the first draft of your plan. Here are a few business plan examples that you may find helpful:

• Sample business plan outline
• Small business plan template
• Comprehensive business plan writing
• Business Plan Workbook for Loan Applications

Start preparing your business plan

Finally, you understand the importance and key elements of drafting a business plan for securing a loan or funding. But it requires some extra effort to find success down the road.

If you’re still confused about where to start, Upmetrics could be a great choice. It’s a modern business plan app that helps entrepreneurs or small business owners create an actionable plan quickly.

With Upmetrics, you’ll get easy-to-follow guides, a library of business plan templates , AI support, a financial forecasting tool, and other valuable resources to streamline your entire business planning approach.

So, don’t wait and start preparing your business plan for a loan!

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

Do i need a business plan to get a loan.

Of course, most lenders or financial institutes require a solid business plan, even if you are a well-established business. A well-crafted business plan helps you highlight every essential information about your business and demonstrate to lenders that you have a realistic plan in place to generate income and repay the loan.

Can I write a business plan myself?

Definitely, you can write a business plan by yourself. Also, you can get help from various resources available, including business plan templates and guides, to create a comprehensive plan. But, if you’re unsure or need assistance, you may consider having a business plan software or hiring a professional writer.

How long should my business plan be?

The length of your business plan should be concise and focused, typically depending on its purpose. A one-page business plan is a single-page document, a lean or mini business plan comprises 1–10 pages, while a comprehensive business plan can range from 15 to 35 pages and beyond.

What's the most important element of a loan-seeking business plan?

The financial plan is the most crucial element of a loan-seeking business plan, as lenders want to check realistic and well-structured financial forecasts that present your ability to repay the loan. Also, this section can make or break a lender’s confidence and willingness to raise capital.

What format should I use?

It’s essential to select a format that can effectively convey your business idea, strategy, and financial projections to the lenders. Following are a few common options to consider:

• Traditional text-based document
• PowerPoint or Keynote presentation deck
• Executive summary or a pitch deck

So, whatever format you choose, it should align with your preferences, the lender requirements, and the complexity of your business.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Reach Your Goals with Accurate Planning

Mortgage Brokerage Business Plan Template & Guidebook

If you’re looking for a comprehensive, easy-to-follow guide to launching and growing a successful mortgage brokerage business, you've come to the right place. The #1 Mortgage Brokerage Business Plan Template & Guidebook provides the information and tools you need to create a comprehensive, professional business plan for your mortgage brokerage. With this guide, you'll have the knowledge and confidence to attract investors, secure funding and succeed in the competitive world of mortgage brokerage.

Get worry-free services and support to launch your business starting at $0 plus state fees.

• How to Start a Profitable Mortgage Brokerage Business [11 Steps]
• 25 Catchy Mortgage Brokerage Business Names:

How to Write a Mortgage Brokerage Business Plan in 7 Steps:

1. describe the purpose of your mortgage brokerage business..

The first step to writing your business plan is to describe the purpose of your mortgage brokerage business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a mortgage brokerage business:

Our mission at [Mortgage Brokerage] is to offer the highest level of financial advice and guidance to our clients, helping them to achieve their goals and promote long-term financial stability. We strive to create an environment of trust, respect, and integrity, and to provide every client with an individualized mortgage solution tailored to their specific needs. We are committed to providing exceptional customer service and delivering a positive customer experience throughout the loan process.

2. Products & Services Offered by Your Mortgage Brokerage Business.

The next step is to outline your products and services for your mortgage brokerage business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

• What is my business?
• What are the products and/or services that I offer?
• Why am I offering these particular products and/or services?
• How do I differentiate myself from competitors with similar offerings?
• How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your mortgage brokerage business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your mortgage brokerage business includes the following elements:

Target market

• Who is your target market?
• What do these customers have in common?
• How many of them are there?
• How can you best reach them with your message or product?

Customer base 

• Who are your current customers? 
• Where did they come from (i.e., referrals)?
• How can their experience with your mortgage brokerage business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

• How does it work, what features does it have, and what are its benefits?
• Can anyone use this product or service regardless of age or gender?
• Can anyone visually see themselves using this product or service?
• How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

• Which companies are competing with yours today (and why)? 
• Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
• What specific advantages does each competitor offer over yours currently?

Marketing channels

• Which marketing channel do you intend to leverage to attract new customers?
• What is your estimated marketing budget needed?
• What is the projected cost to acquire a new customer?
• How many of your customers do you instead will return?

Form an LLC in your state!

4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

• The equipment and facilities needed
• Who will be involved in the business (employees, contractors)
• Financial requirements for each step
• Milestones & KPIs
• Location of your business
• Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a mortgage brokerage business?

• Licensed mortgage broker
• Computers and software
• Access to a loan origination system (LOS)
• Office space
• Business license and permits
• Furniture and office supplies
• Insurance for the business
• Dedicated phone line
• Advertising and marketing budget

5. Management & Organization of Your Mortgage Brokerage Business.

The second part of your mortgage brokerage business plan is to develop a management and organization section.

This section will cover all of the following:

• How many employees you need in order to run your mortgage brokerage business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
• The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
• How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Mortgage Brokerage Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a mortgage brokerage business varies based on many different variables, but below are a few different types of startup costs for a mortgage brokerage business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your mortgage brokerage business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your mortgage brokerage business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your mortgage brokerage business plan:

• Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
• Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
• Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
• Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
• Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
• Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

Frequently Asked Questions About Mortgage Brokerage Business Plans:

Why do you need a business plan for a mortgage brokerage business.

A business plan is a fundamental tool for the success of a mortgage brokerage business. It outlines business goals, strategies and tactics, financial projections, and provides potential investors with an analysis of the expected returns over time. It also serves as a roadmap for the business owner to follow and helps identify potential risks and opportunities. Additionally, banks and other lenders often require aspiring entrepreneurs to have a comprehensive business plan in order to qualify for financing.

Who should you ask for help with your mortgage brokerage business plan?

You should ask for help with your mortgage brokerage business plan from a local small business advisor or accountant. You could also contact a local Small Business Development Center (SBDC) for guidance on developing a business plan.

Can you write a mortgage brokerage business plan yourself?

Yes, it is possible to write a mortgage brokerage business plan yourself. Depending on the scope of the business plan, it may be necessary to obtain specialized financial information and advice from an accountant, lawyer or other qualified professional. Additionally, there are many resources available online that can provide guidance on how to write a successful business plan.

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From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

Mortgage Broker Business Plan Template

Written by Dave Lavinsky

Mortgage Broker Business Plan

You’ve come to the right place to create your Mortgage Broker business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Mortgage Broker companies.

Below is a template to help you create each section of your Mortgage Broker business plan.

Executive Summary

Business overview.

Davidson Mortgage, located in Tucson, Arizona, is a new mortgage brokerage specializing in residential mortgages. The company will operate in a professional setting, conveniently located next to several banks in the center of the shopping district. We offer a wide range of services to help our clients get a mortgage, including finding loan options, applying for the loans on the clients’ behalf, and completing all the paperwork. We strive to serve our clients with the utmost empathy to ensure they get the best mortgage for their situation.

Davidson Mortgage is headed by Harold Davidson. He is an MBA graduate from Arizona State University with 20 years of experience working in the finance industry. His passion is to help his clients qualify for their dream homes and provide them with a smooth process from start to finish.

Davidson Mortgage will focus on providing superior service to all of its clients to ensure they get the best mortgage possible. Our services include finding loan options, applying for loans on behalf of customers, and completing closing paperwork. Since customer service is our top priority, we will keep in touch with our clients after they have closed on the mortgage. Furthermore, Harold will create webinars, online courses, and other content to educate his clients and the local community on the mortgage lending process.

Customer Focus

Davidson Mortgage will primarily serve homebuyers interested in properties located in the Tucson, Arizona area. Tucson is a growing city with thousands of residents eager to purchase a new home. We expect our clientele to be equal parts first-time home buyers and existing homeowners.

Management Team

Davidson Mortgage is run by Harold Davidson. Harold has been a licensed mortgage broker for the past 20 years, working for several large firms. However, throughout his career, he desired to have a closer connection with his clients as well as have more flexibility to help them get their dream homes. He started this company in order to achieve those goals. In addition to his valuable experience, Harold also holds an MBA from Arizona State University.

Harold is joined by Bethany Peterson. She will serve as the company’s full-time assistant, who, among other things, will manage the company website, coordinate scheduling, and answer basic client questions. Bethany has experience working with C-level executives and has spent significant time as an administrator.

Success Factors

Davidson Mortgage is uniquely qualified to succeed due to the following reasons:

• Davidson Mortgage will fill a specific market niche in the growing community we are entering. In addition, we have surveyed local realtors and homebuyers and received extremely positive feedback saying that they would consider making use of our services when launched.
• Our location is in an economically vibrant area where new home sales are on the rise, and turnover in homes and rentals occurs often due to the upward mobility of residents.
• The management team has a track record of success in the mortgage brokerage business.
• The local area is currently underserved and has few independent mortgage brokers offering high customer service to homebuyers.

Financial Highlights

Davidson Mortgage is seeking a total funding of $250,000 of debt capital to open its office. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital.

Specifically, these funds will be used as follows:

• Office design/build: $50,000
• Three months of overhead expenses (payroll, rent, utilities): $100,00
• Marketing expenses: $50,000
• Working capital: $50,000

Company Overview

Who is davidson mortgage, davidson mortgage history.

After surveying the local customer base and finding a potential office, Harold Davidson incorporated Davidson Mortgage as an S-Corporation on 1/1/2023.

The business is currently being run out of Harold’s home office, but once the lease on Davidson Mortgage’s office location is finalized, all operations will be run from there.

Since incorporation, Davidson Mortgage has achieved the following milestones:

• Found office space and signed Letter of Intent to lease it
• Developed the company’s name, logo, and website
• Hired an interior designer for the decor and furniture layout
• Determined equipment and fixture requirements

Davidson Mortgage Services

Industry analysis.

Despite the pandemic hurting several industries, the mortgage brokers industry still performed strong and is projected to continue to do so. Last year, U.S. mortgage brokerages brought in revenues of $11.7 billion and employed 47,000 people. There were just over 12,000 businesses in this market.

However, the mortgage broker industry is highly fragmented, with the top two companies accounting for just over 11% of industry revenue. Furthermore, mortgage interest rates are on the rise, as well as housing prices, preventing many people from buying houses and applying for mortgages. These two factors significantly stunt the industry at present.

Despite these challenges, the industry is still projected to increase moderately throughout the rest of the decade. Though larger firms may dominate revenue and clientele, studies and surveys show that clients don’t necessarily favor working with large firms. Providing excellent service and personal touches throughout the process can help small firms succeed in the industry.

Customer Analysis

Demographic profile of target market.

Davidson Mortgage will primarily serve the residents of Tucson, Arizona. The area we serve has a significant population of people who are searching for their first home, as well as families and individuals who need a new home.

The precise demographics for Tucson, Arizona are:

Customer Segmentation

Davidson Mortgage will primarily target the following customer segments:

• Existing homeowners
• First-time home buyers

Competitive Analysis

Direct and indirect competitors.

Davidson Mortgage will face competition from other companies with similar business profiles. A description of each competitor company is below.

The Loan Store

Established in 2010, The Loan Store originates, finances, and sells mortgage and non-mortgage lending products throughout the United States. It offers a range of consumer credit products, such as home loan products, home equity loans, and unsecured personal loans, as well as home and personal loan servicing. The company claims to be one of the largest private, independent retail mortgage lenders in the U.S. Its current business channels include direct lending, affinity, branch retail, and servicing.

However, agents working with The Loan Store experience high turnover, resulting in little concern for maintaining ongoing relationships with clients. Also, the agents themselves are mixed in quality, ranging from part-time brokers with little experience or sales records to full-time brokers with long-term experience. There is no systematic company method for passing on knowledge from experienced to inexperienced brokers as all are competing with each other, to a certain extent, for commissions.

Direct Loan Connection

Founded in 2006, Direct Loan Connection (DLC) employs licensed mortgage professionals who have access to multiple lending institutions, including banks, credit unions, and trust companies. This access enables the company to offer a vast array of available mortgage products – ranging from first-time homebuyer programs to financing for the self-employed to financing for those with credit blemishes. In addition, to help homebuyers and homeowners, DLC offers commercial mortgages.

Though they are a local leader in the premium end of the market, they refuse to negotiate their broker’s fees and sometimes lose potential clients because of this. Davidson Mortgage’s fees will be far more reasonable.

Supreme Mortgage

Supreme Mortgage specializes in mortgage brokering and is committed to helping homebuyers, and homeowners get the best mortgage with the lowest interest rate. The brokerage works with more than 40 lenders who compete to provide mortgages and who pay Supreme Mortgage’s fee so that clients receive the service free of charge.

Some reviews of Supreme Mortgage point out the low-quality service offered by brokers, who have little training in customer service. Furthermore, Supreme Mortgage does not attempt to maintain long-term relationships with customers who will eventually purchase another home.

Competitive Advantage

Davidson Mortgage enjoys several advantages over its competitors. These advantages include:

• Location: Davidson Mortgage’s location is near the center of town, in the shopping district of the city. It is visible from the street, where many residents shop for both day-to-day and luxury items.
• Client-oriented service: Davidson Mortgage will have a full-time assistant to keep in contact with clients and answer their everyday questions. Harold Davidson realizes the importance of accessibility to his clients and will further keep in touch with his clients through monthly seminars on topics of interest.
• Management: Harold Davidson has been extremely successful working in the mortgage brokerage sector and will be able to use his previous experience to grant his clients detailed insight into the world of home loans. His unique qualifications will serve customers in a much more sophisticated manner than many of Davidson Mortgage’s competitors.
• Relationships: Having lived in the community for 25 years, Harold Davidson knows many of the local leaders, newspapers, and other influencers.

Marketing Plan

Davidson Mortgage will use several strategies to promote its name and develop its brand. By using an integrated marketing strategy, Davidson Mortgage will win clients and develop consistent revenue streams.

Brand & Value Proposition

The Davidson Mortgage brand will focus on the company’s unique value proposition:

• Client-focused residential mortgage brokerage services, where the company’s interests are aligned with the customer
• Service built on long-term relationships and personal attention
• Big-firm expertise in a small-firm environment

Promotions Strategy

The promotions strategy for Davidson Mortgage is as follows:

Website/SEO

Davidson Mortgage will invest heavily in developing a professional website that displays all of the features and benefits of working with the mortgage broker. It will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.

Social Media

Davidson Mortgage will invest heavily in a social media advertising campaign. Harold and Bethany will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Davidson Mortgage understands that the best promotion comes from satisfied customers. The company will work to partner with local realtors by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.

By offering webinars and courses on topics of interest in the office or other locations, Harold Davidson will encourage residents in the community to become comfortable with the expertise and character of Davidson Mortgage. These webinars will generally be offered free of charge as general promotion and for direct networking.

Davidson Mortgage’s pricing will rely on the standard industry rates in order to be perceived as neither a luxury nor a discount broker. The standard rate for brokering a mortgage is 1-2% of the loan amount. By seeking quality clients and maintaining long-term relationships with them, Davidson Mortgage will fend off pressure to discount their rates, even in down markets.

Operations Plan

The following will be the operations plan for Davidson Mortgage.

Operation Functions:

• Harold Davidson is the founder and will operate as the President of the company. He will be in charge of all the general operations and executive functions within the company. Furthermore, until he hires additional staff, he will personally help all clients who agree to utilize the company’s services.
• Harold is assisted by his long-term assistant Bethany Peterson. She will serve as the company’s full-time assistant and will manage the company website, coordinate scheduling, and answer basic client questions. Bethany has experience working with C-level executives and has spent significant time as an administrator.
• As the business grows and Harold takes on more clients, he will hire other mortgage brokers to assist him.

Milestones:

The following are a series of steps that will lead to the company’s long-term success. Davidson Mortgage expects to achieve the following milestones in the next six months:

3/202X            Finalize lease agreement

4/202X            Design and build out Davidson Mortgage office

5/202X            Hire and train initial staff

6/202X            Kickoff of promotional campaign

7/202X            Reach break-even

8/202X            Reach 25 ongoing clients

Financial Plan

Key revenue & costs.

Davidson Mortgage’s revenues will come primarily from the commissions earned from residential mortgage sales.

The major cost drivers for the company will include employee salaries, lease payments, and marketing expenses.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.

• Annual lease: $30,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Mortgage Broker Business Plan FAQs

What is a mortgage broker business plan.

A mortgage broker business plan is a plan to start and/or grow your mortgage broker business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Mortgage Broker business plan using our Mortgage Broker Business Plan Template here .

What are the Main Types of Mortgage Broker Businesses?

There are a number of different kinds of mortgage broker businesses , some examples include: Retail Mortgage Broker, Business/Corporate Mortgage Broker, or Private Mortgage Brokers.

How Do You Get Funding for Your Mortgage Broker Business Plan?

Mortgage Broker businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Mortgage Broker Business?

Starting a mortgage broker business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Mortgage Broker Business Plan - The first step in starting a business is to create a detailed mortgage broker business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your mortgage broker business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your mortgage broker business is in compliance with local laws.

3. Register Your Mortgage Broker Business - Once you have chosen a legal structure, the next step is to register your mortgage broker business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your mortgage broker business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Mortgage Broker Equipment & Supplies - In order to start your mortgage broker business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your mortgage broker business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful mortgage broker business:

• How to Start a Mortgage Broker Business

• Mar 30, 2023

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walk-Through

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walkthrough

As a business plan specialist and expert business planner, I'm here to guide you through the process of writing a comprehensive business plan for securing a loan. Whether you're a start-up or an established business looking to expand, a well-crafted business plan is essential for impressing potential lenders and securing the funding you need.

In this extensive, 5,000-word article, I'll cover everything you need to know about creating a top-notch business plan that will boost your chances of loan approval. We'll go through each section in detail, providing you with practical examples and tips to optimize your plan for success. So, let's get started!

Executive Summary

The executive summary is the first and most critical section of your business plan. It's a brief overview of your entire plan, highlighting the key points and giving readers an insight into your business.

Key elements to include in your executive summary:

Business concept: Briefly explain your business idea, the products or services you plan to offer, and the target market.

Company overview: Provide essential information about your company, including its legal structure, location, and mission statement.

Management team: Showcase the expertise and experience of your management team, emphasizing their ability to lead the business.

Market opportunity: Describe the market demand, trends, and target audience, highlighting the opportunity for your business to succeed.

Financial highlights: Summarize your financial projections, including sales, profits, and cash flow.

Loan purpose: Clearly state the purpose of the loan and the amount you're seeking.

Remember, the executive summary is often the first thing lenders read, so make it engaging and informative to grab their attention.

Company Description

The company description section is where you provide a more in-depth look at your business. It should give readers a clear understanding of your company's purpose, goals, and competitive advantages.

Key elements to include in your company description:

Business history: If your company has an existing history, briefly describe its origins and milestones achieved.

Mission statement: Articulate the purpose of your company and the value you aim to provide to customers.

Objectives: Outline the specific goals you want to achieve with your business, both short-term and long-term.

Products and services: Provide a detailed description of the products or services you plan to offer, emphasizing the benefits they provide to customers.

Target market: Identify your target audience, specifying their demographics, psychographics, and buying habits.

Competitive advantage: Explain what sets your business apart from the competition and how you plan to maintain this edge.

Market Analysis

The market analysis section demonstrates your understanding of the industry, market, and competition. It's crucial to show lenders that you've done your homework and have a comprehensive understanding of the market landscape.

Key elements to include in your market analysis:

Industry overview: Provide a high-level view of your industry, including its size, growth trends, and key players.

Market segmentation: Break down your target market into smaller segments, identifying their unique needs and preferences.

Target market characteristics: Describe the specific characteristics of your target market, such as demographics, psychographics, and geographic location.

Market demand: Present evidence of market demand, using data on customer needs, market trends, and buying behaviors.

Competitor analysis: Evaluate your main competitors, analyzing their strengths, weaknesses, and market share.

SWOT analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to assess your business's position in the market.

Marketing and Sales Strategy

In this section, outline your marketing and sales strategy to show lenders how you plan to attract and retain customers, as well as generate revenue. A well-defined marketing and sales strategy is crucial to demonstrate that you have a clear plan for growth and profitability.

Key elements to include in your marketing and sales strategy:

Marketing objectives: Define your marketing goals, such as brand awareness, lead generation, or customer retention.

Target audience: Reiterate your target market, emphasizing their needs and preferences.

Unique selling proposition (USP): Highlight your USP, the main reason customers should choose your products or services over the competition.

Marketing channels: Identify the marketing channels you plan to use, such as social media, email, content marketing, or paid advertising. Explain the rationale behind your choice of channels and how they align with your target audience.

Sales process: Describe your sales process, from lead generation to closing deals. Include details on your sales team structure, training, and compensation plans.

Key performance indicators (KPIs): List the KPIs you'll use to measure the success of your marketing and sales efforts, such as conversion rates, average deal size, or customer lifetime value.

Operations Plan

The operations plan section details the day-to-day activities required to run your business. It shows lenders that you have a clear understanding of the operational aspects of your company and the resources needed to support your growth.

Key elements to include in your operations plan:

Facilities: Describe your business's physical location, including its size, layout, and any equipment or machinery required.

Production process: If applicable, detail your production process, including the steps involved, quality control measures, and production capacity.

Supply chain: Outline your supply chain, identifying key suppliers, procurement processes, and inventory management practices.

Staffing: Explain your staffing requirements, including the roles, responsibilities, and qualifications of each team member.

Management structure: Provide an organizational chart, showcasing your company's management structure and reporting lines.

Legal and regulatory requirements: Identify any relevant legal or regulatory requirements, such as licenses, permits, or certifications needed to operate your business.

Financial Plan

The financial plan is arguably the most crucial section of your business plan when applying for a loan. It demonstrates your ability to manage finances, make informed decisions, and, ultimately, repay the loan.

Key elements to include in your financial plan:

Revenue projections: Estimate your future sales, breaking them down by product or service category and showing growth rates over time.

Expense projections: Forecast your expenses, including fixed costs (e.g., rent, utilities) and variable costs (e.g., marketing, salaries).

Cash flow statement: Provide a detailed cash flow statement, showing how cash will flow in and out of your business over a specified period (typically 12 months).

Profit and loss statement: Create a profit and loss statement that projects your business's profitability over time.

Balance sheet: Prepare a balance sheet that showcases your business's assets, liabilities, and equity.

Break-even analysis: Calculate the point at which your business will break even, meaning your revenues equal your expenses.

Loan repayment schedule: Detail your proposed loan repayment schedule, including the loan amount, interest rate, repayment terms, and projected date of full repayment.

The appendices section is where you can include any additional documents or supporting materials that are relevant to your business plan. These documents may provide further evidence of your company's viability and help strengthen your case for securing a loan.

Examples of items to include in the appendices:

Resumes of key team members

Product samples or prototypes

Market research data or surveys

Letters of intent or contracts with suppliers, partners, or customers

Intellectual property documentation, such as patents, trademarks, or copyrights

Relevant licenses, permits, or certifications

Writing a comprehensive business plan for a loan can seem like a daunting task, but with the right approach and guidance, it's an achievable goal. By following the step-by-step instructions outlined in this article, you can create a well-structured, persuasive business plan that will greatly improve your chances of securing the funding you need. Remember to:

Pay close attention to your executive summary, as it sets the tone for the entire plan.

Be thorough and detailed in your market analysis, showing a deep understanding of your industry and target audience.

Develop a solid marketing and sales strategy to demonstrate your ability to attract and retain customers.

Address the operational aspects of your business, including staffing, facilities, and supply chain management.

Present a robust financial plan, complete with projections and a loan repayment schedule.

By doing so, you'll showcase your expertise, commitment, and preparedness to potential lenders, significantly increasing the likelihood of obtaining the loan your business needs to grow and succeed.

In addition to following the steps outlined in this guide, consider seeking professional assistance from a business plan consultant or specialist to review and refine your plan. Their expertise can help you identify any areas that may need improvement and ensure that your business plan is optimized for success.

Finally, remember to continuously update your business plan as your business evolves. Regular updates will ensure that your plan remains relevant and accurate, providing you with a valuable roadmap for your business's future growth and development.

With dedication, persistence, and a well-crafted business plan, you can secure the funding you need to bring your business vision to life. Good luck, and here's to your success!

• Writing Your Business Plan
• Funding Your Business

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The Ultimate Cheat Sheet: Business Plan Writing Tips & Tricks

How to Write a Business Plan for a Small Business

Noah Parsons

24 min. read

Updated September 2, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of writing a business plan

If you’re reading this guide, then you already know why you need a business plan . 

You understand that writing a business plan helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your business plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After writing your business plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

When writing a business plan, the produces and services section is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

When writing a business plan, the operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

The last section of your business plan is your financial plan and forecasts. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI to write a business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of writing a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Writing a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of writing a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

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• Manage with your business plan

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A business plan is a document that explains what a company’s objectives are and how it will achieve them. It contains a road map for the company from a marketing, financial, and operational standpoint. Some business plans are more detailed than others, but they are used by all types of businesses, from large, established companies to small startups.

If you are applying for a business loan , your lender may want to see your business plan. Your plan can prove that you understand your market and your business model and that you are realistic about your goals. Even if you don’t need a business plan to apply for a loan, writing one can improve your chances of securing finance.

Key Takeaways

• Many lenders will require you to write a business plan to support your loan application.
• Though every business plan is different, there are a number of sections that appear in every business plan.
• A good business plan will define your company’s strategic priorities for the coming years and explain how you will try to achieve growth.
• Lenders will assess your plan against the “five Cs”: character, capacity, capital, conditions, and collateral.

There are many reasons why all businesses should have a business plan . A business plan can improve the way that your company operates, but a well-written plan is also invaluable for attracting investment.

On an operational level, a well-written business plan has several advantages. A good plan will explain how a company is going to develop over time and will lay out the risks and contingencies that it may encounter along the way.

A business plan can act as a valuable strategic guide, reminding executives of their long-term goals amid the chaos of day-to-day business. It also allows businesses to measure their own success—without a plan, it can be difficult to determine whether a business is moving in the right direction.

A business plan is also valuable when it comes to dealing with external organizations. Indeed, banks and venture capital firms often require a viable business plan before considering whether they’ll provide capital to new businesses.

Even if a business is well-established, lenders may want to see a solid business plan before providing financing. Lenders want to reduce their risk, so they want to see that a business has a serious and realistic plan in place to generate income and repay the loan.

Every business is different, and so is every business plan. Nevertheless, most business plans contain a number of generic sections. Common sections are: executive summary, company overview, products and services, market analysis, marketing and sales plan, operational plan, and management team. If you are applying for a loan, you should also include a funding request and financial statements.

Let’s look at each section in more detail.

Executive Summary

The executive summary is a summary of the information in the rest of your business plan, but it’s also where you can create interest in your business.

You should include basic information about your business, including what you do, where you are based, your products, and how long you’ve been in business. You can also mention what inspired you to start your business, your key successes so far, and your growth plans.

Company Overview

In this section, focus on the core strengths of your business, the problem you want to solve, and how you plan to address it.

Here, you should also mention any key advantages that your business has over your competitors, whether this is operating in a new market or a unique approach to an existing one. You should also include key statistics in this section, such as your annual turnover and number of employees.

Products and Services

In this section, provide some details of what you sell. A lender doesn’t need to know all the technical details of your products but will want to see that they are desirable.

You can also include information on how you make your products, or how you provide your services. This information will be useful to a lender if you are looking for financing to grow your business.

Market Analysis

A market analysis is a core section of your business plan. Here, you need to demonstrate that you understand the market you are operating in, and how you are different from your competitors. If you can find statistics on your market, and particularly on how it is projected to grow over the next few years, put them in this section.

Marketing and Sales Plan

Your marketing and sales plan gives details on what kind of new customers you are looking to attract, and how you are going to connect with them. This section should contain your sales goals and link these to marketing or advertising that you are planning.

If you are looking to expand into a new market, or to reach customers that you haven’t before, you should explain the risks and opportunities of doing so.

Operational Plan

This section explains the basic requirements of running your business on a day-to-day basis. Your exact requirements will vary depending on the type of business you run, but be as specific as possible.

If you need to rent office space, for example, you should include the cost in your operational plan. You should also include the cost of staff, equipment, and any raw materials required to run your business.

Management Team

The management team section is one of the most important sections in your business plan if you are applying for a loan. Your lender will want reassurance that you have a skilled, experienced, competent, and reliable senior management team in place.

Even if you have a small team, you should explain what makes each person qualified for their position. If you have a large team, you should include an organizational chart to explain how your team is structured.

Funding Request

If you are applying for a loan, you should add a funding request. This is where you explain how much money you are looking to borrow, and explain in detail how you are going to use it.

The most important part of the funding-request section is to explain how the loan you are asking for would improve the profitability of your business, and therefore allow you to repay your loan.

Financial Statements

Most lenders will also ask you to provide evidence of your business finances as part of your application. Graphs and charts are often a useful addition to this section, because they allow your lender to understand your finances at a glance.

The overall goal of providing financial statements is to show that your business is profitable and stable. Include three to five years of income statements, cash flow statements, and balance sheets. It can also be useful to provide further analysis, as well as projections of how your business will grow in the coming years.

What Do Lenders Look for in a Business Plan?

Lenders want to see that your business is stable, that you understand the market you are operating in, and that you have realistic plans for growth.

Your lender will base their decision on what are known as the “five Cs.” These are:

• Character : You can stress your good character in your executive summary, company overview, and your management team section.
• Capacity : This is, essentially, your ability to repay the loan. Your lender will look at your growth plans, your funding request, and your financial statements in order to assess this.
• Capital : This is the amount of money you already have in your business. The larger and more established your business is, the more likely you are to be approved for finance, so highlight your capital throughout your business plan.
• Conditions : Conditions refer to market conditions. In your market analysis, you should be able to prove that your business is well-positioned in relation to your target market and competitors.
• Collateral : Depending on your loan, you may be asked to provide collateral , so you should provide information on the assets you own in your operational plan.

How Long Does It Take to Write a Business Plan?

The length of time it takes to write a business plan depends on your business, but you should take your time to ensure it is thorough and correct. A business plan has advantages beyond applying for a loan, providing a strategic focus for your business.

What Should You Avoid When Writing a Business Plan?

The most common mistake that business owners make when writing a business plan is to be unrealistic about their growth potential. Your lender is likely to spot overly optimistic growth projections, so try to keep it reasonable.

Should I Hire Someone to Write a Business Plan for My Business?

You can hire someone to write a business plan for your business, but it can often be better to write it yourself. You are likely to understand your business better than an external consultant.

Writing a business plan can benefit your business, whether you are applying for a loan or not. A good business plan can help you develop strategic priorities and stick to them. It describes how you are going to grow your business, which can be valuable to lenders, who will want to see that you are able to repay a loan that you are applying for.

U.S. Small Business Administration. “ Write Your Business Plan .”

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

U.S. Small Business Administration. “ Fund Your Business .”

Navy Federal Credit Union. “ The 5 Cs of Credit .”

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How To Create a Business Plan for a Bank Loan [4 Key Steps]

Posted august 9, 2024 by kody wirth.

Wondering how to create a business plan that will wow your banker?

You’re not alone.

Aside from your loan application, your business plan is the main supporting document to help you get a business loan . Getting all the details just right is absolutely essential.

So here’s what we recommend: simplify the planning process by breaking the work up into manageable, bite–sized steps. That way, you can focus on one section at a time to ensure that your business plan is accurate and convincing.

Here’s a quick overview of the step–by–step process we guide entrepreneurs through when they sign up for LivePlan.

1. Outline the opportunity

This is the core of your business plan. It should give loan officers a clear understanding of:

• What problem you’re solving
• How your product or service fits into the current market
• What sets your business apart from the competition

There are three key parts to this step:

The problem and your solution

Detail exactly what problem you are solving for your customers. How do their lives improve after you solve that “pain point” for them?

Be sure to describe your solution in vivid detail. For example, if the problem is that parking downtown is expensive and hard to find, your solution might be a bike rental service with designated pickup and dropoff locations.

If you’re just starting, we recommend actually going out and talking with your customers first. That way, you can prove you’re solving a real problem for your intended audience.

Target market

Who exactly are you selling to? And roughly how many of them are there?

This is crucial information for determining whether or not your business will succeed long–term. Never assume that your target market is “everyone.” You need to break down the total market into a realistic number of sales based on your business’s capabilities.

For example, it would be easy for a barber shop to target everyone who needs a haircut. But most likely, it will need to focus on a specific market segment to reach its full business potential. This might include catering to children and families, seniors, or business professionals.

Competition

Who are your direct competitors ? These are companies that provide similar solutions that aim to solve your customers’ pain points.

Then outline what your competitive advantages are. Why should your target market choose you over other products or services?

Do you think you have no competition? Think again. Your customers are likely turning to an indirect competitor who is solving their problem with a different type of solution.

For example, a taco stand might compete directly with another taco stand but indirectly with a nearby hot dog vendor.

2. Show how you’ll execute

This is where the action happens! 

Here you’ll get into the details of how you’ll take advantage of the opportunity you outlined in the previous section. This part demonstrates to banks that you have a strong plan to achieve success.

The three main components of this step include:

Marketing and sales plan

There can be a lot of moving parts to this one, depending on your business model.

But most importantly, you’ll need to fully explain how you plan to reach your target market and convert those people into customers. 

Here are a few examples of what to include:

• Positioning strategy: What makes your business both unique and highly desirable to your target market?
• Marketing activities: Will you advertise with billboards, online ads or something else entirely?
• Pricing: The price you charge must reflect consumer demand. There are several pricing models to choose from, including ‘cost–plus pricing’ and ‘value pricing.’

This is the nuts and bolts of your business. It’s especially important for brick–and–mortar companies that operate a storefront or have a warehouse. You may want to explain why your location is important or how much space you have available. 

Plan to work at home? You can also cover your office space, how this positively impacts your expenses, and if you have any plans to move outside your house.

If you use any specialized software, equipment, or tools be sure to mention them here as well.

Milestones and metrics

Lenders and investors want to be confident that you know how to turn your business plans into financial success. That’s where your milestones come in.

These are planned goals that help you progress your company. For example, if you’re launching a new product your milestones may include completing prototypes and figuring out manufacturing.

Metrics are how you will gauge the success of your business. 

Do you want to generate a certain level of sales? Or keep costs at a certain level? Figuring out which metrics are most important and then tracking them is essential for growth.

3. Detail your financial plan

This is the most crucial – and intimidating – part of any business plan for a bank loan. 

Your prospective lender will look especially close at your financial performance and financial forecasts to determine how likely your business is to succeed.

Ideally, you’re already tracking your finances and have at least dabbled with forecasting. However, if you’re starting from scratch, break your financial planning into the following smaller pieces:

Simply put, these are your projections for your business finances. It gives you (and the bank) an idea of how much profit your company stands to make. Just a few items you’ll need to include:

• Sales forecast : List all your products, services, and any other ways your business will generate revenue. If you have direct costs, or expenses required to make what you sell, consider adding them as a percentage of your revenue.
• Personnel forecast : Salaries and expenses related to what you pay yourself, employees, and any contractors.
• Expense forecast : Things like rent, utilities, marketing costs, and any other regular expenses.

How much and how will you use any investments, loans, or other financing to grow your business? This might include paying for capital expenses like equipment or hiring personnel. 

Explain where the money will go, and if possible, create a forecast scenario showing the use and repayment of the loan. Also detail where all your financing is coming from. Lines of credit, loans, or personal savings should be listed here alongside the loan you’re applying for.

Bankers will be giving this section a lot of attention. Here’s what you’ll need:

• Profit & Loss : This statement pulls in numbers from your sales forecast and other elements to show whether you’re making or losing money.
• Balance Sheet : This is likely the first thing a loan officer will look at. It covers your liability, capital, and assets and provides an overview of your business’s financial soundness.
• Cash Flow Statement : Essentially, this statement tracks how much money you have in the bank at any given point. Loan officers will likely expect realistic monthly cash flow for at least 12 months.

4. Summarize your business information

The executive summary is the first section of your business plan, but we recommend you tackle it last.

It’s an introduction to your company and summarizes the main points of your plan. While lenders will need to review your full business plan, they may use the executive summary as a quick way to determine whether your business is worth their time.

It may be your only chance to get the lender excited about your business. So, keep it to just one or two pages and be as clear and concise as possible. 

What to check before submitting your business plan to the bank

Before you finish your loan application and send in all your paperwork, be sure to review the following in your business plan:

• Did you complete every section? Business plans have a fairly standard outline that lenders expect to see. It might sound simple, but make sure that you don’t leave a section blank by mistake. If you want to verify that everything is correct, consider using a business plan builder that uses an investor-approved outline.
• Have you completed your full financial plan? Having detailed financials is expected. Your historical performance and financial forecasts tell the story of your growth path through numbers. Be sure that all of your financial documents are included and accurate. To go above and beyond, be sure to include the assumptions behind your financials and any financial scenarios you’ve been exploring.
• Is your plan concise? No one has time to read a 50-page business plan, and you probably don’t want to write one. Keep every section of your business plan to-the-point, and be sure to populate your executive summary. If something should be included but adds unnecessary complexity to your plan, go ahead and add it to your appendix.
• Did you pay attention to spelling, grammar, and punctuation? Small things really do make a difference, so dot those i’s and cross those t’s. If you can, have someone else review your business plan to catch any errors you may have missed. For another review, consider using an AI business plan generator to check your grammar and even rewrite sections to sound more professional.
• Is your plan realistic? Make sure your calculations, goals, and predictions are practical, and that you back-up your plan with good market research. Also, double-check that sections of your business plan don’t contradict one another.

If you need help writing your plan

Getting a business loan isn’t easy. According to Federal Reserve Data , only 31% of businesses receive the total amount of financing they request.

Having a well-written business plan for your bank loan can go a long way toward you being among the businesses that do get the funding they ask for.

Not everyone feels confident writing a business plan themselves, especially if it’s needed to secure a bank loan. While you don’t need an MBA to write one, getting your business plan right often does require quite a bit of work. 

So if you need help writing your plan, here are a few options to consider:

• Download a free business plan template : Start with an expert-designed template formatted to meet lender expectations.
• Check out our guide on writing a detailed business plan : Dig deeper into what to include in every section of your business plan.
• Hire a professional business plan writer to do it for you: This is typically the most expensive route, but worth it if you’re pursuing $100,000 or more in capital.
• Sign up for LivePlan : It’s business planning software that provides a step–by–step process for writing any type of plan. It’s an affordable option that also gives you an easy way to track your actuals against your business plan, so you can get the insights you need to grow faster.

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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How to Start a House-Flipping Business: Your Essential Toolkit

There’s a lot to know about flipping houses for profit. Read our guide before you start a house-flipping business.

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If you've tuned into HGTV lately, it won't come as a shock to learn that more people than ever are interested in how to start a house-flipping business. For enterprising investors who aren’t afraid of hard work, flipping a house is an exciting opportunity for short-term investment and for starting a new business. But there’s a lot of research to be done, plus financing and resources you need before you can start a house-flipping business yourself.

So we’re all on the same page here, house flipping is the process of purchasing distressed, foreclosed, or otherwise desirably priced property with the intent to fix it up and sell at a higher price within a short period of time.

»MORE: Read how to fix up that first property you're flipping

If you’re one of those enterprising investors who want in, you’ll need to know more about how to start a house-flipping business. Follow this guide to help you develop a business strategy, plus determine and execute the optimal financing plan.

Starting a house-flipping business in 8 steps

If you’re determined to invest in short-term real estate and flip a house, here’s where to start:

Step 1: Write a business plan

Before taking any action, financial or otherwise, it’s crucial that writing a business plan is the first step in starting your own house-flipping business. A business plan will be key to keeping your business on track, helping you estimate profits, and getting investors.

Your business plan should be fairly in-depth and there is a lot of information you should be sure to include in it. You can either write it on your own or use a business plan template to help you. No matter what you choose, you should be sure to include the key parts of a business plan.

You'll want to start out with an executive summary detailing the purpose of your business, the vision you have for it, some high-level financial projections and identify who will be involved in the business. The rest of the business plan should include a section on the competition and the demand for your business. After all, you need to be sure that there's enough demand to sustain your house-flipping business—a lack of demand for a small business is the reason 42% of small businesses don't make it. That's a group you don't want to be a part of simply because you didn't do your research before starting your business.

You should also use your business plan to lay out what exactly your business will do and how much it will cost, along with how much you expect to make. With house flipping, you'll want to detail how much money you have, how much you expect to need to buy properties and flip them, and then how much you expect to make back.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Step 2: Grow your network

Flipping houses is tough work, and you'll need a plethora or resources to help you finish each job. Identify the resources already available to you to take full advantage of your strengths. Experience in the real estate business, access to a network of excellent craftspeople, or just a promising property are all assets.

Talk to friends or relatives involved in real estate investment, particularly in the area where you plan to invest in property. Anecdotal evidence and word-of-mouth advice can help you find reputable wholesalers, contractors, and realtors to help you find and complete jobs within budget.

Reach out to your existing professional or personal network to find contacts within the industry, and seek out experts for mentoring and advice. Get active in local real estate investment groups or find your chapter of REIClub to connect with industry professionals.

Step 3: Choose a business entity

In order to operate your house-flipping business legally, you'll need to choose a business entity and register your business with the state in which you plan to operate. While there are many business entity types to choose from, you will want to opt for one with limited liability protection, such as an LLC or corporation.

Liability protection is especially important for a house-flipping business because there are many opportunities for things to go wrong. If someone sues your company over an issue with a property you flipped, you'll want to make sure your personal assets are protected. If you're unsure which entity is right for your business, consult a business attorney to help you weigh your options.

Step 4: Obtain an EIN, insurance, permits, and licenses

Registering your business is the first step to legally establish your operation, but there are a few more steps to take to make sure you're officially allowed to start work as a house flipper. First, you should register for an employer identification number, also known as an EIN. Think of this as a socials security number for your business, which you will use for tax purposes, as well as when applying for business loans or a business bank account or credit card. Applying for an EIN can be done online through the IRS website.

Next, you'll want to look into your business insurance options. If you hire employees, you'll need workers compensation, unemployment, and disability insurance. Beyond those policies, you should also look into general liability and commercial property insurance to protect yourself, your business, and your properties.

Finally, you'll need the proper business licenses and permits to operate your business. The licenses and permits you need will depend on your state and the scope of work you're doing; however, you can expect to need several permits when working in the construction business. Check with your local chamber as commerce and consult with your business attorney to make sure you have all the paperwork you need before you start any work.

Step 5: Find suppliers and contractors

Once your business is legally established, it's time to find contractors and suppliers to help you get your business going. Even if you plan to contribute sweat equity to your house-flipping business, you’ll probably need additional contractors to complete a project successfully. Look for contractors with a portfolio of demonstrable work, references, and positive feedback from previous projects.

A trusted general contractor can also look over any remodeling plans and budget projections you make to check for accuracy with regard to cost and timeliness. Finding suppliers who are reliable and can work within your budget is also incredibly important. Tap into your network and do your research to find some reputable options.

Step 6: Assemble a team

Whether you plan on bringing in a partner, hiring outside contractors, or renovating each property yourself, you’ll need to recruit a team of qualified people to complete a successful flip. In particular, consider sourcing for these roles, which could really help you keep things organized and get the most out of your investment:

Business partners or investors

A good potential partner might be an active private investor in your personal network or a real estate investor looking for a project manager. A good business partner brings an asset or skill to the relationship—be it capital resources, skilled labor, industry expertise, or simply a great work ethic and determination to make an honest profit.

According to Jamell Givens, a partner and real estate investor at Leave the Key Homebuyers, the advantage of having a business partner is the ability to evaluate a deal in different ways. Whereas one partner might think only of a home's profit potential, the other might bring local knowledge or connections with contractors.

Realtors or property owners

A background in real estate and property ownership is a huge plus in the house-flipping business. An experienced partner can help you search efficiently for prospective properties, identify the most valuable improvements for a given area, and navigate contracts and sales once the rehabilitation is complete.

Or, if you know a homeowner looking to sell and willing to loan you the money for necessary repairs and renovations, owner or seller financing may work for you.

Legal counsel

Seeking legal advice about any financial agreement or contractual obligation is a good idea, especially when you’re considering making major investments and buying property.

Step 7: Obtain financing

You’ve found a partner, done your research, and maybe even identified the first property you want to flip. In other words, you’re ready to finance your house-flipping business’s first fix-and-flip.

If this is the beginning of your house-flipping career, you’re probably not going to be eligible for a traditional bank loan. Typically, banks only approve businesses with many years of profitability under their belts. And in house-flipping, time is money. That makes the best fix-and-flip loans short-term financing option—usually around 12 months. Repayment terms on bank loans, on the other hand, can run between five and seven years.

That said, you do have a wide variety of fix-and-flip loans available to you. As a brand-new business, you also have a good option to tap into your personal funds or investments. It’s a little risky to throw your own skin in the game—in other words, your nest egg—but it’s likely that your business doesn’t have the revenue and financial stability that most lenders want to see before extending you a business loan .

As always, it’s wise to explore all of your possible options before settling on a loan that best suits your needs. Start your search with these options for new house-flipping businesses:

Friends and family loan

Many rookie real estate investors fund their first projects with personal loans from partners, friends, or family members. If the loan is comfortably within the lender’s means, this alternative to a bank or private loan can alleviate some of the pressure of a traditional loan, as well as ensure a degree of accountability.

If a friend or family member is an investor or partner in your house-flipping project, it’s a good idea to establish terms of the arrangement in writing as soon as you reach an agreement.

Tap into your 401(k)

For first-time flippers with a retirement plan who are not planning to retire in the near future, one financing possibility is taking out a loan from your 401(k). This option incurs the risk of losing your nest egg, which is always a scary prospect. But financing a business with a 401(k) might be the only viable option for entrepreneurs just starting out—and if you’re smart with starting your house-flipping business, you can hopefully make back the cash and then some.

There are two main options for 401(k) loans: The classic 401(k) loan, in which the IRS allows you to borrow up to half the vested balance, or $50,000, whichever is amount is lower; or a ROBS . You’ll determine which type of financing makes the most sense for you based on the size of your investment and your willingness to dip into your retirement savings.

Combination financing

Many experienced short-term real estate investors find success using multiple financing sources to purchase and renovate a property. Depending on your own capital, a partner or investor, and external lenders, it’s likely that you’ll end up using a combined solution to finance your house flipping business.

Step 8: Source your deal

The success of flipping a home depends in large part on supply and demand in the local real estate market, as well as the cost of labor and value appreciation of the renovations.

Identifying your target property market might help you decide if a real estate wholesaler, auction, or a traditional broker is the right choice for your project. If you’re interested in distressed or foreclosed properties, a wholesale broker or auction will have higher volumes of properties available. A traditional broker might be right for you if the real estate market is new to you or if you need help finding a specific type of property or building.

Determine the scope of renovations or rehabilitation you are equipped to complete on a property, keeping in mind the duration and amount of your fix-and-flip loan.

LLC Formation

Follow these best practices for a successful house-flipping business

Once you develop a business strategy, assemble a team, identify a property, and secure financing, it’s time to start implementing your renovation plans, thinking about marketing and selling the property , and generally getting your house-flipping business underway. Make sure you:

Commit to your business plan. Planning, logistics, and administrative organization will make or break your project—although you have the potential to make a big, quick profit, starting a house-flipping business is no walk in the park. You’ll need to scout properties, calculate renovation costs, source a trustworthy crew, possibly apply for a small business loan… not to mention the curveballs that may arise with every step.

Approaching the process with a detailed business plan in hand will help keep you on track. And the more confident you are in your business strategy and execution plan, the more adaptable you’ll be to those unpredictable circumstances that’ll inevitably arise.

Grow your network. Use your first fix-and-flip project to foster relationships with industry professionals—from investors to realtors to carpenters—whose collaboration and skills you will need for your next house flip. Experienced contractors and agents can connect you with other vendors, give you leads on properties and service-providers, as well as provide advice on specific projects. Trusted contacts in the industry can also help you cover your blind spots, and make sure estimates for properties and repairs are accurate, saving you time and money.

Make estimates—then double them . Unless you’re already in possession of a property, sufficient cash, and experience with home repairs, the process of flipping a home will require timelines and cost estimates at every turn.

Err on the side of caution when making any projections about the cost and duration of the renovation. That’s especially important if you’re financing your startup with outside investors who need to see that you’ve done your due diligence before putting their own capital on the line.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Every business owner can benefit from writing a business plan, including those in the early stages of launching a business . A well-crafted business plan communicates the business’s strategy for growth to key leaders and investors. It’s also an important step to getting a business loan since many lenders require it.

Let’s walk through the steps and elements of writing your ideal business plan.

Key takeaways

• A business plan outlines how you plan to bring products or services to market
• Many lenders require a business plan be included with a loan application
• You can choose to write a lean or traditional business plan
• It covers everything from market research to your marketing and financial plan.

What is a business plan?

A business plan is a document that outlines a business’s strategy for bringing a product or service to market. It describes the company, product idea and goals or steps that the business will take to achieve growth. The document includes multiple sections that provide insight into each part of the strategy.

The business plan can be a simple document called a lean business plan or a more detailed traditional business plan. The lean business plan covers the basics of the company, product, target customers and how it will get revenue. It may only be one page with short descriptions for each part.

The traditional business plan includes more depth on the goals, measurements, research and marketing strategies to get the business where it’s going. Here are key differences in the information written for each type of business plan:

Although there’s no one-size-fits-all approach, follow these steps to create a strong business plan.

Write an executive summary

An executive summary is the introduction to a business plan, giving the key details about your business model and the product or service you’re offering. While there’s no strict formula for writing this section, you should include all the relevant details that you’d want a key partner or investor to know.

It should describe your product or service idea, target market and key objectives for growth within the next few years. It may also summarize your marketing and sources of revenue or funding.

You can adjust what to include based on the exact business you’re starting and its business model. Most business plans keep the executive summary to one to two pages.

Create a company description

The company description should overview important details about your company. It can state your company’s name, location and type of entity as well as describe its history. It should also clearly define the vision that you have for your company’s future in the form of a mission or vision statement.

You may also outline the structure for managing the business, listing key roles and responsibilities and the people filling those roles. Depending on the details you included in the executive summary, you might include information about your product or service.

Describe your value proposition

The value proposition is your chance to pitch what makes your business stand out. It identifies the customer’s problem or gap in the market for the product or service you’re offering. It then goes into detail about how your business will solve the problem.

The value proposition can also explain major barriers that customers have before making a decision and what your business will do to break through those barriers. It shows leaders and investors that you have a thoughtful purpose behind the business you’re creating.

State your business goals

The path to achieving success starts with knowing what success looks like. Many business plans state its main objectives in the company description. Others describe those goals in a separate part of the business plan to dive deeper into the specific goals.

You can also include key measurements you’ll use to gauge whether your business is achieving its goals. You would then use these goals in other business planning documents, further breaking them down into defined short-term steps that ladder up to the larger goals.

Outline your product and service

Next, you want to dive into the main product or service that your business is offering. Explain what the product is, how it works and the benefits that it brings to customers. If you’re planning to make multiple products, you can include a description of each product line. Show how this product or service is set apart from similar products from competitors.

You can also use this section to show how the product or service is produced, including cost of supplies and the price at which you plan to sell. Let the investors and stakeholders know if you have a trademark or patent for the products you’re creating.

Give a summary of market research

Next comes market research, the part of the plan where you do your due diligence to gather information and understand your target customers and competitors. First, you want to understand your target customers’ needs and any barriers they might have to buying your product.

You want to look for information about their demographics and how they might respond to the product you’re offering. This information will help you when designing your product and marketing it in a way that resonates with customers.

Then, you can look at the economy around your product, such as average pricing and sales revenue. This also includes research about your competitors, the market share that they hold and the barriers to entering your market. This section may include data from data research companies, surveys, focus groups and interviews.

According to the U.S. Small Business Administration , the questions you’re trying to answer include:

• Market size, or how many people may want to buy your product
• What people are willing to pay for your product
• Similar products already available
• Who your competitors are
• How your industry is doing
• Typical revenue gained by small businesses in your industry

Summarize a marketing strategy

Once you’ve clearly defined your product and who you’re selling to, you can come up with a strategy for how you’ll reach and sell to customers. In this section, you’ll include the different marketing channels you’ll use to promote your products and services.

These may include direct mailers, social media, traditional or online advertising or media events. The exact channels you use will depend on where you can easily find your target customers.

You can also describe the key messaging that you plan to use during marketing, which will pinpoint the value that it offers to customers. The marketing plan should also include the cost of marketing to different channels and your marketing budget. You can then outline the marketing goals and measurements you’ll use to see if you’re meeting those goals.

Create a logistics and operations plan

The logistics and operations section of your business plan is a detailed description of how your business will bring products and services to market. It explains how the business will run on a day-to-day basis. It should highlight your company’s management structure, give an overview of processes and describe the workflow from end to end. It can also include data on how many products you can make or how long it will take to make products or offer services.

Create a financial plan

Now that you’ve laid out the research, goals and planning, you can use that information to forecast revenue and build a financial plan. Use any past revenue or sales history as a starting point. Then, refer to your company’s recent growth and goals to calculate future financial growth.

If you’re a startup , you can use market research to estimate revenue for a startup in your industry. You can either forecast revenue manually or find software that projects revenue for you.

In your financial plan, you also want to create and track your business budget . You’ll track your estimated and actual revenue, updating regularly to keep the revenue forecast accurate and realistic. Next, you’ll list all expenses and their amounts, including one-time, variable, fixed or seasonal expenses. Here are some examples of different business expenses:

• One-time or capital expenses: Equipment, real estate, furniture, commercial vehicles, business licenses
• Variable expenses: Inventory, utilities, fuel, office supplies, shipping services, card processing fees
• Fixed expenses: Employee salaries and benefits, software, web hosting, office or equipment leases, business loan repayments

Business plan resources

Writing your business plan will take more than putting pen to paper. Try these resources to help you gather data, set up your finances and more:

• Business plan templates. Creating a business plan for the first time? Learn by looking up examples of other business plans or templates like these from Smartsheet .
• Software for accounting and financial planning. Many small businesses use Quickbooks, Xero or Netsuite to track revenue and expenses. These may also forecast revenue based on sales history.
• Business loan resources. To cover your funding needs, think through the types of business loans that would best serve your business. Once you’ve landed on a loan, compare features and interest rates to help you make a decision.
• Survey tools. For in-depth market research, you can build a survey and send to your target customers through a data research company like GWI.

Small business mentoring

Experienced mentors can guide you to making effective business decisions and unlock new potential for growth. Where to find small business mentors:

• SBA. You can find resources and free or low-cost mentors through the SBA’s local assistance tool .
• Small Business Development Centers. SBDCs provide specialized training programs in your local area covering specialized topics like marketing, data research and business management.
• Community Development Financial Institutions. CDFIs   are financial organizations like banks and credit unions that are built to develop the community. Alongside banking and lending services, CDFIs offer training programs and resources.
• SCORE. SCORE is an organization that partners with the SBA to bring resources to small business owners. Mentorship is at the core of what the organization does, and it can match you with a local mentor through its online locator tool.
• Local Chamber of Commerce. These local organizations are known for supporting business networking. They may help you find a mentorship program, or you may build a relationship with another successful entrepreneur through networking events.
• Nonprofit organizations. Some nonprofit organizations are dedicated to supporting small business owners with funding, trainings and mentorship programs. These are typically local programs. For example, NYPACE is a nonprofit that offers free consulting to underserved entrepreneurs in New York.

Bottom line

Your business plan should outline key information about your company, products and the strategy for getting those products in the hands of your customers. Every business plan looks different, but there is essential information to include in every plan, such as who your target customer is and your expected revenue. The business plan serves to help you get business funding and outline exact goals and steps to growing your company.

Frequently asked questions

Do i need a business plan to apply for a business loan, how do i write a simple business plan, what basic items should be included in a business plan, related articles.

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How to Write a House Flipping Business Plan

The most important part of starting a new rehab project is having a house flipping business plan.

Before making an offer on a property, you need to define what your goals are for the project and how you’re planning to reach them. House flipping needs to be approached from an objective and quantifiable perspective, not an emotional one. As such, a house flipping project plan is essential to create a clear path to success.

To make the process as easy as possible, we have created a free house flipping business plan that you can download.

We also encourage you to read the rest of this article to help you understand each part of the house flipping business plan.

Click Here Get Your Free House Flipping Business Plan Template

Benefits of writing a house flipping business plan, writing a house flipping project plan is important because:.

• It will turn your vague ideas into concrete thoughts.
• It will help you to resolve lingering issues that you keep pushing off.
• It will help you to fully understand what you are getting into and how to get out of it.
• It will force you to consider the time, money and emotional commitment needed.
• It will force you to address your tolerance for risk.
• It will make you think about your own strengths and weaknesses and identify areas where you may need assistance.
• It will show people who are working with you (lenders, lawyers, contractors, etc.) that you are serious about the project.
• It will improve your chances of getting approved for a loan.
• It will help you plan and organize your house flipping business beyond single house flips
• It will let you know if/when you are going off-track

House Flipping Business Plan Outline

Now that you know why you should create a house flipping business plan, let’s jump into what a business plan actually looks like.

Our free house flipping business plan template includes the following topics:

Executive Summary

Mission statement.

• Market Analysis
• Strategy, Timing, and Financial Projections
• Team Description

Exit Strategies and Backup Plans

What are you doing.

The executive summary is the elevator pitch version of your business plan. It should briefly cover all of the topics covered in the business plan, starting with your mission statement and a brief overview of the project goals.

If someone only has time to read one page of your house flipping business plan, this will be it. They should gain a basic understanding of the whole project, your ideas, and what you bring to the table. It’s often easiest to write this piece last after all of your planning from the other sections are established.

Why are you embarking on this business venture?

The mission statement is a one to three sentence synopsis of your project objectives and the underlying philosophies behind them. This statement says a lot about your central ideals and business culture, and it is very important when laying the foundations for your project.

When writing your mission statement, cut the jargon! Make it clear, concise and useful.

Comparative Market Analysis

What is the economic environment surrounding your project.

Read more about how to prepare your own CMA in our Real Estate Strategy section.

Understanding the neighborhood where you are buying is essential to your success. Only when you have done your own due diligence can you be sure that you are getting a good deal. In the end, your thoughtful planning should be rewarded with moving forward on a successful project.

Sites such as Realtor , Zillow , and Trulia are all free sites that can give you information on the property to be purchased and neighborhood value. These sites can show you the selling prices of nearby homes and the characteristics of the home (bedrooms, bathrooms, square footage, lot size, etc.), allowing comparisons to be made between properties. These sites will also show you what is for sale in the neighborhood, so you will have a sense of the competition in the local market. Another great strategy is attending as many open houses in the neighborhood as possible to get a real sense of size, finishes, configurations, and more.

Below is a list of ways to better understand the market you want to buy in:

• Work with a realtor to help you identify properties
• Join real estate investment groups to get education
• Align with a wholesaler
• Find lists on the Internet
• Review foreclosure sale lists

All of these tools may help you identify your best opportunities, but you must do the work yourself, and not rely on what others tell you.

Once you do your due diligence, be sure you describe your research and rationale within your business plan. Write this section as an organized series of data points that explain the decisions that you are making with the choice of house and rehabbing decisions.

The goal of this section is to show a third party reader where the property and project fit in the current economic and regional real estate markets.

A house flipping business plan will force you to consider any difficulties that may arise, and prepare for them. This is just one of the ways that a house flipping project plan can help you plan, prepare, and get ahead of future roadblocks.

Project timeframe, how long will your project take.

Now that you’ve outlined your executive summary, mission and market analysis, you’ll want to develop a timeframe for your rehab project.

Keep in mind that rehabbing and flipping always takes longer and costs more than you think it will. Make a timeline that is realistic, and then add additional time to it to cover inevitable delays that you can’t initially account for.

Next, “cost out” each month on your timeline being as detailed as possible.

Consider the following questions when costing out your timeline:

• How much will you need to pay on the loan you have for the property?
• How much are insurance and taxes monthly?
• How much will you need to pay your contractor?
• How much are the monthly utility bills going to be?

To read more about developing a project timeline, read Chapter 4 of our Flipping Houses 101 Guide, “ Develop a Property Investment Plan and Timeline .”

Financial Projections

How much will it cost where will the time & money go.

After you determine how long your flipping project will take, you will need to show a budget and financial projection. The financial projection takes into account both time spent flipping the property and money spent across the whole project. This is one of the most important sections of the business plan.

Here are a few costs to include in your budget:

• Cost of the property
• Expected rehab costs
• Other expenses like marketing costs to sell the property
• Additional contingency expenses

Add all of these costs to get a total investment number.

Then, provide a realistic, supportable value for the sale of the property and deduct liquidation costs (such as realtor fees, transfer taxes, etc.) to project your expected profit on the property.

Use our House Flipping Calculator to help calculate a cost breakdown for your project, and then include these details in your business plan. This will not only help you identify potential budget challenges, but also show people you are working with that you’ve strategically thought through your budget!

Pro tip: Make sure that your numbers are realistic, and do not rely on everything going right.

After identifying all of the costs to buy a home, and how long it will take to actually complete the rehab, you should be able to fully estimate your cash flow through the duration of the project. This financial projection will help you understand how much cash is necessary to keep your project moving forward.

Financing Strategy

How do you plan to fund your project.

This section of the business plan should identify all of the sources of your start-up capital for your rehab project. To put it simply: Where will you get the money to flip a house?

There are numerous house flipping funding options, including:

• Conventional Mortgage
• Government Insured Loans
• Owner Financing
• Private Money

Keep in mind that your source of funding will have an impact on your timeline, costs and overall budget.

In the world of real estate investing, an all-cash offer is always preferred over an offer from someone with financing contingencies. Financing your project with your own cash is a good option if you don’t want to be in debt to an institution. However, most house flippers cannot afford to flip a house without financial help. It’s important to do your research about each type of funding listed above to compare the short and long term costs of each option.

To learn more about these six types of funding, check out Chapter 3 of our Flipping Houses 101 Guide, “ Getting Rehab Funding Right .”

If you want to get funding from a lender, watch the video below, where Rehab Financial’s President, Susan Naftulin, offers key tips to help you get approved by a lender.

Once you choose a source of funding, clearly explain which financial assistance you intend to use in your house flipping business plan, if you are going to get pre-approved, and how far in advance you plan to get pre-approved.

About Your Team

How is your organization structured are you building a team or taking on responsibilities yourself.

Now, you need to decide how you want your house flipping business to be organized.

Do you want to borrow in your own name as a sole proprietor? Or, do you want to form a partnership, corporation, limited liability company?

Read more about the best business structures for real estate investors in our Real Estate Strategy section.

You may need to seek the advice of an attorney or accountant to fully understand the implications of each organization type. Be careful about this choice, because your selection can affect your ability to borrow money, mitigate your risk, attract investors, etc.

This section of the business plan is also where you should talk about yourself. Include a brief bio, relevant experience and unique skills that will be advantageous to your company.

If you are working with a house flipping team , include who these people are, and why you chose to work with them. Make sure that the reader understands what you are doing and how the team you are working with will contribute to a successful rehab project.

How are you getting out of the investment? Do you have contingencies in place in case of unforeseen circumstances?

Finally, your house flipping business plan needs to address your exit strategy. Essentially, an exit strategy is what a house flipper plans to do with their property once the rehab is complete.

You also need to address contingencies in case the project doesn’t go as planned.

Below are a few examples of common scenarios where you’ll need to explain your contingency plans.

Scenario 1: Your property doesn’t sell

• What will you do if your property does not sell? Will you use it as a rental?
• If so, you should show that the rental will pay the carrying expenses of the building.

Scenario 2: You’re going to use your property as a rental

• Do you plan to refinance the property and hold it as a rental?
• If so, show your plans for refinancing it, but also show what you will do if you cannot obtain the needed credit.

Scenario 3: You’re going to sell the property

• Will you sell the property?
• If so, state how much you plan to sell it for. In addition, you will also need to know the rules related to your exit strategy.

Scenario 4: You’re going to sell the property to an FHA buyer

• Do you plan to sell to an FHA buyer?
• If so, make sure you understand the anti-flipping regulations to make sure you aren’t trying to sell too soon. Generally, you will need to hold the property for more than 90 days in an FHA situation.

Why a House Flipping Business Plan is Crucial

A thorough, well-written business plan can be an invaluable tool in helping you meet your house flipping goals. Time spent on planning at the beginning of the process will save you immeasurable time, money and worry during the process.

Get Your Free House Flipping Business Plan Template

Bounce House Business Plan Template

Written by Dave Lavinsky

Bounce House Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their bounce house companies. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a bounce house business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Bounce House Business Plan?

A business plan provides a snapshot of your bounce house business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Bounce House Business

If you’re looking to start a bounce house business or grow your existing bounce house company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your bounce house business to improve your chances of success. Your bounce house business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Bounce House Businesses

With regards to funding, the main sources of funding for a bounce house business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for bounce house companies.

Finish Your Business Plan Today!

How to write a business plan for a bounce house business.

If you want to start a bounce house business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your bounce house business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of bounce house business you are running and the status. For example, are you a startup, do you have a bounce house business that you would like to grow, or are you operating a chain of bounce house businesses?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the bounce house industry.
• Discuss the type of bounce house business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of bounce house business you are operating.

For example, you might specialize in one of the following types of bounce house businesses:

• Inflatable : this type of bounce house business offers classic bounce houses for children of all ages. They are offered in a variety of different themes and styles.
• Obstacle Course: this type of bounce house includes various fun obstacles that are attached to the main bounce house area.
• Water Slide: this type of bounce house offers inflatable water slides.

In addition to explaining the type of bounce house business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, the number of customers with positive outcomes, reaching X number of customers served, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the bounce house industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the bounce house industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your bounce house business plan:

• How big is the bounce house industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your bounce house business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your bounce house business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments:  schools, families with children, and companies.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of bounce house business you operate. Clearly, companies would respond to different marketing promotions than families, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

Finish Your Bounce House Business Plan in 1 Day!

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other bounce house businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes big box retailers that sell inflatable bounce houses or sporting goods stores. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of bounce house business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide options for all ages?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a bounce house business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of bounce house company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide water slides, obstacle courses, tables and chairs for rent, or other outdoor games?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your bounce house company. Document where your company is situated and mention how the site will impact your success. For example, is your bounce house business located in a busy retail district, out of your house, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your bounce house marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• School events
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your bounce house business, including answering calls, scheduling the rental of bounce houses, billing customers and picking up and delivering bounce houses.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth bounce house customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your bounce house business to a new city.  

Management Team

To demonstrate your bounce house business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing bounce house businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a bounce house business or successfully running a family outdoor entertainment business.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.  

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you rent out 5 bounce houses per day, and/or offer other items to rent? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.  

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your bounce house business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.  

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a bounce house business:

• Cost of bounce house inventory and delivery supplies
• Warehouse to house all bounce house inventory
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your warehouse location lease or a list of bounce houses you plan to rent out.  

Writing a business plan for your bounce house business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the bounce house industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful bounce house business.

Don’t you wish there was a faster, easier way to finish your Bounce House business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s business plan services can give you a winning business plan.

Other Helpful Business Plan Articles & Templates

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Federal Judge Temporarily Blocks Another Pillar of Biden’s Student Debt Plan

The plan would affect millions of borrowers struggling with runaway interest and others who were still paying off loans after decades. It was set to take effect this fall.

By Zach Montague

Reporting from Washington

A federal judge placed a temporary hold on another component of President Biden’s student debt relief plan on Thursday, siding with a coalition of seven Republican states that filed a lawsuit to halt the program on Tuesday.

The ruling comes as yet another blow to the president’s student debt relief agenda after the Supreme Court upheld a similar hold on the SAVE program, the centerpiece of his strategy to cancel tens of millions of dollars in student debt.

The plan at issue in Thursday’s ruling is meant to cancel debt for as many as 27 million borrowers who saw interest on their loans balloon over time, or who were still paying off loans after at least 20 years.

Even though the policy was not scheduled to go into effect until the fall, the states bringing the lawsuit argued that they had obtained evidence that the Education Department had notified federal contractors to “immediately” begin canceling some balances.

“Through cloak and dagger, the Department has thus finalized a rule with a rollout plan that is maximally designed to forgive tens or hundreds of billions of dollars without any judicial review and is designed to boost the incumbent Democratic presidential candidate two months before the election,” the complaint filed on Tuesday read.

Angelo Fernández Hernández, a White House spokesman, said the administration would continue to fight the challenge in court.

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White House signaling it will likely stop Nippon Steel's plans to buy US Steel

The White House is signaling an openness to formally blocking the acquisition of U.S. Steel by Nippon Steel, as a government review of the proposed takeover by the Japanese company is on the cusp of ending

WASHINGTON -- The White House is signaling an openness to blocking the acquisition of U.S. Steel by Nippon Steel , as a government review of the proposed takeover by the Japanese company is on the cusp of ending.

The Washington Post reported Wednesday that President Joe Biden plans to stop the deal from going forward. A White House official, insisting on anonymity to discuss the matter, did not deny the report and said Biden still needs to receive the official recommendation from the Committee on Foreign Investment in the United States. That review could end as soon as this month.

Biden had already voiced his objections to the merger, backing his supporters in the United Steelworkers union who oppose the deal. The objection carries weight as U.S. Steel is headquartered in the swing state of Pennsylvania and is a symbol of Pittsburgh's industrial might in an election year where Republicans and Democrats alike are promising more domestic manufacturing jobs.

Vice President Kamala Harris , the Democratic nominee, came out against the deal this week. Former President Donald Trump , the Republican nominee, already said he would block the merger if he was still in the White House.

Stock in U.S. Steel fell roughly 17% on the news that Biden would stop the merger.

The CFIUS review process generally pertains to business issues with national security implications. U.S. Steel spokesperson Amanda Malkowski said in an email that the company had not received any update on the process and that the company sees “no national security issues associated with this transaction, as Japan is one of our most staunch allies.”

“We fully expect to pursue all possible options under the law to ensure this transaction, which is best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes,” Malkowski said.

A spokesman representing Nippon Steel said the company had not received any updates from the federal government on the review process.

Tucker Elcock, who works for the advisory firm Teneo, said on behalf of Nippon Steel that it was the “only willing and able” company that could make an investment in U.S. Steel that put the entire sector on a “stronger footing.” He added that Nippon Steel “strongly believes that the U. S. government should appropriately handle procedures on this matter in accordance with the law.”

U.S. Steel on Wednesday hosted a rally in support of the acquisition. It said in a statement that without the Nippon Steel deal the company would “largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities across the locations where its facilities exist, and depriving the American steel industry of an opportunity to better compete on the global stage.”

Nippon Steel announced the deal in December 2023 and U.S. Steel shareholders approved it in April of this year.

Levy reported from Harrisburg, Pennsylvania.

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White House signaling it will likely stop Nippon Steel’s plans to buy US Steel

Democratic presidential nominee Vice President Kamala Harris campaigns with President Joe Biden at the IBEW Local Union #5 union hall in Pittsburgh, on Labor Day, Monday, Sept. 2, 2024. (AP Photo/Jacquelyn Martin)

• Copy Link copied

WASHINGTON (AP) — The White House is signaling an openness to blocking the acquisition of U.S. Steel by Nippon Steel , as a government review of the proposed takeover by the Japanese company is on the cusp of ending.

The Washington Post reported Wednesday that President Joe Biden plans to stop the deal from going forward. A White House official, insisting on anonymity to discuss the matter, did not deny the report and said Biden still needs to receive the official recommendation from the Committee on Foreign Investment in the United States. That review could end as soon as this month.

Biden had already voiced his objections to the merger, backing his supporters in the United Steelworkers union who oppose the deal. The objection carries weight as U.S. Steel is headquartered in the swing state of Pennsylvania and is a symbol of Pittsburgh’s industrial might in an election year where Republicans and Democrats alike are promising more domestic manufacturing jobs.

Vice President Kamala Harris , the Democratic nominee, came out against the deal this week. Former President Donald Trump , the Republican nominee, already said he would block the merger if he was still in the White House.

Stock in U.S. Steel fell roughly 17% on the news that Biden would stop the merger.

The CFIUS review process generally pertains to business issues with national security implications. U.S. Steel spokesperson Amanda Malkowski said in an email that the company had not received any update on the process and that the company sees “no national security issues associated with this transaction, as Japan is one of our most staunch allies.”

“We fully expect to pursue all possible options under the law to ensure this transaction, which is best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes,” Malkowski said.

A spokesman representing Nippon Steel said the company had not received any updates from the federal government on the review process.

Tucker Elcock, who works for the advisory firm Teneo, said on behalf of Nippon Steel that it was the “only willing and able” company that could make an investment in U.S. Steel that put the entire sector on a “stronger footing.” He added that Nippon Steel “strongly believes that the U. S. government should appropriately handle procedures on this matter in accordance with the law.”

U.S. Steel on Wednesday hosted a rally in support of the acquisition. It said in a statement that without the Nippon Steel deal the company would “largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities across the locations where its facilities exist, and depriving the American steel industry of an opportunity to better compete on the global stage.”

Nippon Steel announced the deal in December 2023 and U.S. Steel shareholders approved it in April of this year.

Levy reported from Harrisburg, Pennsylvania.