A business plan is a must-have for any company, no matter how long it has existed.
A three-year business plan gives you a healthy timeframe to work with. It’s long enough to let you develop robust strategies and revenue estimates, but it’s not so far out that your projections aren’t based on quality data.
Learn how to create a business plan structure that is easy to craft while also able to serve as a compelling resource for anyone interested in your company’s overall strategy — especially lenders and investors.
Key Points
• A business plan provides a strategic roadmap for achieving your business goals, guiding decision-making, securing funding, and measuring progress over time.
• Components of a three-year business plan include a description of your business, business goals, an analysis of your potential or ideal market, a marketing plan, and an estimate of your costs and revenues.
• Most lenders will want to see a business plan, so if you plan on applying for a small business loan now or in the future, a business plan is necessary.
Why Should You Write a Business Plan?
Taking the time to write a thoughtful business plan can help you get a firm understanding of where you’re taking the company and how you’re going to get there. Without a plan, it can be easy to be pulled in many directions, especially if you’re a new small business. Use your business plan as a reference for how to prioritize in order to best meet your goals.
Measure Progress and Goals
A business plan serves as a roadmap that outlines your business’s objectives, strategies, and timelines, providing clear benchmarks to measure progress and goals. By setting specific, measurable targets, such as revenue milestones, customer acquisition numbers, or market expansion timelines, you can track your progress regularly.
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What to Include in a 3-Year Business Plan
Here are the key things to make sure you do in your three-year business plan.
Describe Your Business
This section is often called an executive summary. It should outline the goods or services you plan to provide.
This is also where you should state where and how you plan to sell your product, and whether it’s an online or a brick-and-mortar store.
Another important component of this section is your differentiator. Are you marketing to a specific audience? Are you selling a product that’s new to market? Investors and lenders want to know how you plan to outperform your competition.
This is also where you can talk about where your company is today and where you plan to be in the next few years.
Define Your Goals
Once you outline the structure of your business, it’s time to set goals for the next three years.
Revenue is a frequently used metric here. Provide a year-by-year estimate of expected revenue growth based on your specific company and the broader industry.
Gross margin is another important goal to consider, especially since your expenses may grow as your revenue increases.
All of this information helps you figure out how to calculate cash flow and prepare for any upcoming financing needs to meet these goals.
Depending on your business structure, here are some other goals that might make sense to include in your three-year business plan:
• Number of new and repeat customers
• Net profit
• Net income
• EBITDA
• Locations
• Product line revenue
• Sales closing ratios
• Market share
Analyze Your Potential Market
In order for your new small business to be competitive, you need to understand the market you’re entering. If you have a more established business, a market analysis helps you figure out where you currently stand.
In this section, you can explain the size of your industry, as well as growth projections and current trends.
Also, research your target audience to determine its size and buying habits. You should also perform an in-depth analysis of your competition to identify their strengths and weaknesses.
Explain Your Marketing Plan
Your three-year business plan outline should include a clear strategy for your marketing efforts.
Describe any advertising or promotions you plan to do, whether it’s through online, print, TV, or radio media. Also include the costs involved and the reach you expect to gain with your target audience.
A key part of your marketing strategy should be a calendar outlining your campaign schedule. Creating that calendar gives you the chance to think about the upcoming seasonal flow of your business. It’s also helpful for lenders to see that you’re thinking ahead, in case you need to get a business loan in the future.
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Estimate Costs and Revenues
As you nail down the details of your business operations and marketing strategy, it’s also important to estimate your costs and revenues.
Figure out your business’s current amount of capital, whether from a business loan, investor capital, early earnings, or your own personal money.
Then, calculate the costs of business activities you outlined in the sections above. Find a conservative balance between inventory and customer demand.
Or, if you’re a service-based business, figure out how quickly you can scale your workforce size to meet your customers’ needs.
Lenders and investors also want to see your customer acquisition cost, which accounts for the expenses involved in your marketing strategy.
Example of a 3-Year Business Plan
Start your business plan by covering each of the previous sections under its own heading. Then you can write your strategy in narrative form and input graphs and tables, as appropriate.
You can also create a timeline using this three-year business plan template example:
| Year 1 | Year 2 | Year 3 |
|---|---|---|
| Goal: | Goal: | Goal: |
| Strategy: | Strategy: | Strategy: |
| Quarterly Target: | Quarterly Target: | Quarterly Target: |
| Q1: | Q1: | Q1: |
| Q2: | Q2: | Q2: |
| Q3: | Q3: | Q3: |
| Q4: | Q4: | Q4: |
Year 1 Plan
Describe Your Business: Launch a new e-commerce platform specializing in eco-friendly home products. The business will cater to environmentally conscious consumers looking for sustainable alternatives.
Define Your Goals: Establish a solid online presence, acquire the first 1,000 customers, and achieve break-even by the end of the year.
Analyze Your Potential Market: Target market includes individuals aged 25-45 who prioritize sustainability. Market research indicates growing demand for eco-friendly products, with a potential market size of $50 million in the initial region.
Explain Your Marketing Plan: Utilize digital marketing strategies, including social media campaigns, influencer partnerships, and content marketing focused on sustainability. Launch a blog and social media platforms to educate and attract eco-conscious customers.
Estimate Costs and Revenues: Initial setup costs estimated at $100,000, including website development, inventory, and marketing. Projected Year 1 revenue is $200,000 with a break-even point expected by month 10.
Year 2 Plan
Describe Your Business: Expand the product line to include eco-friendly personal care items. Begin exploring international shipping options to reach a broader audience.
Define Your Goals: Double customer base to 2,000, increase revenue by 150%, and enter at least one new international market.
Analyze Your Potential Market: The expanded market includes a broader demographic, with a potential size of $100 million in targeted regions. Market research supports growing international interest in sustainable living products.
Explain Your Marketing Plan: Enhance digital marketing efforts, introduce targeted ads for international customers, and collaborate with international influencers. Launch email campaigns promoting the expanded product line.
Estimate Costs and Revenues: Estimated costs for expansion and marketing: $150,000. Projected Year 2 revenue is $500,000, with a significant increase in profit margins due to economies of scale.
Year 3 Plan
Describe Your Business: Solidify market position as a leading provider of eco-friendly products with a diverse product range and global customer base.
Define Your Goals: Achieve market leadership in the niche, triple the customer base to 6,000, and reach $1 million in revenue.
Analyze Your Potential Market: The global market for eco-friendly products is rapidly growing, with an estimated market size of $500 million. The business will focus on maintaining a competitive edge through innovation and customer loyalty.
Explain Your Marketing Plan: Expand marketing to include global campaigns, partnerships with major eco-friendly brands, and participation in international trade shows. Continue to invest in content marketing and customer engagement.
Estimate Costs and Revenues: Estimated costs: $200,000 for global marketing and operational scaling. Projected Year 3 revenue is $1 million, with substantial profitability and strong financial stability for future growth.
The Takeaway
A three-year business plan will require some effort, but thinking it through can give you some clarity on what you want from your small business and how you can best achieve it. And it can help your company in several ways, from giving you clear objectives to attracting external funding.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
FAQ
Why write a business plan?
A business plan keeps you organized and focused when you’re growing your company. The process allows you to set goals and milestones, along with providing plans for actually reaching them. It’s also an essential part of any type of small business financing application, which can help build your business credit.
What should you include in a 3-year business plan?
There are five core components to include in your 3-year business plan: business description, goals, market analysis, marketing strategy, and cost and revenue estimate.
How do I describe my business?
Start by defining what your business plans to sell, whether it’s a product or a service. Then directly state what makes your business stand out from the competition.
How do I write an executive summary?
An executive summary is the description of your company and your products and services. It also includes high-level information on your target audience and financials. Positioned at the beginning of your three-year business plan, your executive summary is meant to encourage the reader to learn more and keep reading about your business.
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